UnitedHealth Group Inc

UNH-N

Can benefit from the long-term secular health theme he believes in. Serves over 75 million people globally. Widely, most diversified company in the managed healthcare space. Able to service Medicare and Medicaid platforms also. Revenues is about 48% commercial, 38% Medicare and 14% Medicaid. 1.6% dividend yield.

(A Top Pick Sept 9/09. Up 23%.) Sold at $31.70 for an 11.6% gain. Health care reform was aimed at health insurance companies and thinks the large insurers such as this are going to be tied to the medical loss ratio that governments are going to control.

(A Top Pick Feb 11/09. Up 15.5%.) Earnings have continued to come through but the cloud of US health care reform has hung over it. Trading around 10X this year's earnings and 9X next year's.

Tied to healthcare reform. Controversial – is an HMO. At the worst you will see a compromise because of healthcare reform. Market has priced in the worst.

Political environment for health insurers is going to be very clouded. Insurance companies are going to be the whipping boys for the reforms that are going to come. They are going to be tough.

One of the largest healthcare providers in the US, both through company-sponsored plans/individual plans, but more importantly through Medicare and Medicaid administration. Although enrolment growth has slowed, work they are doing on the Medicare and Medicaid side through the stimulus package will create more work for them. Trades at 10X earnings.

(A Top Pick Nov 9/07. Down 61%.) Sold his holdings in March at about $38. One of their major competitors stumbled and he was unsure if it was company specific or industry-specific.

Very dependent on having employers as their health care provider and started coming off when some problems came up.

Has come close to buying this a couple of times. He has a model priced at $40.89, a 25% positive differential. It comes close, but he has not bought it yet.

A Top Pick Oct 16/07. Up 21.6%.) Health maintenance organization. Doing very well and will be earning over $4 a share in 08. Well managed company. Good sector. Still a Buy.

You want to focus on companies that have very persistent earnings and are not economically sensitive. Healthcare fits in this category. Had very strong relative price strength against the market recently.

The leading managed care company in the US. They were a growth stock, but the valuation is now one of a value stock. Company is rebuilding its image and is also showing very strong earnings growth. Earnings should be $3.50 this year, $4 next year and $4.50 in 09. Has a 22% ROE. Cheap stock with a high growth rate.

Both a valuation and a growth story. On the growth side, 18% this year, 16% next year. Biggest risk is medical cost rising without the abilities to raise revenues. (unlikely).

His model price is $52.39, which is a 7% upside. You could find more value elsewhere.