UnitedHealth Group Inc. (NYSE: UNH) has been a troubled stock for almost all of 2025. After its CEO was murdered in cold blood, guidance cuts, a Medicare billing scandal and management changes have all weighed on the stock, eating away at more than half of its market capitalization. But there may be hope now that Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-B) has revealed the conglomerate purchased 5 million shares worth about $1.6 billion during the second quarter of 2025.
Did Warren Buffett just make UnitedHealth the top strategic investment of all Dow stocks?
It turns out that Buffett wasn’t the only whale buying UnitedHealth shares in Q2-2025. Appaloosa Management’s David Tepper and “The Big Short” investor Michael Burry also took sizable stakes in the troubled health insurance giant.
Oggonomics is reviewing the good, bad and indifferent aspects of Berkshire Hathaway’s new UnitedHealth stake. There are some things to consider above and beyond what Wall Street analysts are telling their clients. Oggonomics does not maintain any formal rating nor any formal price targets on Berkshire Hathaway, UnitedHealth and other companies referenced in this report.
WALL STREET IMPLICATIONS
One firm has even declared a strategic play at work. Deutsche Bank analyst George Hill called out the Buffet stake as “a big vote of confidence” and even suggested that the stake “likely could provide a near-term trading floor.” While reports have not been seen elsewhere in the wake of Buffett’s UNH stake, several firms with Buy and Outperform ratings may now be forced to decide whether or not to raise price targets from July and August:
- Mizuho ($300)
- Truist ($310)
- Oppenheimer ($325)
Morningstar also spoke favorably about a “vote of confidence” and “at a time of significant uncertainty” for UNH and its industry:
While Berkshire’s vote of confidence does not change our $400 fair value estimate or any of our ratings on narrow-moat UnitedHealth, we appreciate that one of the most admired investment firms also sees value in its shares, despite ongoing challenges.
NOW THINK INDEPENDENTLY…
On an independent thinking process, investors do need to at least consider what Buffett’s big stake may imply. Buffett tries to avoid companies mired in big scandals and with businesses that are going to take years to turn around. Buffett also likes companies with predictable cash flows and long-term opportunities. And he loves when he feels a business is valued less than its intrinsic value.
Another situation to consider in the eyes of Warren Buffett is that UnitedHealth might be considered more of a financial company rather than a healthcare company. UnitedHealth is just the financial interface, gate-keeper, and decision-maker on what expenses should cost and what to pay. The company doesn’t actually perform surgeries, nor does it make medicine and health improvement technologies.
Buffett knows a thing or two about financial companies. After all, his conglomerate is the largest component within the key Financial Select Sector SPDR Fund (XLF) that tracks banks and financials — with even a larger weighting than JPMorgan!
VALUATIONS
UnitedHealth’s earnings came to $27.66 per share in 2024, and the current consensus estimates are $16.23 EPS in 2025 and recovering to $19.17 EPS in 2026. Even after a 10% jump in shares, that values UnitedHealth at 15-times to 18-times forward earnings estimates.
Now go back to 2024 and infer that to “hopeful” earnings for 2027 or out in 2028 — then Buffett thinks he is paying only 10-times future earnings.
Due to such a big drop in the stock, UnitedHealth’s dividend is now more than 3.2%. Marry that dividend with years of future earnings recovery and Buffett may feel like he is getting a crown jewel.
STILL, BUFFETT COULD BE WRONG
It is always possible that Warren Buffett and his team of portfolio managers are wrong in their big bet. UnitedHealth is a hard company to replace in the financial/health world, but it does have strong competition.
Other insurers have been using UNH’s woes to lure new business. Third party providers and insurance brokers can confirm that UNH has had a more difficult time this year than any prior years in recent memory.
UnitedHealth could have even more scandals brewing. The media loves finding scandals, and investigative reporters are likely still looking for any new scandals that can be magnified into big news that would hurt its reputation — just think about Don Henley’s “Dirty Laundry” song for a minute.
WAS IT REALLY ENOUGH?
The SEC filings that show “whale watching” buys and sells were from the period of April 1 to June 30. UnitedHealth’s stock price was $600 at the start of the second quarter, sliding down to $234 at the start of August. The market does not know when Buffett and his team actually bought this stake. It also doesn’t know if they have purchased more shares since then.
Buffett would have had to spend close to $25 billion to buy a 10% stake that then sets of limits of ownership restrictions.
Some investors may feel like this $1.6 billion stake is a very weak stake considering the opportunity. After all, Berkshire Hathaway did sell another $4 billion worth of Apple and Berkshire Hathaway could have easily bought much more stock without it even making a dent in the massive $344 billion cash reserves the company has.
IN THE END…
Whether or not UnitedHealth has formally bottomed or not isn’t the exercise that investors need to be considering. How many investors are perfect at always picking exact bottoms and exact tops?
Investors need to be considering whether this means that 80% of the problems are over and whether losing more than half of the market capitalization (a loss of about $300 billion at the worst) is good enough to find “alpha” in this strategic investors review.
The initial jump on Buffett’s stake was over 11% to $301.71 on Friday’s opening bell. Now consider that its 52-week trading range is $234.60 to $630.73.
If Buffett is wrong, the beloved floor that strategic investors try to find might not be too much lower. But if Buffett was right, then maybe this stock is really worth a lot more looking out into 2026 and beyond. The real judge of Buffett’s success or failure will be known in time.
