UnitedHealth Group Inc (UNH)

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.

She sold half their position, and then exited the rest on a rally for tax-loss selling. Doesn't mean she can't get back in at some point. Still a lot of noise around the stock. Has done well, but struggling of late. Q3 earnings beat, raised full-year guidance. Regulatory scrutiny may still pressure margins. Fundamentals: 8/10, Value: 7/10.

Has now broken its downtrend and starting to move higher. Very good value relative to peers. Likes the stock on its technicals. Healthcare can actually do quite well in November. 

Still likes it for the long term. Well into recovery mode. Has stabilized its cost recovery issue. CEO from a decade ago is back and fixing internal issues. Bar on the future outlook has been set low, which gives it room for earnings revisions higher -- should see this in 2026 and 2027.

Take a step back and look at the whole healthcare insurance group. Higher and higher costs against its revenue stream. The whole model of taking in premiums and paying out claims was completely upended with Covid on both the number and the timing of claims. Many people delayed surgeries and health care, and so company margins did well because costs weren't that high. But now claims are catching up.

Industry showing signs of bottoming. Great opportunities for the patient investor as part of a portfolio, but not sure this name would be his choice.

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Hasn't bought yet, is on his buy list, but only for his aggressive strategy. One-year chart seems to show it's breaking out from the bottom and has done a reversal, but it's early. Not showing much life yet. But if it started making higher highs and higher lows, there's tons of upside. Downside level is probably ~$300.

Chart shows a higher low, so you thnk maybe the worst is over. Down 40% YOY. Good time to pick away at healthcare. Will be lots of chop between $450 and $600 (all those investors who bought there just want out). Good risk to buy at these lows.

Nice bounce off recent low, now drifting. Could be an emerging consolidation within the downtrend, but hasn't yet broken the downtrend. You'd need to see it get above $380-400. Defensive, value names not participating in the rally the same way that cyclicals are.

She sold as headwinds mounted and too many leadeship changes. Berkshire's stake renewed attention in this name, but shares dropped again after an earnings miss and guidance cut.

When a stock of this size and growth drops 50% in a year, he gets tempted. He entered it slightly a few weeks ago, then Buffett revealed his position in it which has lifted shares. Hasn't made a full position, given the investigation into it. We've probably seen the worst for UNH. CVS is a cheaper way to play the private benefits market, so he added that recently and it offers a better valuation than UNH.

It has seen many problems this year, including missing earnings and lowering guidance. Insurance is tough to understand, especially when connected to Medicare.  Then again, the valuation fell and aging demographics are tailwinds. UNH is a turnaround story and will need time. It's weird that Buffett is investing in this, since he doesn't invest in turnarounds. Too many moving parts for him to study. He avoids healthcare.

On top of medical loss ratio issue, now being investigated by DOJ on billing practices. Suspects this will be like a WFC scenario -- clouds will hang over the name and will take a long time to clear. EPS revised down from $25 to $16, so who knows what they'll actually be by year's end.

Likes HMOs in general as a business that reprices YOY. If you're a very long-term investor and you want to take a stab, it's not going away anytime soon. But expect a bumpy ride for the next 1-6 quarters.