Progressive Insurance Victorious in 1st Warren Buffett Challenge

By: SumZero Staff | Published: April 22, 2015 | Be the First to Comment

Progressive Corp

We are pleased to announce the Winners and Runners-Up for SumZero's 1st What Will Warren Buffett Buy Next Challenge. We sincerely thank everyone who participated in this year's inaugural event, including our esteemed Judges Panel, as well as our various prize partners, including and especially Kaplan Schweser, for their tremendous support in this budding research initiative, as well as Steven Keating of St. John's University for his thought leadership on the concept. We are proud to showcase the ideas nominated below as excellent ambassadors of SumZero research quality. We are also excited to ramp things up for Year 2, so please get ready.

There is an important distinction to highlight in this year's results. The true victor this year in terms of total votes/points from the Judges is, in fact, a soon-to-be MBA student. This means that the true Winner in this year's Buffett Challenge will actually take home The Kaplan Schweser Student Prize rather than the overall winner prize. The second place finisher in terms of points, who is not a current student, will take home the prize of Winner (Overall). These are minor semantics as both pitches are excellent, and both are deserving of significant consideration.

The true Winner in terms of points, Christian Solberg, appeared on CNBC's Halftime Report today to quick pitch his long idea on Progressive Corp (PGR:US) alongside SumZero's CEO Divya Narendra.
Check Out the CNBC Clip Here.

Winner: Kaplan Schweser Student Prize
Contributor: Christian Solberg
Long on Progressive Corp (PGR:US)
Contributor Bio: Christian Solberg will be matriculating at the Sloan School of Management at the Massachusetts Institute of Technology (MIT) as a Dean’s Fellow in the fall of 2015 with the goal of earning an M.B.A. in finance. This follows eight years as a Director with management consulting firm BTS, working closely with Fortune 100 senior executives on strategy, operations, culture and capital allocation. He earned his B.A., magna cum laude, from Middlebury College, where he studied history, economics and Spanish and played varsity baseball.
Quick Pitch: Many might think buying Progressive stock would be a bold move. It would be. But how often has Buffett done things that others originally thought were crazy? You don’t earn the nickname “Oracle” by doing what everyone else would do. If he even decided to try to eventually acquire all of PGR, there are many other auto & home players, so there wouldn’t be risk of a monopoly. But he would have locked down the two auto insurers that have a real competitive moat. Everyone trusts Warren Buffett, which is a boon when making bold and/or novel moves.
Download the Winning Buffett Pitch on Progressive

Winner (Overall)
Contributor: Thomas Harris
Long on Rockwell Automation Inc. (ROK:US)
Contributor Bio: Thomas Harris is an individual investor from Toronto. He currently provides investment research for his father's Financial Planning practice. Thomas started his career as an auditor at a big 4 accounting firm. He is a Chartered Accountant (CPA,CA) and will be a CFA charterholder pending experience. He received a BBA from Wilfrid Laurier University.
Quick Pitch: Rockwell Automation (ROK) is a great company at a fair price. Mr. Buffett would be happy to own it for at least 10 years. It passes his tests with flying colors. With $5 billion, could Mr. Munger create a hypothetical competitor from scratch? To create a true competitor to ROK would require start investment in: R&D for >300,000 hardware and software products, sales, distribution, manufacturing, industry experts, and switching costs. Running through his mental models and asking “what could go wrong”, Mr. Munger would classify this as a wonderful company.
Download the Winning Buffett Pitch on Rockwell Automation

Runners-Up (Unordered)

Long on Cal-Maine Foods (CALM:US)
Contributor Bio: Jennie I. Sanders, CFA is the Senior Investment Strategist at MJB Asset Management, a registered investment advisory firm in Manhattan serving the needs of high net worth individuals. Jennie began her career in 1999 as a Portfolio Manager in the Private Asset Management Group at Wells Fargo in San Francisco, Dallas, and Austin. She then joined the Private Banking & Investment Group at Merrill Lynch in Austin as a Vice President and Senior Financial Analyst where she managed equity and bond portfolios, including a core U.S. strategy, a tactical dynamic asset allocation strategy, and a strategic income strategy primarily focused on individual MLPs, Utilities, and Financials. Jennie is actively involved in various capacities with CFA Institute. She earned a B.A. in Business Economics from the University of Texas at Austin.
Download the CALM Pitch

Long on Gree Electric Appliances (0651:HK)
Contributor Bio #1: Pep So, CFA, CPA is a senior analyst at HSZ Group, in which he focuses on generating investment ideas for the HSZ China Fund. HSZ China Fund is a China-focused value long-only fund which looks to invest in undervalued entrepreneurial Chinese companies. Prior to joining HSZ Group, he was a senior research analyst at Chelsea Securities, an investment manager at Anglo Chinese Group and a research analyst at Knight Capital Group, where he was responsible for portfolio management and equity research. Pep started investing at the age of 19 and has solid experience in Hong Kong and China-listed equities, particularly for Chinese consumer-related companies. He likes companies with sustainable competitive advantages and is a believer in long term value investments.
Contributor Bio #2: Jack Chan, CAIA, is a senior investment manager at Imperium Asset Management, in which he focuses on fundamental bottom-up long/short equity investments. Jack formulates his own investment philosophy on five major business fundamentals: management team, business model, industry dynamics, products and valuation. Prior to joining Imperium, he was an investment director at Silver Tree HK limited, a vice president in research at Alphalex Capital Management and a research analyst at Fuhhwa SITE Asset Management. Jack's investment mindset is shaped by Peter Lynch, Anthony Bolton, David Einhorn, Julian Robertson and Warren Buffett.
Download the Gree Pitch

Long on H&R Block (HRB:US)
Contributor Bio: At 22 years old, I bet the farm on internet stocks and dropped out of medical school after only two weeks. I worked in pharmaceutical patent litigation for a few years but shy away from individual pharmaceutical stocks. Quantifying the risk of money being siphoned off due to litigation, regulation or new technology in these stocks and similar high flying equities is not yet in my toolbox. I hold an MBA from the University of Miami and a BA from the University of Virginia. My two young boys, 6 months and 2 years old, and I run a small consulting business from home. I find annual reports much easier to dissect than changing diapers while peacefully negotiating bedtimes.
Download the HRB Pitch

Long on Mattel Inc (MAT:US)
Contributor Bio #1: Brennan Merrell is the co-founder and co-investment manager of Merrell Brothers Investment Management since 2012. Prior to starting Merrell Brothers, LLC, Mr. Merrell worked as an Equity Research Associate covering the software sector for the sell side firm, Ticonderoga Securities, which acquired Soleil Securities. In May 2009, Mr. Merrell earned his MBA from Tulane’s Freeman School of Business with a concentration in finance and a specialization in energy and international business. During his education at Tulane, Mr. Merrell was extremely involved in creating equity research reports for Tulane University’s Burkenroad Reports, for the CFA (Chartered Financial Analyst) Challenge, and for other institutional and retail investors. Brennan Merrell completed his undergraduate work at the University of Florida’s Warrington Business School where he majored in Economics.
Contributor Bio #2: Ryan Merrell is the co-founder and co-investment manager of Merrell Brothers, LLC since 2012. Mr. Merrell is responsible for evaluating current and potential investments and maintaining client contact. Ryan is inspired by investment principals of Warren Buffett to invest in quality businesses. Ryan Merrell earned his law degree from Tulane University Law School, his Master of Arts in the Social Sciences from the University of Chicago in 1999, and his undergraduate degree from Florida State University where he majored in International Affairs, Political Science, and Anthropology in 1998.
Download the MAT Pitch

Long on Philip Morris International Inc. (PM:US)
Contributor Bio: Nick Mazing is the founder of Ampera Capital, an emerging NY-based long-short manager focused on mid/large-cap equities in the consumer/retail space. Ampera was seeded in July 2013 by a Tiger 21 member for whose family office Mr. Mazing worked as an analyst and PM. Mr. Mazing previously worked as an investment banker in the Consumer group at Lehman Brothers and as an operator/general manager for Aramark Corporation. He holds an MBA degree from Columbia Business School, where he also played on the rugby team, and an undergraduate degree in Business from the University of Maine-Machias. Mr. Mazing is a native of Bulgaria and has lived in the US for almost 20 years. Mr. Mazing is a regular contributor to SumZero's platform and competitions. His short Avon (NYSE:AVP) thesis received a top 1% distinction of over 1,500 submissions to the site in 2014. In addition, Mr. Mazing's pseudonymous Twitter account is one of the fixtures of "Finance Twitter" with over 11,000 followers.
Download the PM Pitch

Long on Potash Corp of Saskatchewan Inc (POT:US)
Contributor Bio: Mike Gorlon currently works in the accounting department of a construction management company headquartered in New York City. He has been working there since he received his undergraduate degree a little over three years ago. His biggest hobby is doing equity research, and looking for companies that possess an economic moat, long term business fundamentals, consistent earning power, and a margin of safety. Mike is a bottom-up, value investor with a time horizon of over 5 years. He is currently a CFA Level 2 candidate. He received a Bachelor of Business Administration from Hofstra University with majors in accounting and finance.
Download the POT Pitch

Long on Valmont Industries (VMI:US)
Contributor Bio: Nielsen Fields, CFA is a Co-Portfolio Manager & Senior Analyst at Summit Global Management, Inc. conducting primary company research and making recommendations regarding portfolio positions using fundamental value-based analysis. He is responsible for maintaining and updating Summit's proprietary global hydrocommerce universe of 400 companies, as well as developing the investment theses for potential new portfolio positions. Mr. Fields also directs more qualitative research including interaction with portfolio companies, market analysts, and other water industry professionals. Previously he was with OppenheimerFunds and UBS Financial Services, and was a Cum Laude graduate of Colorado State University with a BS in Business Administration in 2006. He received the designation of Chartered Financial Analyst in 2011.
Download the VMI Pitch

Long on WW Grainger Inc. (GWW:US)
Contributor Bio: Helen Wu is the Head of Operations and Research at Agora Fund, a tech-enabled platform for smart giving. Helen joined Agora at the earliest stages as the fourth team member, and has supported the company to grow in scope and breadth to bring the transparency, rigor and ease of for-profit investment platforms to charitable giving. At Agora, Helen also manages the development of nonprofit funds which allow donors to manage high impact giving much like a mutual fund. Prior to Agora, Helen was an investment banking analyst in the Media & Communications Group at Morgan Stanley and an investment associate at H.I.G. Capital. She plays competitive tennis and speaks fluent Mandarin. Helen holds a Bachelor of Science in Finance and Statistics from the Leonard N. Stern School of Business at New York University.
Download the GWW Pitch

Our two Winners and eight Runners-Up have earned membership to the SumZero Buyside community, and will have access to a list of prizes associated with the Berkshire annual meeting next week. We plan to FedEx the pitches of the two Winners to Berkshire’s Headquarters in Omaha, Nebraska with a supportive cover letter written by the SumZero team. The Winner of the Kaplan Schweser Student Award, eligible for students enrolled in full-time academic programs, has won a PremiumPlus CFA Test Prep Package via our partners at Kaplan Schweser. Additional prizes include autographed Buffett books by Jason Zwieg of The Wall Street Journal and Lawrence Cunningham, author of The Essays of Warren Buffett. See the full prize list on the official Challenge page here:
Get the Full List of Prizes and Judges

Congrats to the Winners and all the Runners-Up. Stay tuned for updates on next year's Buffett Challenge.

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