Middle Coast Investing Outpaces Benchmarks in Q3, Plans Selective Adds to Progressive Despite Near-Term Risks

Overview

• Middle Coast reported Q3 outperformance, with US portfolios up 9.6% versus 7.8% for the S&P 500 and Core U.S. portfolios up 10%.
• Progressive was the fund’s second-biggest loser for the second straight quarter yet was labeled the least concerning detractor and roughly flat year to date.
• The firm warned that rising earnings estimates are being driven by very low combined ratios that could normalize or require rate reductions.
• Policy-in-force growth at Progressive slowed to about 8.5% annualized month over month in August and 13% year over year, down from roughly 18% early this year.
• Progressive trades at under 13x trailing earnings, and Middle Coast placed an order slightly below the current price to add where underweight; shares closed at $245.70 on Oct. 3 with a $144.03 billion market cap, hedge-fund holders rose to 99 in Q2, and Evercore ISI on Oct. 1 cut its price target to $273 with a Hold rating while expecting solid Q3 results.