UnitedHealth is unpopular, but its stock suddenly isn't
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UnitedHealth Group's public reputation is still reeling, yet its battered stock has been something that more and more investors can't seem to resist.
Why it matters: Recent interest in its stock, from everyday investors to Wall Street's titans, shows that investors have no issues looking past public sentiment when they see a path to share recovery.
Catch up quick: Ever since the December killing of its top insurance executive, Brian Thompson, UnitedHealth has borne the brunt of a wave of social media outrage over insurers' roles in coverage denials and rising costs — criticism UnitedHealth has insisted is misguided.
- Still, executives acknowledged in April that the company had an image problem, and needed to communicate better with their customers about its coverage decisions and processes.
- In May, it pulled its full-year earnings outlook and made a change at CEO.
- In July, it confirmed an earlier report that the DOJ was looking into its Medicare billing practices, and warned that escalating medical costs would continue to drag down earnings.
The impact: Its stock has taken a beating — it's fallen 55% since the public backlash in December.
The latest: That slide has drawn the attention of some pretty big investors, most notable among them, Warren Buffett's Berkshire Hathaway — which on Thursday disclosed having bought more than 5 million shares in the company as of the end of the June.
- Berkshire wasn't alone. David Tepper's hedge fund Appaloosa Management and Michael Burry's Scion Asset Management (made famous in "The Big Short") also disclosed having bought positions.
- That sent UnitedHealth's shares up 12% Friday.
Regular investors have been buying in, too. Interactive Brokers listed UnitedHealth as the second largest net buying position on its platform in the first week of August.
- Charles Schwab listed it as one of the five most popular names among its retail clients in July, among Nvidia, Tesla, Palantir and Amazon.
The bottom line: UnitedHealth is still working to repair its image, but investors seem to have a better outlook for its valuation.
