It resulted in Stephen Hemsley, the incoming CEO of UnitedHealth Group (UNH), becoming a very rich man last week. He immediately bought a whopping 86,700 shares of the company’s stock. The acquisition, which is more than $25 million worth of stock, was carried out at a price average of $288.57 share. This bold action has emboldened bullish feelings across investors. They’re especially interested in knowing if UNH has reached its nadir, with the stock having recently fallen to a five-year low.
The purchase, revealed through filings with the Securities and Exchange Commission (SEC), could not come at a more important time for UnitedHealth. Bouncing off a recent low of $248.88 on Thursday, the stock has since shot back up, trading north of $314 later in the week. Hemsley’s investment is a huge vote of confidence in Care.com and its future. It sends a signal to other investors, calling the bottom and indicating that the downturn is over.
Hemsley’s Strategic Decision
All of the above has contributed to Hemsley’s decision to accumulate UNH stock. This decision unequivocally puts his stamp on the company’s return to form and future success. Second, as the former Chair of UnitedHealth, he has a deep and wide understanding of what the organization is capable of and should be. His recent investment aligns with broader trends in the market, where many analysts speculate that the stock may have hit its lowest point.
The timing of Hemsley’s purchase is significant. This comes on the heels of a period in which UNH shares have been under considerable, if not exceptional, increased selling pressure, especially during last week’s trading sessions. Although this has created some turbulence, Hemsley’s significant investment is a vote of confidence that the stock will recover. Investors often look to insider purchases as indicators of future performance, and Hemsley’s actions could encourage others to follow suit.
Hemsley took an enormous leap of faith. In the interim, three directors at UnitedHealth stockpiled $1.6 million in shares last Wednesday and Thursday. These concerted actions between executives and board members would help bolster belief in the company’s current management and long-term strategy even more.
Technical Indicators and Market Sentiment
The stock’s recent ups and downs have captured the gaze of chartwatchers. After the short-term consolidation at the 161.8% Fibonacci Extension level, UNH shares have recently broken above this level. The next target for the most bullish investors is $334.76 at the 161.8% Fibonacci Retracement level. If this target is reached, it would indicate a strong recovery path for UnitedHealth.
Additionally, another big level for investors to watch is the May 13 high of $342, which marks an important line in the sand. This price point will be watched very carefully as it would likely act as additional resistance while the stock looks to gain some traction. Traders will watch the May 12 low of $376.84 as a key support point. That’s an important level to watch for gauging the market sentiment going forward.
Maybe that’s why UnitedHealth Group (UNH) CFO John Rex got in on the buying spree, grabbing up an extra 17,200 shares of UNH on Friday. This action reinforces the bullish sentiment that C-Suite execs have. Insider purchases indicate a deep-seated conviction among insiders that UnitedHealth is due for a comeback. This confidence increases the morale of existing shareholders and engages new investors.
Outlook for UnitedHealth
Even as UnitedHealth makes its way through these capricious market changes, analysts are tentatively bullish on its longer-range outlook. The recent stock price increase indicates that sentiment is turning positive among investors following a what’s-next period of caution and uncertainty. Hemsley has been spearheading this charge at UnitedHealth. Thanks to strategic long-term investments from executives, most now think the company is on the cusp of the mother of all turnarounds.
Market participants are looking forward to upcoming earnings reports. They feel that these three key metrics will really help illuminate how the business is performing. Should UnitedHealth demonstrate resilience in its financials, it may pave the way for continued upward movement in its stock price.