UnitedHealth Group Inc (UNH-N)

Good entry point for long-term hold; potential generational buying opportunity. Reason for the drop is that they were classifying clinic patients as less sick than they actually were. Resulted in recouping less revenue, to the tune of ~$500 per month per patient, amounting to ~$3+B. Keep an eye on how quickly this amount is recovered. Yield is 2.1%.

Be mindful that this doesn't turn into a bigger problem of something fundamentally changing in the ever-evolving US healthcare system. Facts could change.

It will be under pressure for some time and he's been very negative on this stock, but at $400 you can start a position on it.

Fallen angel. Disappointing quarter, severely lowered guidance for 2025. 80% of its business is healthcare insurance. Taking market share in every segment they operate in. Funding pressure on government-funded healthcare insurance is curtailing short-term profitability; but this is building long-term value for shareholders. Secular trends of demographics and morbidity in the US are tailwinds. 

Fortress-like balance sheet, A+ credit rating. Buying back shares prolifically with FCF. Trading at 15x PE vs. the 5-year average of 19.5x. Yield is 1.97%.

Has plunged 22% since reporting last Thursday and dragged the sector down. What in the world happened? They missed top and bottom lines, but worse they cut their full-year earnings forecast by 12%, citing high medical costs in its Medicare plans. The health profiles of many patients has been inaccurate., especially in their managed care business. Their medical care ratio was 84.8% in Q1 2025, but they guided full year at 87.5%. However, UNH's peers are faring better. UNH is having execution problems and is no longer best of breed.

Down today, so an opportunity. The largest health insurer can do anything it wants under this presidency.

It reports Thursday. Not too high of a PE and not overly loved and purely domestic. It has pricing power.

Is up 10% in the past month. Don't chase a red hot stock, but let it come in a bit (lower). Every time this spikes, it goes down. It's best of breed.

Near term, this can't trade at prior multiples given volatility. Anything healthcare is uncertain. He still believes in the $600 price target. Great management. They have growth.

Leader in the space. Trades at 16x forward PE, 11% growth. Last 5 years, earnings have growth 12% a year. 200-day MA trending higher, but price is a bit below that, so technical signals are neutral. Integrated model strong. Pricing power. Down 24% from recent highs on regulatory concerns, overdone.

Is down 20% in 6 months and trades at 6.5x EBITA vs. 12x historically, strong managers, $20 billion free cash flow and new share buybacks.

The DOJ is going after them for Medicare payments. Is taking some risk off the table.

Yes. It was a top pick of his last spring. He doesn't think there will be much negative impact from Washington investigating their billing practices, though there remains headline risk. Fundamentals are improving, though they are paying out more for medical costs, which he hopes will normalize. It's trading below the market PE, when usually it trades above.

It is integral to the systematic delivery of health care across the U.S. and is a leader in well vertically integrated companies. There are some headwinds which he thinks will dissipate. He likes the longer term prospects and is seeing the development of per capita growth.
Buy 29  Hold 1  Sell 0

He bought some yesterday. Didn't change guidance. Q4 profitability was OK, though revenue was a bit light. Health insurance in US will continue to grow, it's a leader. Core holding for him. Great distribution system, so cost is less than peers. Trump administration will not nationalize healthcare.

Well run and uses AI a lot. It's an easy punching bag in the US for critics of the healthcare system. Health is always a political hot knife, but HC is the biggest employer in the US. Some disagree, but it's not in their interest to screw customers (by denying claims). He has been this all the way down.