Warren Buffett’s Berkshire Hathaway just dropped a big hint. The firm had purchased nearly $1.6 billion shares of UnitedHealth Group stock as of June 30. This strategic maneuver bolsters what’s already an impressive portfolio for Berkshire. It positions UnitedHealth as the 18th largest share within their portfolio. The acquisition consists of more than 5 million shares. This latest move demonstrates Buffett’s realization that while he has famously decried the state of the U.S. healthcare sector, it remains an arena ripe for disruption.
For one, Buffett is signaling that he’s ready to retire—as planned—at the end of this year. This announcement comes as the giant conglomerate is undergoing perhaps its greatest transition. He’ll hand the leadership baton over to Greg Abel, who has been groomed for the job for several years. Buffett will continue to be very active as chairman of the board. Even as he nears his 95th birthday later this month, he remains an active agent in determining the company’s direction.
In the past, Buffett has not been reticent about expressing criticism about the U.S. healthcare system. Even more recently he has referred to it as a “tapeworm” for the economy. This is no accident and reflects his deep concern, perhaps even disdain, for our skyrocketing healthcare costs. Nonetheless, these concerns aside, his majority investment in UnitedHealth would indicate that he has a high conviction view on the long term stability and growth potential of the company.
In what could be considered a strong vote of confidence on news of this announcement, UnitedHealth’s stock jumped 6% in after-hours trading. This uptick reflects market confidence in Berkshire Hathaway’s endorsement, which is significant given that Buffett’s investment decisions often sway investor sentiment.
Berkshire Hathaway’s total equity portfolio is worth over $300 billion, highlighting the company’s massive presence in a number of industries. The firm, Majority Action, has invested in UnitedHealth. It confirmed its re-entry in the homebuilding space by taking stakes in Lennar and DR Horton, further diversifying its broad portfolio.
Buffett’s two investing lieutenants, Todd Combs and Ted Weschler, play crucial roles in managing these investments and are expected to continue shaping Berkshire Hathaway’s future strategies.
In 2018, Buffett joined with other well-known business leaders such as Jeff Bezos and Jamie Dimon. Together, they formed the collaboration known as Haven, dedicated to improving health care. The initiative was eventually repealed, highlighting the paradoxical and turbulent currents swirling around our nation’s healthcare seas.