Progressive Insurance (PGR) Approaches Its Indicated BuyAt Price

Nothing is within one percent of the indicated Buy At or Sell At price.

Yesterday we were able to get out of our Nvidia at $556.96. I note that it is now trading at $548.40. It is sometimes tempting, when a stock takes off, to hold past the indicated AI-indicated Sell At price. A few minutes after we sold yesterday, the stock hit $559.97. The sale the day before of Facebook at $267.11 came after a similar rapid rise. FB is now trading at $277.09 after reaching a high of $278.47.

My conclusion, after doing hundreds of AI Algo-indicated trades, is that the Algo knows best. It is not infallible. It is running thousands of calculations in order to assess where the sweet spot is in terms of likelihood of reaching a higher number (or lower number when accumulating positions) and makes a probability-weighted decision. On balance, those decisions are reliable, somewhat like the odds assessment of a casino blackjack dealer. The dealer knows where the odds are, over hundreds of hands, given that the next card is unpredictable.

I re-ran the SuperGrowth MultiBagger software overnight and it added one more company to the sixty on the Potential Positions list — GSHD – Goosehead Insurance Inc.

Graph Of The Day — Progressive Insurance Summary Graph

Buffett’s thoughts on Progressive:

Progressive is a very well-run business. GEICO is a well-run business,” he said, predicting that other industry competitors would continue to lose market share to both of them for the foreseeable future.

“I have always thought for a very long time [that] Progressive has been very well run. They have an appetite for growth. Sometimes they copy us. Sometimes we copy them. And I think that will be true five years from now, 10 years for now,” he said.

“We will see five years from now or 10 years from now which one of us passes State Farm first,” he added.

“We grew in the first quarter about 340,000 policies net, which will look good compared to anybody but Progressive.” Jain, splitting the underwriting profit figures for the two auto insurance competitors into the expense ratio and loss ratio components, revealed that Progressive has a significant advantage on the loss ratio side—some 12 points over GEICO. GEICO beats Progressive on expenses with a seven-point expense ratio advantage, Jain said. “So, net-net, Progressive is ahead by about five points,” he said, reporting that “GEICO is very aware of this” loss ratio disadvantage and “very focused on trying to bridge that gap.”

Jain concluded: “Sometimes, GEICO is ahead of Progressive. Right now, Progressive is ahead of GEICO, but I’m hopeful they’ll catch up on the loss ratio side and maintain the expense ratio advantage as well.”

You can read the entire article in Carrier Management here.

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PGR is now the closest SuperGrowth MultiBagger to its indicated BuyAt price (currently $89.43 versus current stock price of $92.68).

Progressive is one of the more stable SuperGrowth MultiBaggers in both free cash flow and stock price volatility, which, over time, tend to mirror each other. The BuyAt/SellAt spread, as determined by the AI Algo, for PGR is 11.13% versus almost 37% for all MultiBaggers. This suggests that while PGR has less profit potential than the group in terms of short term trading, it is more reliable. In terms of annual appreciation potential, PGR rates at 17% versus 33.5% for the average MultiBagger.