UNH Stock Is Among Buffett's Final Picks: Should You Follow?

UnitedHealth (UNH) is one of the stocks Berkshire Hathaway disclosed in its Q2 filing, and Berkshire's stake (5 million shares, roughly $1.4–$1.6 billion) is a clear vote of confidence. 

However, it isn't a guarantee that you should copy the trade. While the stake signals that value-oriented, long-horizon investors see an asymmetric risk/reward after a painful 2025 sell-off, whether you should follow depends on your time horizon, tolerance for regulatory & operational risk, and how you size the position within a diversified portfolio.

This article unpacks the latest facts behind Berkshire's entry, scrutinises the underlying investment thesis, highlights the chief hazards, and offers a practical guide for deciding whether to enter UNH stock yourself.

What Happened to UNH Stock? Quick Snapshot

As mentioned above, Berkshire Hathaway disclosed a new position of about 5 million shares of UnitedHealth in its Q2 filing, valued at roughly $1.4–$1.6 billion depending on the day's price. The filing and reporting triggered a jump in UNH shares after the news. 

UNH latest price & market cap (Aug 13–14, 2025): UNH traded around $270–$272 per share in mid-August 2025. Public data providers list UnitedHealth's market capitalisation in the low-to-mid $200 billion range. 

The share purchase followed a year of stress for UNH, as increasing medical-cost inflation, regulatory oversight, cyber and operational issues, and management changes led to a decline in its stock value.

Those negative developments compressed UNH's valuation dramatically through 2025, creating what value investors perceive as an asymmetric risk/reward.

Why Did Warren Buffett Invest in UNH Stock? 4 Key Reasons

1) Durable Franchise and Scale Advantages

UnitedHealth is one of the largest healthcare platforms globally. It combines a broad insurance business (UnitedHealthcare) with a massive, growing services and technology arm (Optum). 

Scale buys negotiating leverage with providers, greater data and analytics capabilities, and diversification across product lines (commercial, Medicare Advantage, etc.). 

For long-term investors who see healthcare demand as consistent and anticipate that fragmented companies will merge, UNH appears to be a fundamental victor.

2) Cash Generation and Capital Allocation Optionality

Historically, UNH has generated strong operating cash flow that can underwrite investments, buybacks, and dividends. 

Price compression after a year of severe stock weakness creates optionality: a relatively modest stake by Berkshire can produce asymmetric returns if cash flows normalise and multiples expand. 

Public market data in mid-August shows compressed multiples, one of the technical inputs that value buyers watch.

3) Sector Familiarity Reduces Informational Friction

Berkshire understands insurance economics deeply, through its investments in GEICO and other insurance and reinsurance exposures.

That experience lowers the unknown factor for investing in a large insurer/managed-care company, making a re-entry into UNH more comfortable than a random tech stake.

4) Price as a Key Driver

Buffett's approach focuses equally on price and quality. UNH's dramatic price decline in 2025, driven by operational shocks, regulatory uncertainty, and investor de-risking, created a margin of safety at current levels that a long-term buyer could find compelling. 

The 13F disclosure suggests Berkshire saw an attractive risk-reward at the then-market price.

What Are the Biggest Risks You Must Weigh Before Following?

1. Regulatory and Legal Exposure

UnitedHealth disclosed it was cooperating with inquiries from the Department of Justice and other authorities regarding aspects of its Medicare business; the DOJ interaction is live and material to the company's long-term economics. 

Regulatory investigations can lead to penalties, limitations, or alterations in business models that permanently decrease profitability. The company's own public statement acknowledges cooperation with formal requests.

2. Medical-Cost Inflation and Utilisation

A sustained spike in medical costs, driven by utilisation, expensive new therapies, or provider pricing, would compress margins and challenge the earnings rebound thesis. 

Insurers' earnings are highly sensitive to the trajectory of medical-cost trends; if those trends remain elevated, valuation recovery may be delayed or limited. 

3. Operational & Reputational Shocks (Including Cyber)

UnitedHealth suffered operational disruptions and cyber incidents in 2025; these are not merely headlines, they have direct financial impacts and can erode customer trust. 

Restoring performance takes time and investment, and during that period, revenue and margins can stay depressed.

How to Interpret Berkshire's Move as a Retail Investor

Here's how to operationalise the signal:

1) Treat It as a High-Quality Data Point, Not a Command

Berkshire buys for its goals; your situation may differ.

2) Conduct Your Individual Analysis on the Risk Vectors

Read company filings, regulatory updates, and Optum-specific disclosures. The company's public cooperation statement about DOJ requests is essential reading.

3) Size Conservatively if You Follow

If you decide to take exposure, keep it modest unless you have a long horizon and the stomach for volatility. Buffett's investment in a $240B firm is significant but not dominant; replicate accordingly if needed.

4) Consider Hedging or Buy-And-Scale

Use staggered purchases (dollar-cost averaging) or protective hedges if you're worried about regulatory outcomes.

5) Monitor the Six Key Indicators Below

• Guidance

• DOJ Updates

• Optum Margins

• Cash Flow

• Insider/Board Signals

• Healthcare Cost Trends

The 6 Key Indicators to Watch Weekly and Monthly

1) Regulatory Updates / DOJ Filings

Any new request, enforcement action, or settlement materially changes the case. UNH's official newsroom published its cooperation statement in July 2025. Monitor for follow-ups.

2) Quarterly Medical-Cost Trend Disclosures

Look for evidence that medical-cost inflation is moderating.

3) Optum Segment Metrics

Revenue growth, margin stabilisation, and client retention in Optum are the most vital internal signals for upside.

4) Free Cash Flow & Capital Allocation

Rising free cash flow and disciplined buybacks/dividends indicate management confidence. Recent Market data show that UNH has historically generated substantial cash flow. 

5) Insider/Board Changes

Governance moves or high-quality hires aimed at remediation are constructive signals.

6) Industry Peers & Macro Inputs

If peers report cost deceleration, it helps UNH's narrative; macro inflation data help forecast utilisation vs price effects.

Practical Portfolio Guidance

1) Time Horizon Matters

If you have a 5–10 year horizon and can stomach drawdowns, UNH could be an attractive idea at depressed multiples, but only as a modest slice of a diversified portfolio. Berkshire is playing a long game; match that mindset if you intend to follow.

2) Position Sizing Rule of Thumb

For most retail investors, a starting allocation of 1–3% of investable assets (with the option to scale on positive fundamental signals) is prudent. 

For very risk-tolerant, long-horizon investors, a 3 to 5% could be considered. Never exceed the share of your portfolio you can afford to see fall substantially in adverse scenarios.

3) Avoid Leverage

Considering regulatory binary risks and potential ongoing cost pressure, refrain from margin or leveraged investments in UNH until the recovery trajectory is more defined.

4) Consider Alternatives

For healthcare exposure with reduced single-name risk, consider diversified ETFs targeting healthcare sectors or a group of insurers and service firms, which lessen company-specific regulatory risks.

Frequently Asked Questions

1. Why Did Warren Buffett Invest in UnitedHealth (UNH) Stock in 2025?

Berkshire Hathaway's 2025 purchase of UNH stock likely reflects Buffett's preference for companies with strong cash flow, dominant market positions, and long-term growth potential.

2. What Other Stocks Are Part of Warren Buffett's Final Stock Picks?

Besides UNH, Berkshire Hathaway's late-2025 portfolio adjustments included holdings in Apple (AAPL), Occidental Petroleum (OXY), Coca-Cola (KO), American Express (AXP), Chevron (CVX), and select bank stocks such as Bank of America (BAC).

3. How Has UNH Stock Performed Compared to Other Buffett Picks in 2025?

As of August 2025, UNH recovered approximately 8% from its yearly low following Berkshire's acquisition, while Apple remained flat, Occidental benefited from strong oil prices, and Coca-Cola provided consistent dividend returns.

Final Verdict

As a whole, should you follow Buffett into UNH stock, the answer is maybe, but only if you understand and accept the risks. 

While Berkshire's purchase is a crucial signal that one of the world's most experienced value allocators found the risk/reward attractive at mid-August prices, it does not eliminate the real regulatory, cost, and operational risks that could delay or limit recovery.

Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.