Here's Why UnitedHealth Group Incorporated (UNH) Detracted in Q2

L1 Capital, an investment management firm, released its “L1 Capital International Fund” (unhedged) second quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund returned 4.5% (net of fees) in the June quarter compared to the MSCI World Net Total Return Index’s (in AUD) 6.0% return. The Fund returned 22.1% (net of fees) for the year ended June 30, 2025, compared to 18.5% for the benchmark. During the quarter, the Information Technology and Communication Services sectors outperformed others, driven by the Magnificent 7. Please check the fund’s top five holdings to know its best picks in 2025.

In its second quarter 2025 investor letter, L1 Capital International Fund highlighted stocks such as UnitedHealth Group Incorporated (NYSE:UNH). UnitedHealth Group Incorporated (NYSE:UNH) is a diversified healthcare company that operates through UnitedHealthcare, Optum Health, Optum Insight, and Optum Rx segments. The one-month return of UnitedHealth Group Incorporated (NYSE:UNH) was -4.79%, and its shares lost 48.98% of their value over the last 52 weeks. On July 16, 2025, UnitedHealth Group Incorporated (NYSE:UNH) stock closed at $292.49 per share, with a market capitalization of $265.329 billion.

L1 Capital International Fund stated the following regarding UnitedHealth Group Incorporated (NYSE:UNH) in its second quarter 2025 investor letter:

"On the negative side, 3 companies, Eagle Materials, Marsh & McLennan and UnitedHealth Group Incorporated (NYSE:UNH) (in alphabetical order) each detracted more than 0.5% from the Fund’s returns for the quarter.

UnitedHealth announced a material downgrade to 2025 profit expectations in conjunction with its first quarter results and followed up a few weeks later with a further profit downgrade and the “resignation” of then CEO, Andrew Witty. We are extremely disappointed with the performance and management of UnitedHealth, and our own assessment of the business. It is hard to do justice to UnitedHealth or the issues impacting the business in a few sentences. UnitedHealth is by far the largest and most diversified healthcare business in the world providing both health insurance and an extensive array of health services.

Prior to the first profit downgrade, UnitedHealth had a market capitalisation of around $550 billion, and even today it is around $280 billion. To give a sense for scale, today’s market capitalisation is more than 30 times that of Medibank Private…” (Click here to read the full text)

UnitedHealth Group Incorporated (NYSE:UNH) is in 18th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 139 hedge fund portfolios held UnitedHealth Group Incorporated (NYSE:UNH) at the end of the first quarter, which was 150 in the previous quarter. While we acknowledge the potential of UNH as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered UnitedHealth Group Incorporated (NYSE:UNH) and shared the list of stocks on Jim Cramer’s radar. ClearBridge Large Cap Growth Strategy trimmed its holdings in UnitedHealth Group Incorporated (NYSE:UNH) in Q2 2025. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.