Is UnitedHealth Group (UNH) Trading at an Attractive Valuation?

Cullen Capital Management, LLC, operating under the name Schafer Cullen Capital Management, Inc. (SCCM), has released its “SCCM Value Equity Strategy” third-quarter investor letter. A copy of the letter can be downloaded here. The US equity market continued the rally in the third quarter, with the S&P 500 returning 8.1% and the Russell 1000 Value surging 5.3%. The value equity strategy returned 6.9% (gross of fees) and 6.8% (net of fees) in the quarter, while the Russell 1000 Value and S&P 500 returned 5.3% and 8.1%, respectively, during the same period. The strategy returned 13.0% (gross), YTD, compared to the Russell 1000 Value’s +11.7% return and the S&P 500’s +14.8% return. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its third-quarter 2025 investor letter, SCCM Value Equity Strategy 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 -13.25%, and its shares lost 47.78% of their value over the last 52 weeks. On November 18, 2025, UnitedHealth Group Incorporated (NYSE:UNH) stock closed at $313.58 per share, with a market capitalization of $284.053 billion.

SCCM Value Equity Strategy stated the following regarding UnitedHealth Group Incorporated (NYSE:UNH) in its third quarter 2025 investor letter:

"UnitedHealth Group Incorporated (NYSE:UNH) was purchased in the Value strategy during the quarter. UNH is the largest diversified managed care organization in the United States, operating a leading health insurer (UnitedHealthcare) and a powerful healthcare services platform (Optum). Its vertically integrated model enables UnitedHealth to combine insurance, pharmacy benefit management, data analytics, and provider services, allowing it to better coordinate care, manage medical cost trends, and capture synergies across its businesses. This scale and diversification provide UnitedHealth with a durable cost-advantage and network-effects moat anchored in local scale, switching costs in Optum Rx, and Optum Insight’s leading position in data and technology solutions. Under former CEO Andrew Witty, the company pursued aggressive expansion into new lines of business without fully accounting for the associated risks and acquired numerous companies that were not successfully integrated. In addition, its ambitious membership growth strategy drove higher-than- expected utilization, leading to higher medical costs and a sharp decline in earnings. The company is undergoing a multi-year turnaround under new leadership, pairing cultural reform with operational discipline. Management, led by returning CEO Stephen Hemsley, has reset expectations by guiding to at least $16 in adjusted EPS for 2025, providing a new baseline from which earnings growth is expected to resume in 2026. Hemsley is widely regarded as a strong strategic leader and operator who has emphasized restoring the performance culture and discipline that characterized the company during his tenure. Strategic actions include repricing for higher medical trend, exiting plans serving over 600K Medicare Advantage members, narrowing networks, and taking a more conservative approach to ACA participation. Optum Health has reduced its 2025 new patient growth target by more than half to 300K to focus on mature markets and expects to deliver nearly $1 billion of cost reductions in 2026.

Longer-term, UnitedHealth has multiple levers for growth. Medicare Advantage penetration continues to expand, and we believe UnitedHealth is well positioned to benefit given its national scale and leading Stars performance, with management recently indicating about 78% of MA members are in 4+ star plans – a key driver of bonus payments. Optum Health’s value-based care margins are expected to remain near breakeven in 2026 as the final year of V28 phase-in is absorbed, then advance toward management’s 6–8% long-term target as newer cohorts mature. Optum Insight and Optum Rx provide additional recurring, fee-based revenue streams that diversify earnings and help dampen volatility. Management’s cost reduction initiatives, repricing actions, and benefit re-designs are expected to close the gap between cost trends and premium growth, restoring margin credibility and putting the company on track toward mid-to-high single digit earnings growth from 2026 onward…” (Click here to read the full text)

UnitedHealth Group Incorporated (NYSE:UNH) is in the 18th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 159 hedge fund portfolios held UnitedHealth Group Incorporated (NYSE:UNH) at the end of the second quarter, which was 139 in the previous quarter. In the third quarter of 2025, UnitedHealth Group Incorporated (NYSE:UNH) generated revenues exceeding $113 billion, representing a 12% year-over-year growth due to the expansion of domestic memberships. While we acknowledge the potential of UnitedHealth Group Incorporated (NYSE: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 Jim Cramer discussed. The London Company Income Equity Strategy initiated a position in UnitedHealth Group Incorporated (NYSE:UNH) during Q3 2025. In addition, please check out our hedge fund investor letters Q3 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.