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Berkshire Hathaway’s latest SEC filing revealed that the company has taken a $1.6 billion stake in UnitedHealth Group.
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Berkshire added a few others while reducing stakes in both Apple and Bank of America.
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UnitedHealth has faced several challenges this year, including the revelation of multiple DOJ investigations and the resignation of its CEO.
Shares of UnitedHealth Group (NYSE: UNH) are jumping on Friday, up 13.8% as of 2:14 p.m. ET. The spike comes as the S&P 500 (SNPINDEX: ^GSPC) declined 0.1% and the Nasdaq Composite (NASDAQINDEX: ^IXIC) fell 0.3%.
The troubled health insurance giant is finally seeing its stock rebound after months of trouble, thanks to the purchase of 5 million shares by Warren Buffett’s Berkshire Hathaway.
Berkshire Hathaway’s latest regulatory filing revealed that the company took a considerable stake in UnitedHealth. The 5 million-share, $1.6 billion stake makes the massive health insurer the 18th-biggest position in Berkshire’s portfolio. Buffett’s company also trimmed its positions in Apple and Bank of America.
The move took Wall Street by surprise, given the many issues UnitedHealth faces, and the revelation sent shares soaring immediately.
The company’s most recent quarterly report revealed a darkening financial picture, including a significant miss on earnings per share, as costs from medical care continue to balloon. The company was also forced to suspend guidance as it tries to adapt to the shifting market.
Its financial woes are far from the company’s only issues, having recently suffered the sudden departure of its CEO for “personal reasons.” The departure comes as the company faces two Department of Justice (DOJ) probes — one criminal and one civil — into its Medicare billing practices.
It’s hard to disagree with the Oracle of Omaha, but there are just too many issues facing UnitedHealth at the moment and with no clear picture of an imminent turnaround. I would stay away from the stock.
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