UnitedHealth Group Inc (UNH)

A battleground stock. Has done pretty well since the revision in the Medicaid rate from 0 to 3%, a major change. Run by a great CEO. Is not overvalued now.

He wants to see confirmation that the current chart base is real. Wants to see a breakout first which could see tons of upside. 

(Note the shortish timeframe.)  Bumpy road. Biggest weight on stock has been Trump administration's proposal to essentially flatten (increase of 0.1%) Medicare Advantage rates in 2027. That miniscule increase combined with medical cost inflation really puts pressure on. 

Trying to prioritize margins over growth. Insurance products will be repriced next year, should see better growth in topline and bottom line.

The whole sector is hurt by high medical costs, an aging US population who have higher medical costs, and reimbursements (pressure from Washington). UNH has a good track record, but these problems will persist.

He owns CVS instead, and a third of their business is health insurance, which 100% of UNH's business. The problem with US healthcare is all the news coming out of Washington. A lot of their business is dictated by the whims of one or two people in the U.S. Still a good business, but is a little speculative.

Previous CEO was starting to fall short. Fears of overstating revenues, sparking an internal investigation. US federal regulator trying to cut healthcare costs in general, which will challenge HMO companies like this one. He imagines stock will sit here for a while until new CEO is able to turn the ship around, or until US healthcare industry sees some change and HMOs get pricing power back.

This space is not a guarantee. Avoid.

Fortunately, he sold around $560. A bit of a quicker trade than usual for him. Company's gone through a lot of changes -- new CEO, higher costs than expected, more regulatory scrutiny. Chart's improved somewhat, so it's on his radar. Might be basing. Still below 200-day MA, and a move above that would be a positive. There's been some buying from major institutions.

Likes it long term. Last year was tough. Now seeing a bit of recovery. Thinks most headwinds will fade, a lot of them were just medium-term issues. Medical cost inflation in US has been extremely high. Believes 2027 guidance is extremely conservative. Earnings revisions should move higher. Beneficiary of AI improving efficiencies.

Still holds, actually bought more. Underwriting caught offside, as medical demand far outstripped estimates. Margins are already razor-thin. With insurance you can get it wrong one year, but hard to get it wrong multiple years. He bought at both the high and the low; took profits around $370. He'd buy again today.

Recent lows were around $250 and $300, and you want the chart to hold above those level. Watch if this breaks below $300; if so, be ready to exit. They had a rough spring and detached from the wider market. 

Are at the centre of the US health system, a massively vertically integrated company. Are in the penalty box, very though the last 12 months because Washington has tightened their reimbursement rates while more people use their services at lower prices. Is the perfect storm that's squeezing margins. Also, was an anti-trust investigation. A former CEO has returned and he will execute. 

UNH is the largest health insurer. They've rehired their fine CEO. He sees 25-30% upside.

Issues on costs, will reprice next year. Trump administration is very focused on medical costs, and the new CEO seems to be under pressure with that. She's on the sidelines for the whole industry.

Pharmacy benefits managers starting to do a bit better. Berkshire getting involved is a positive. US health insurance still a difficult market. Potential criminal charges are a huge negative. PE ratio is in the high teens.

For him, a better play in the sector would be CVS.

Pretty optimistic on it. Recent moves down have more to do with some of its competitors than UNH itself. As a whole, insurance industry not as good as it used to be. But that doesn't mean that this stock in the $300s is priced correctly for the next 5 years.
 
Costs have started to spike, but they have this more under control than before. Should grow earnings in high teens consistently in next 3 years. Thinks it'll get back into the $500s, but the ride has been painful.