Buffett’s Bold $1.6B Move Revives Fading Confidence in UnitedHealth

Berkshire Hathaway has acquired roughly five million shares of UnitedHealth Group in the second quarter, placing about $1.57–1.6 billion behind a company that has lost nearly half its value in the past year.

Image Credit: Mike Blake (Reuters)

That kind of investment by Warren Buffett (or his lieutenants, Todd Combs or Ted Weschler) signals more than financial backing. It offers a tacit endorsement of long-term prospects and the way Buffett do his perfect job.

UnitedHealth’s stock jumped between 11 percent and 14 percent on Friday, depending on market timing. Reuters reported nearly a 14 percent rise, while pre-market trading reflected around an 11 percent surge.

Analysts say this Buffett-fueled rally is one of UnitedHealth’s strongest single-day moves in a decade.

Still, underlying issues remain baked into the company’s valuation. Rising care costs, management turmoil, regulatory scrutiny, and criminal investigations into its Medicare Advantage billing have all weighed heavily. Previously, UnitedHealth was forced to withdraw its earnings outlook amid sharper-than-expected expenses.

It is still operating at about 15.8 to 16 times forward earnings, which is lower than its peers and its own five-year average.

A Morningstar analyst remarked that investor conviction in UnitedHealth hinges on management rebuilding credibility and returning to its past habit of consistent beats and raises.

James Harlow of Novare Capital emphasized, “management needs to regain trust and credibility with investors and get back to its beat-and-raise reputation”.

Other hedge funds joined the fray. Appaloosa Management, Lone Pine, Two Sigma, and David Tepper’s Appaloosa Management increased holdings alongside Berkshire, reinforcing the sense that a turnaround might be unfolding.

This move comes at a pivotal moment. Buffett is expected to retire as Berkshire’s CEO by the end of 2025.

His conspicuous investment signal could reflect a final strategic play, leveraging his reputation to back a distressed, yet potentially undervalued, health conglomerate.

Expect scrutiny on UnitedHealth to intensify: investors will watch legal developments, management execution, and cost controls closely. The stock’s performance in the coming quarters will determine whether this vote of confidence pays dividends or becomes a cautionary tale in value investing.