Recently, the 13F reports from institutional investors in the US stock market have been disclosed, and Buffett's company Berkshire Hathaway has notably bought the dip on UnitedHealth (#UNH), which has attracted a lot of attention. Stimulated by this news, UnitedHealth's stock price surged over 10% in pre-market trading today, recovering above $300. I decided to follow Buffett's moves tonight. 🧐

While looking at the 13F reports today, I noticed an interesting phenomenon—most market participants are avoiding it, but big names like Buffett, David Tepper, Renaissance Technologies, Michael Burry, and Saudi PIF are all buying the dip. Berkshire even re-entered the health insurance sector after 14 years, purchasing 5.04 million shares worth $1.57 billion in one go.

Why did I decide to follow their lead tonight? Because these old foxes are definitely not in it for a short-term rebound; they believe the company is being unfairly punished.

📊 First, let's look at the fundamentals of #UNH:

Scale: The largest health insurance company in the US, with a projected revenue of $400.3 billion and a net profit of $14.4 billion in 2024. This scale is basically "aircraft carrier" level in the US healthcare sector.

Profitability: Over the past 15 years, dividends have increased every year, and profits have been stable—this is a typical "defensive cash cow."

Valuation: The current stock price has returned to 2020 levels, with a price-to-earnings ratio of only 12 times—such leading companies typically have a conservative estimate of 20 times in a normal market environment.

Let me give you a straightforward example 🌰:

If you had invested $10,000 in #UNH at the end of 2003, even considering the recent sharp decline, today that investment would still be worth about $100,000, with dividends increasing throughout. If the performance before the decline had been better, the estimate would be $180,000. This long-term stable compounding ability is what institutional investors truly prefer.

📝 Why did #UNH plummet?

This recent drop is not due to a financial collapse but rather a sudden increase in market risk expectations:

1️⃣ Potential criminal investigation: The Department of Justice is investigating it. Although the company claims to be "confident," if this escalates, it could affect contracts and reputation.

2️⃣ Suspension of performance guidance: In July, the company directly canceled its annual performance outlook, blaming "surging medical demand leading to a sudden change in the environment," which increases uncertainty for investors.

3️⃣ Executive changes: CEO Andrew Witty suddenly resigned (for personal reasons), and the company brought back veteran Hemsley. Leadership changes are often a risk signal, especially during regulatory storms.

4️⃣ Policy pressure: The US government is cutting healthcare spending, and medical costs are rising, which is a double whammy for insurance companies.

5️⃣ Cybersecurity and public image: Cyberattacks and events like the CEO being shot are black swan incidents that, while not directly related to core finances, put significant pressure on the brand and public opinion.

My logic for buying the dip is quite simple: first, these big names have started buying, which gives me ample confidence. Additionally, the valuation is indeed cheap. Although there are many negatives—criminal investigations, suspended guidance, and policy uncertainties—these impacts on stock prices have already been substantially reflected, especially since the stock price has dropped from over $600.

Personally, I prefer value long-term investments. If you are like me and have a value investment horizon of over five years, such moments are often good opportunities to position yourself. The fundamentals of #UNH—the essential nature of health insurance, its leading position in the industry, and its large member base—have not changed. The trend of an aging US population continues, and long-term medical demand will only increase. Therefore, from a medium to long-term perspective, it is relatively high in certainty!

I feel that buying #UNH now is somewhat like buying Johnson & Johnson (#JNJ) in 2008—short-term troubles abound, and the market is not fond of it, but in the long run, it could be the sweetest fruit. Following the big names, we can use time and patience to wait for market sentiment to recover. 🧐

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