August 16, 2025

Berkshire Hathaway’s Major Investment in UnitedHealth

News Summary

Berkshire Hathaway, led by Warren Buffett, has acquired over 5 million shares of UnitedHealth Group worth $1.6 billion amidst a tumultuous year for the company. UnitedHealth’s stock saw a significant drop due to disappointing earnings and leadership changes. Buffett’s bold investment resulted in a 13% surge in stock value, signifying potential for recovery. Other institutional investors are similarly optimistic, reflecting renewed interest in UnitedHealth despite the company’s challenges. As the health insurance landscape shifts, all eyes are on the future of UnitedHealth and its investors.

Warren Buffett’s Berkshire Hathaway Takes Big Bet on UnitedHealth

Warren Buffett, the Oracle of Omaha, has made headlines once again! His investment company, Berkshire Hathaway, announced it has purchased over 5 million shares of UnitedHealth Group worth a whopping $1.6 billion. This move, revealed in a recent SEC filing, comes at a time when UnitedHealth has found itself in a bit of a pickle.

A Wild Ride for UnitedHealth’s Stock

2025 has been a challenging year for UnitedHealth, to say the least. The company’s stock price plunged about 40%, making it the worst performer in the prestigious Dow Jones Industrial Average. What caused this tumble? A combination of disappointing earnings reports, rising operational costs, a sudden CEO change, and even an investigation by the Department of Justice.

Buffett’s Vote of Confidence

Despite these hurdles, Buffett’s substantial investment sent UnitedHealth’s stock soaring by 13% on the day of the announcement. This surge reveals that even in tough times, there are investors out there willing to take a risk. And they aren’t alone! Other notable hedge funds like David Tepper’s Appaloosa Management and Lone Pine Capital also scooped up significant shares in UnitedHealth during the same quarter, signaling renewed interest in the company.

Other Institutional Investors Join the Fray

Even Marshfield Associates showed some love, adding around 1 million shares, which represents about 4% of their total assets. They’ve expressed confidence in UnitedHealth’s long-term potential, despite its current challenges.

Understanding the Numbers

To understand why some investors remain optimistic, let’s look at the numbers. UnitedHealth pulled in $400 billion in revenue and made a net profit of $15 billion in 2024. However, they faced a wave of negative headlines in the current year. For instance, their first-quarter earnings fell short of expectations, which led to a 22% drop in share price just this past April.

Shifting Leadership

In May, the company’s CEO, Andrew Witty, stepped down unexpectedly and was replaced by Stephen Hemsley, the chairman and former CEO. To top it all off, UnitedHealth also suspended its annual forecast. This uncertainty rattled investors, especially following revelations of a Department of Justice investigation into possible Medicare fraud.

Is It an Overreaction?

Many analysts think the drop in stock price might be an overreaction. Companies have faced similar challenges in the past without severe long-term repercussions. Positive news also surfaced when the Centers for Medicare & Medicaid Services announced a 5.1% increase in reimbursement rates for Medicare Advantage plans, which should help UnitedHealth and fellow insurers.

Trading at a Bargain Price

UnitedHealth’s stock is trading at a low price-earnings ratio of around 13, considerably lower than its competitors like Humana, Cigna, and CVS Health. This could indicate a potential buying opportunity for savvy investors. Buffett’s recent moves also included purchasing stakes in homebuilders like Lennar and D.R. Horton, as well as a steel manufacturer, Nucor.

Changes at Berkshire Hathaway

As the market watches closely, it’s worth noting that Buffett plans to pass the CEO baton to Greg Abel at the end of the year while remaining as chairman. This change comes at a pivotal time for Berkshire Hathaway as it continues to navigate through the ever-changing financial landscape.

Renewed Interest in UnitedHealth

With recent stock purchases from other significant institutional investors, such as Michael Burry, it’s clear that there’s a growing appetite for UnitedHealth shares. At its current price, which is near its lowest in over a decade, trading just under 12 times earnings, it might be a goldmine waiting to be discovered.

The investment community is buzzing with excitement and curiosity as all eyes are on how this plays out in the coming months for UnitedHealth and its shareholders. Will Buffett’s risky bet pay off? Only time will tell!