Billionaire investors were quite active in the second quarter, with many of the big names going after a relatively narrow basket of stocks. Undoubtedly, great minds tend to think alike, especially in the world of investment. If one investment legend perceives deep value to be had in a specific stock, there’s a good chance that others might also see an opportunity to get a steep discount to intrinsic value.
In this piece, we’ll look at a specific stock that a number of billionaire investors punched their ticket to in the second quarter. And while it’s impossible to know what the smart money has done with their positions (perhaps they added to their stakes in the third quarter, trimmed, or sold out) until the next round of 13-F filings, I do think that some of the more recent developments suggest that there’s still value and perhaps near-term upside to be had in the stock.
The smart money just loves UnitedHealth Group stock
Enter shares of UnitedHealth Group (NYSE:UNH | UNH Price Prediction), a managed health provider that a number of hedge funds you follow may have initiated new positions in during the spring season. Undoubtedly, the stock imploded back in April and May, crashing by over 60% at its worst point. And while many of the smart money managers may still be in the red on their initial positions, I don’t think UNH stock will cease to be a hedge fund favorite by year’s end unless, of course, the stock recovers all of the ground it lost in the first half of 2025.
Even after bouncing back over 36% from its August lows, UNH stock stands out as one of the biggest buy-the-dip opportunities in the large-cap space. With an inverse head-and-shoulders formation that could be in the works, the health insurer may be in for further relief before the year comes to a close. Furthermore, the mere 14.5 times trailing price-to-earnings (P/E) multiple entails ample room for multiple expansion, even if medical expenses are bound to overwhelm for a while longer.
UnitedHealth is already showing signs of turning a corner
Perhaps the biggest reason to follow the smart money into UnitedHealth Group is the latest commentary courtesy of none other than Morgan Stanley analyst Stephen Hemsley, who has “conviction in the turnaround.” Indeed, a recovery may very well be in the works, both in Optum and Medicare Advantage. Despite the encouraging commentary, though, Morgan Stanley isn’t nearly as bullish as Cantor Fitzgerald’s Sarah James, who holds a $440 price target on the name, suggesting close to 32% upside from current levels.
James sees the firm on the receiving end of margin expansion across various business segments. I think James is right on the money to be so bullish on the name, especially amid the recent buying spree in major hedge funds. Though investors should be cautious when bottom-fishing following the managed care meltdown of 2025, I do find the depressed multiple and rich 2.6% dividend yield to be enough reason to consider backing up the truck.
With a good quarter already in the books, perhaps the bottom may already be in. The big question for investors is whether there’s more steep upside ahead. I think there’s a good chance of this, especially given high hopes for a smooth turnaround. In any case, it takes more than one quarter to kick off a trend. The big question is whether the turnaround could allow UnitedHealth to guide higher in its next quarterly reveal.
The bottom line on UNH stock
Just because a number of billionaires, including Warren Buffett, have been buying a stock doesn’t mean you should, especially if you don’t understand the business behind the shares.
In any case, I do think the managed health space is rich with value for those brave enough to step in right here. It’s an unloved corner of healthcare, but relief might not be all too far off, especially as industry veterans look to meet or even exceed the full-year guidance milestones.
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