To The Moon

$UnitedHealth(UNH)$ Warren Buffett’s Berkshire Hathaway dropped a bombshell with its Q2 2025 13F filing today, August 15, 2025, unveiling a bold new stake in UnitedHealth Group (UNH). The investment giant snapped up 5.039 million shares of the U.S. health insurance titan for approximately $1.6 billion, with an average purchase price of $314 per share. By quarter’s end, the position was valued at $1.57 billion, securing its spot as the 18th largest holding in Berkshire’s $300 billion portfolio, trailing Amazon and Constellation Brands (STZ). With the S&P 500 at 6,466.58, Nasdaq at 21,713.14, and Bitcoin surging to $124,002, the market pulses with optimism, though tariffs (30% on EU/Mexico, 35% on Canada) and oil at $75/barrel cast shadows. Is this Buffett’s signal to buy UNH at $300, or a risky move in a troubled sector? This deep dive explores the bet, market reactions, and strategies to navigate this high-stakes opportunity.

The Buffett Bet: Why UnitedHealth?

Buffett’s move into UnitedHealth signals a strategic pivot:

• Scale of Investment: The $1.6 billion purchase, executed at $314 per share, reflects confidence in a company with a $216 billion market cap, despite a 46% YTD drop to $250.74 as of August 8, 2025.

• Historical Context: After exiting UnitedHealth in 2010 with 1.18 million shares, Buffett’s return suggests a reevaluation, possibly driven by deputies Todd Combs or Ted Weschler, given his 95th birthday this month and impending CEO transition to Greg Abel.

• Company Challenges: UnitedHealth grapples with soaring medical costs, a Justice Department probe into Medicare billing, a cyberattack, and the exit of CEO Andrew Witty, yet its $410 billion revenue and $22 billion profit over 12 months hint at resilience.

• Portfolio Fit: Ranking 18th behind Amazon ($3.8 billion stake) and STZ ($1.58 billion), this 0.52% portfolio allocation underscores a calculated entry into healthcare, a sector Buffett once dubbed a “tapeworm” on the economy.

The move defies UnitedHealth’s recent 22% stock plunge from $585.04 to $454.11 in April 2025, suggesting Buffett sees value where others see risk.

Market Reaction: A Mixed Bag

The filing sparked immediate ripples:

• Stock Surge: UNH jumped 7% in after-hours trading to $268, with support at $250 and resistance at $280, reflecting investor enthusiasm for Buffett’s backing.

• Sector Impact: Health insurers like CVS Health rose 2.5% to $58.20, while peers Humana and Cigna gained 1.8% and 1.5% to $345.60 and $320.10, respectively, signaling a sector lift.

• Broader Market: The S&P 500’s 6,466.58 and Nasdaq’s 21,713.14 held steady, with a 4.05-to-1 advancer-decliner ratio, though tariff fears could cap gains.

• Sentiment Shift: Posts found on X show a split—some hail it as a “Buffett bargain,” others question the timing amid UnitedHealth’s woes, hinting at polarized views.

The VIX at 14.49 suggests controlled volatility, but a potential 5-10% market dip to 6,150-6,200 could test this rally if trade tensions flare.

Is $300 a Buy? The Pros and Cons

Buffett’s $314 entry price offers a benchmark:

• Bull Case: At $250.74, UNH trades 20% below Buffett’s cost, with a 13x trailing earnings ratio and 3.58% dividend yield, appealing to value investors. Analysts see a $420-$470 target by 2026, per recent posts, if Medicare Advantage stabilizes.

• Bear Case: A 46% YTD drop reflects real issues—$5 billion in extra costs, regulatory scrutiny, and a lowered 2025 profit forecast. A further 10-15% slide to $210-$225 is possible if probes intensify.

• Technical View: RSI at 38 nears oversold (below 30), with support at $240-$245 and resistance at $280-$300. A break above $300 could target $320-$340, but a drop below $240 risks $200.

• Buffett’s Lens: His 2018 healthcare venture with Bezos and Dimon, though shuttered, shows interest in reform. This stake might bet on UnitedHealth’s dominant 29% Medicare Advantage share and $84 trillion in U.S. senior wealth.

Buying at $300 could yield 20-30% upside if fundamentals improve, but a dip to $240 might offer a safer entry.

Trading Strategies: Ride or Hedge Buffett’s Play

Short-Term Plays

• Buy on Dip: Enter at $260-$270, target $300-$310, stop at $250. A 15-19% gain if Buffett’s bet boosts sentiment.

• Scalp Rally: Buy at $268-$270, sell at $280-$285, stop at $260. A 4-6% gain on momentum.

• Options Play: Sell $280 calls (August expiry) for 100-150% premium decay, or buy $260 puts as a hedge.

• Breakout Target: Buy at $280-$290, target $320, stop at $270. A 10-14% upside if resistance breaks.

Long-Term Investments

• Hold UNH: Buy at $260-$270, target $350-$400 by 2026, for 30-53% upside if healthcare stabilizes. Stop at $240.

• Diversify with CVS: Buy at $58-$60, target $70-$75, for 17-25% upside with pharmacy synergy. Stop at $55.

• Tech Play: Buy Amazon (AMZN) at $185-$190, target $220-$240, for 16-26% upside with portfolio tie-in. Stop at $180.

• Defensive Pick: Buy Coca-Cola (KO) at $68-$70, target $75-$80, for 10-14% upside with stability. Stop at $65.

Hedge Strategies

• VIXY ETF: Buy at $14, target $17, stop at $12, to hedge volatility or tariff risks.

• SPY Puts: Use puts at $646 for a 5-10% market drop if sentiment sours.

• Gold (GLD): Buy at $200, target $220, stop at $190, as a safe-haven play.

My Trading Plan: Following Buffett’s Lead

I’m intrigued by Buffett’s UNH bet and see value in the dip. I’ll buy at $260-$270, targeting $300-$310, with a $250 stop, banking on a sentiment-driven rebound. I’ll add $CVS Health(CVS)$ at $58-$60, aiming for $65, with a $55 stop, and $Amazon.com(AMZN)$ at $185-$190, targeting $200, with a $180 stop. For stability, I’ll pick KO at $68-$70, targeting $73, with a $65 stop. I’m hedging with $ProShares VIX Short-Term Futures ETF(VIXY)$ at $14, targeting $16, and holding 20% cash for a tariff-driven pullback or regulatory news. I’ll monitor Medicare Advantage trends and insider moves.

Key Metrics

The Bigger Picture

Buffett’s $1.6 billion plunge into UnitedHealth at $314, revealed today, lifts UNH 7% to $268 amid a 46% YTD drop, with the S&P 500 at 6,466.58 and Bitcoin at $124,002 fueling optimism. Yet, regulatory probes and a potential 10-15% dip to $210-$225 threaten stability. At $268, it’s 15% below Buffett’s entry, offering a buy at $300 for 20-30% upside if Medicare Advantage recovers. Investors should buy dips, hedge with VIXY or GLD, and watch tariff and DOJ developments. This could be your Buffett-inspired edge—move decisively.

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📝 Disclaimer: This post is for informational purposes only and does not constitute financial advice. Always conduct your own research before making investment decisions.

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