Berkshire Hathaway’s Recent Moves in Healthcare
Warren Buffett seems to have healthcare on his radar as he nears retirement. Berkshire Hathaway recently acquired over 5 million shares of health insurance company UnitedHealth, worth about $1.6 billion, by the end of June. This acquisition was disclosed in a quarterly portfolio update on Thursday, often referred to as the “13th floor.”
It’s uncertain whether Buffett himself or his investment managers, Todd Combs and Ted Weschler, made the decision to invest in UnitedHealth. Still, it stands out as one of his last significant moves while leading Berkshire. Notably, the “Oracle of Omaha” is set to retire at the end of this year.
Following the announcement, UnitedHealth’s shares are reported to have surged by over 10% in after-hours trading. This kind of reaction isn’t unusual, as investors often look to Buffett’s choices for guidance and inspiration.
UnitedHealth has been facing challenges recently, particularly after the tragic death of CEO Brian Thompson. The stock price, which was around $600 in mid-April, had dropped to about $310 by the end of June. Buffett, known for his value-investing strategy, may have seen this as an opportunity, possibly recognizing it as undervalued.
In addition to this healthcare investment, Berkshire Hathaway cut its stake in Apple by 7%, now holding 280 million shares, which is a significant decrease from its earlier position valued at $174 billion at the start of 2024.
Berkshire has also disclosed other holdings such as Homebuilders Drs. Houghton and Lenard, as well as stock in steel producers, following regulatory approvals for these investments in earlier portfolio submissions.
Furthermore, Berkshire revealed newer positions in companies like Allegion and increased investments in Chevron, Constellation Brands, and Domino’s Pizza. Notably, Buffett also divested from T-Mobile US and reduced his positions in long-time favorite, Bank of America.
The latest filings provide context to Berkshire’s revenue trajectory. The firm sold a net $3 billion in shares during the previous quarter, purchasing $3.9 billion worth but selling $6.9 billion. Berkshire, which owns brands like Geico and Fruit of the Loom, has been primarily a net seller of stocks lately.
This selling spree has contributed to a boost in Berkshire’s cash reserves, now standing at $344 billion, surpassing the market capitalization of Coca-Cola. It’s worth mentioning that at 95 years old, Buffett has faced challenges in finding appealing investment opportunities, especially as company valuations continue to rise. This cautious approach is reflected in his latest choice with UnitedHealth.
