Giverny Capital, an investment management company, recently published its fourth-quarter investor letter in 2022. A copy of the same can be downloaded here. The model portfolio of the firm appreciated 8.49%, net of fees in the fourth quarter compared to a 7.56% return for the Standard & Poor’s 500 Index. For 2022, the fund delivered a -22.65% return compared to a -18.11% return for the Index. Oil and energy was the strongest sector in the year increased by 65%. In addition, you can check the top 5 holdings of the fund to see its best picks for 2022.
Giverny Capital highlighted stocks like The Progressive Corporation (NYSE:PGR) in its Q4 2022 investor letter. Headquartered in Mayfield, Ohio, The Progressive Corporation (NYSE:PGR) is an insurance holding company. On January 26, 2023, The Progressive Corporation (NYSE:PGR) stock closed at $134.91 per share. One-month return of The Progressive Corporation (NYSE:PGR) was 4.01%, and its shares gained 24.09% of their value over the last 52 weeks. The Progressive Corporation (NYSE:PGR) has a market capitalization of $78.922 billion.
Giverny Capital made the following comment about The Progressive Corporation (NYSE:PGR) in its Q4 2022 investor letter:
“At the top of our performance list, The Progressive Corporation (NYSE:PGR) rose 26% for the year as it generated outstanding results relative to other large auto insurers. Markel and Berkshire Hathaway rose modestly. The three companies compete in diverse lines of insurance, but they all benefit from rising rates for property coverage after an extended period of weather catastrophes, rising jury awards in lawsuits and inflated loss costs. Our insurers tend to be careful underwriters, so their profitability rises with rates. Our insurers also benefit from rising interest rates because they tend to invest premiums paid by customers into fixed income securities until they pay claims.
Our largest holding at year-end was Progressive, ascending to the top spot thanks to 26% appreciation in a year when most of our holdings lost value.
The auto insurance industry is in turmoil, with most companies losing money as soaring used car prices drive up the cost of accident repairs and replacements. It is hard to overstate Progressive’s superiority to its peer group. It is the most sophisticated underwriter in the country, and it began raising insurance premiums earlier than its peers did as driving patterns and repair costs worsened in 2021. It did other smart things, too, including reducing advertising and sales efforts in markets where it could not get rate increases – thus choosing where it would compete hardest for customers – and not renewing the policies of high-risk drivers. This may seem elementary, but most other major insurers did the opposite: they used the windfall profits earned during pandemic quarantine to ratchet up their marketing efforts to attract new customers. They cut rates to try to grow faster…” (Click here to read the full text)
The Progressive Corporation (NYSE:PGR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 63 hedge fund portfolios held The Progressive Corporation (NYSE:PGR) at the end of the third quarter, which was 54 in the previous quarter.
We discussed The Progressive Corporation (NYSE:PGR) in another article and shared the list of the most progressive companies in America. In addition, please check out our hedge fund investor letters Q4 2022 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
