What Happened?
Shares of health insurance company UnitedHealth (NYSE: UNH) fell 3% in the afternoon session after investors took some profits off the table as markets awaited signals on future monetary policy from the Federal Reserve's Jackson Hole symposium later in the week. The downturn in the market was largely attributed to a significant sell-off in megacap tech and chipmaker shares. Nvidia, Advanced Micro Devices (AMD), and Broadcom all saw notable drops, dragging down the VanEck Semiconductor ETF. Other major tech-related companies like Tesla, Meta Platforms, and Netflix were also under pressure. A key reason for this trend is that much of the recent market gains have been concentrated in the "AI trade," which includes these large technology and semiconductor companies. So this could also mean that some investors are locking in some gains ahead of more definitive feedback from the Fed.
The shares closed the day at $304.16, down 1.4% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy UnitedHealth? Access our full analysis report here, it’s free.
What Is The Market Telling Us
UnitedHealth’s shares are quite volatile and have had 19 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 4 days ago when the stock gained 11.6% on the news that the company disclosed that Warren Buffett's Berkshire Hathaway had acquired a significant new stake, with news that regulators had also approved a major merger. According to regulatory filings, Berkshire Hathaway accumulated a position of approximately 5 million shares valued at around $1.6 billion. The investment is seen as a major vote of confidence in the health insurer, whose stock had fallen significantly year-to-date amid various challenges. Adding to the positive news, regulators also cleared UnitedHealth's proposed $3.3 billion merger with Amedisys Inc., further bolstering investor optimism. Filings also revealed that other top investors, such as Michael Burry, had initiated new stakes in the company.
UnitedHealth is down 39.8% since the beginning of the year, and at $303.75 per share, it is trading 51.4% below its 52-week high of $625.25 from November 2024. Investors who bought $1,000 worth of UnitedHealth’s shares 5 years ago would now be looking at an investment worth $963.06.
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