UnitedHealth: Burry, Buffett, Tepper Go Long As Halvorsen Exits

Core Insights - UnitedHealth Group Inc (UNH) has shifted from being a favored stock on Wall Street to facing significant challenges, yet notable investors have increased their stakes in the company during Q2 [1][3][4]. Investor Activity - Hedge funds, including Michael Burry's Scion Asset Management, David Tepper's Appaloosa LP, and Warren Buffett's Berkshire Hathaway, have significantly increased their investments in UNH, indicating a belief in its potential recovery [6]. - Scion Asset Management acquired 20,000 shares, making UNH nearly 19% of its holdings [6]. - Appaloosa LP raised its stake by 1,300% to 2.45 million shares, valued at approximately $764 million, making it the second-largest position for the firm [6]. - Berkshire Hathaway opened a position of 5.04 million shares, worth around $1.57 billion, which led to an 11% pre-market surge in UNH stock [6]. - Other firms like Renaissance Technologies and Naya Capital also increased their positions, while Viking Global completely exited its stake [6]. Stock Performance - UNH's stock has experienced a significant decline, down 53% over the past year, 46% year-to-date, and 6.9% in the last month [7]. - The company faces pressure from rising medical costs, reduced earnings guidance, and a 430 basis point increase in the medical cost ratio year-over-year [7]. - Additional challenges include investigations by the DOJ into Medicare Advantage billing practices and a cyberattack that has impacted operations [7]. Financial Metrics - Despite the challenges, UNH reported a 13% revenue growth, totaling approximately $112 billion [7]. - Earnings per share (EPS) have decreased from about $6.80 to roughly $4.70 due to cost pressures [7]. - Analysts maintain an 'Overweight' rating on UNH, with an average target price exceeding $408.75, suggesting over 50% upside potential from current levels [7]. Management Changes - The company has experienced leadership changes, including the exit of CEO Andrew Witty and the return of former CEO Stephen Hemsley, which has contributed to management instability [7].