Buffett's Mystery Buy Revealed, and It's a Big Bet on UNH

The long-running mystery around Warren Buffett’s latest stealth investment is finally over. In Berkshire Hathaway’s (NYSE: BRK.B) newest 13F filing, the Oracle of Omaha revealed a fresh stake in UnitedHealth Group Incorporated (NYSE: UNH). Berkshire ended Q2 holding five million shares, valued at about $1.6 billion, a position it likely began building quietly in the prior quarter after requesting permission from regulators to accumulate shares without triggering a rush of buying.

The news sent UnitedHealth shares soaring more than 10% in after-hours trading on Thursday. While the choice might seem unexpected given the company’s battered reputation in 2025, it fits perfectly into Buffett’s playbook.

Specifically, the playbook of finding quality businesses that have been beaten down and scooping them up at bargain prices.

A Contrarian Play in Troubled Waters

UnitedHealth has been anything but a market darling this year. Shares were already down nearly 50% for 2025 before the filing was made public. The nation’s largest private health insurer has faced a storm of negative headlines, becoming a symbol of public frustration over rising healthcare costs.

In addition, the Justice Department is investigating Medicare billing practices, which has weighed heavily on the stock.

The troubles didn’t stop there. UnitedHealth pulled its annual earnings outlook in May, and CEO Andrew Witty stepped down shortly after. A new 2025 outlook released last month fell well short of Wall Street expectations, sending the stock tumbling even further. In other words, Buffett didn’t step into calm waters; he walked straight into a storm.

But that’s the thing about Buffett’s investing style. He often buys when sentiment is at its worst, knowing that quality businesses tend to survive turmoil and eventually recover.

For UnitedHealth, a company valued at roughly $250 billion and still holding its crown as America’s largest health insurer, the case may be that the market has overshot on pessimism.

Buffett Isn’t Alone

While Berkshire’s purchase is the headline grabber, other big names have also been quietly building positions. Michael Burry disclosed over $100 million in UNH call options, representing more than 18% of his portfolio. David Tepper picked up 2.27 million shares, while Renaissance Technologies added 1.35 million shares.

When heavyweight super investors converge on a name like this, sentiment can shift fast.

UnitedHealth still carries a Moderate Buy consensus rating from Wall Street analysts, but that could tilt more bullish now that Buffett’s name is attached. The average price target sits at $366.52, almost 30% above Thursday’s close.

That kind of upside potential, coupled with the backing of some of the market’s most respected investors, could be enough to flip the narrative from damaged stock to recovery story.

Dividend Strength and a Discounted Valuation

Despite its operational setbacks, UnitedHealth hasn’t wavered on rewarding shareholders. The company currently yields 3.25% and has an impressive 15-year record of dividend growth. With a payout ratio of just over 38%, those dividends look well-protected, a sign of both financial discipline and long-term commitment to shareholders.

Institutional investors haven’t abandoned ship. In fact, over the past 12 months, net inflows from institutions totaled $62.5 billion, compared to $43.34 billion in outflows. And that was before the most recent batch of 13F filings. Those figures will likely swell further now that Berkshire’s move is public knowledge.

Perhaps most telling is the valuation. After this year’s steep sell-off, UnitedHealth trades at just 11.5 times projected 2027 earnings, well below its historical averages. For long-term investors, the market may be pricing in a worst-case scenario that is unlikely to materialize fully.

Why Buffett’s Bet Matters

Buffett’s entry isn’t just a headline. It’s a potential turning point in how the market views UnitedHealth. His track record of identifying value in the middle of market overreactions is well-documented, and his willingness to commit $1.6 billion here speaks volumes. While UnitedHealth’s challenges are real, so is its scale, market share, and ability to adapt.

If history is any guide, Buffett’s move could mark the moment sentiment begins to shift, not just for UnitedHealth, but for the broader perception of investing in large-cap healthcare amid uncertainty.

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