The rumors were right about UnitedHealth Group stock
- Rumor that Berkshire would buy UNH proved true.
- Berkshire Hathaway purchased 5.04 million shares in Q2.
- UNH stock surges 10% on the news after 13F filing.
- Support for UNH should readjust back to $300.
After plunging to a five-year low on August 1 at $234.60, the rumor began to circulate that UnitedHealth Group (UNH), the largest private health insurer in the US, might be saved by Warren Buffet's Berkshire Hathaway (BRK-A, BRK-B). While the Oracle of Omaha has opted to retire from his behemoth holding company at the end of the year, it appears he had one large trade still in him.
Berkshire's 13F filing late Thursday shows that it purchased 5.04 million shares of UNH in the second quarter that ended on June 30. The new $1.57 billion position has deteriorated since then, with shares dropping well below its average purchase price of $311.97, but Berkshire has a long history of adding to its positions. Investors will now think that the share price is backstopped by Berkshire's large buying ability.
UNH shares jumped 10.5% in the first few minutes of trading, returning to $300 a share for the first time since July 15.
The Dow Jones Industrial Average (DJIA) has gained 0.5% despite the NASDAQ shedding weight moderately. The market is a bit tepid on Friday after President Donald Trump downplayed Friday's meeting with Russian President Vladimir Putin and US Retail Sales in July arrived in line at 0.5% MoM. Trump is also threatening to institute new tariffs on semiconductor imports.
UnitedHealth Group stock news
UnitedHealth Group is a dividend growth stalwart much in line with Berkshire's history of interest in insurance investments. Investors are not being foolhardy in the hope that Berkshire continues buying while UNH trades at 50% off its all-time high of $630.
Alongside UNH, Berkshire started new positions during Q2 in steelmaker Nucor (NUE) and homebuilder DR Horton (DHI). But neither reached the billion-dollar level of UNH. In order to fund the purchases, Berkshire continued selling shares of Apple (AAPL) and Bank of America (BAC).
While the Justice Department continues to investigate UnitedHealth for alleged Medicare fraud and the insurer deals with higher-than-expected medical cost ratios, the share price will remain subdued overall. But Berkshire's purchase alongside many other hedge funds in Q2 makes the stock look attractive to many bargain hunters.
To make up for those higher medical usage and cost ratios, insurers are asking for an average 15% rise in Affordable Care Act (ACA) exchange plans for 2026, and some insurers have filed for premium hikes of as much as 37%. While these hikes may not be approved, most expect UnitedHealth's business to be on much firmer ground in 2026.
UnitedHealth Group stock forecast
While they wait for the health insurance industry to right the ship, investors can expect UNH to start utilizing the $300 psychological level as a recovered support level. This is where the share price largely held up since UnitedHealth's former CEO, Andrew Witty, resigned in May amid the worrisome cost increase.
Now trading above the 50-day Simple Moving Average (SMA) for the first time since April 16, bulls will target resistance at $342.00 and eventually aim to fill the gap up to $376.84. The worst of the sell-off will be over only when UNH recovers the $438.50 former support level.
UNH daily stock chart
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Author
Clay Webster
FXStreet
Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.
