Why Warren Buffett Is Betting Billions on UnitedHealth

Source Credit : Portfolio Prints

Finding Opportunity in the Chaos

Berkshire Hathaway quietly accumulated 5–5.04 million shares of UnitedHealth Group, valued between $1.57 billion and $1.6 billion, by the end of the second quarter of 2025. This reflects classic Buffett strategy: buying blue-chip companies at depressed prices when market sentiment is low.

UnitedHealth’s stock had lost nearly 40% to 53% over the past year, weighed down by rising medical costs, leadership turnover, a DOJ probe, cyberattack fallout, and even the fatal shooting of its former CEO.

Market Reaction and Investor Confidence

The announcement triggered what analysts are calling the “Buffett Bounce”:

• UnitedHealth shares jumped 8%–14%: as much as 12% in single-day gain (its best since 2020) and around 14% as reported by Reuters.


• The Dow briefly reached its first intraday record high of 2025, fueled in part by this rally.


• The move lifted confidence across healthcare stocks, including Centene, Elevance Health, and Molina.

Underlying Fundamentals and Long-Term Opportunity

Even amid short-term struggles, UnitedHealth maintains strong core fundamentals:

• A 2.91% dividend yield, and its P/E ratio is at approximately 90% of its five-year average, signaling potential undervaluation.


• Long-term potential in areas like Medicare Advantage, Optum, and healthcare efficiencies remain, though execution is currently under scrutiny due to higher utilization and cost pressures.


• Analysts advise a cautious outlook but believe profitability could rebound over the next 18 months, possibly yielding 50%–80% upside by 2028 if margins recover.

Buffett’s “vote of confidence” serves not just as a financial move but also as a psychological boost to the market. As Novare Capital’s James Harlow put it, management now needs to live up to that confidence and return to consistent "beat-and-raise" performance.

Portfolio Strategy and Broader Context

This isn’t Buffett’s only big move this quarter:

• Berkshire also invested in Nucor, DR Horton, and Lennar, and trimmed positions in Apple, Bank of America, and T-Mobile US. Net selling continued, as the firm has been a net stock seller for the 11th consecutive quarter, ending Q2 with over $344 billion in cash.


• As Buffett approaches retirement (expected end of 2025) and eventual leadership transition to Greg Abel in 2026, these moves hint at positioning Berkshire for resilience and value in the post-Buffett era.

Conclusion

Warren Buffett’s multi-billion-dollar investment in UnitedHealth is emblematic of his long-term, value-driven strategy—buying fundamentally strong enterprises at cyclical lows. Despite ongoing challenges, UnitedHealth’s dividend, business moat, and undervaluation made it an attractive entry point.

The market’s positive response highlights the enduring influence of Buffett’s brand—and sets the stage for a potentially strong rebound, provided UnitedHealth can navigate current headwinds and restore investor trust.