What stands out here is Warren Buffett has a lot of money burning a hole in his pocket. Nically, it's Berkshire Hathaway's (BRK, given the current landscape.
79%) pocket, but Buffett gets to decide how to use the cash. And when I say a lot of money, I mean a lot of money: Berkshire's cash position totaled nearly $348 billion at the end of the first quarter.
On the other hand, The blem is that Buffett can't find many stocks to buy that meet his stringent investment criteria, in today's market environment.
However, I think there's one beaten-down blue chip stock that fits his playbook perfectly, considering recent developments. On the other hand, Image source: The Motley Fool.
A Buffett understands Buffett has stated on multiple occasions, in various ways, that he will only invest in a that he thoroughly understands, in this volatile climate.
Furthermore, In his 1996 letter to Berkshire Hathaway holders, he wrote: "You don't have to be an expert on every company, or even many.
You only have to be able to evaluate companies within your circle of competence. " bably no is within Buffett's circle of competence more than insurance.
Berkshire generates a significant portion of its revenue from its perty and casualty, in today's market environment.
But the core principles of running an insurance are the same regardless of what type of insurance it is (fascinating analysis).
At the same time, The key to success is to effectively evaluate risk and charge premiums that cover that risk while making a fit (this bears monitoring).
UnitedHealth Group (UNH 0 (remarkable data) (which is quite significant). 89%) is the largest health insurer in the United States. I don't doubt that Buffett knows its quite well (remarkable data).
Additionally, Moreover, After all, he bought a stake in UnitedHealth for Berkshire's portfolio in 2006 and owned the stock for three years, amid market uncertainty.
Financials Buffett would find appealing UnitedHealth Group's price has plunged more than 50% this year. Furthermore, The company dered lower-than-expected results in the first quarter.
Furthermore, It initially cut full-year guidance and then withdrew the guidance altogether. On the other hand, However, I suspect that Buffett would still find UnitedHealth's financials appealing.
Moreover, Buffett has talked the importance of return on equity (ROE) in the past. He has hinted that 20% is his preferred ROE threshold.
However, UnitedHealth Group's ROE over the past 12 months was 22. Despite its disappointing Q1 results, UnitedHealth Group's revenue still grew $9. On the other hand, 8 billion year over year to $109.
The evidence shows company also generated a fit of nearly $6. It had nearly $34 (an important development). 3 billion in cash and cash equivalents with a manageable debt load.
I think Buffett would focus on UnitedHealth's hard numbers more than he would Wall Street's expectations.
A price Buffett almost certainly s Why hasn't Buffett put more of Berkshire's massive cash stockpile to work. He can't find many stocks with attractive valuations.
But UnitedHealth Group has a price Buffett almost certainly s. Furthermore, The healthcare stock trades at roughly 12 times trailing 12-month earnings.
Additionally, UnitedHealth Group's earnings multiple was significantly higher when Buffett first initiated a position in early 2006.
UNH PE Ratio data by YCharts Of course, Buffett focuses on future earnings potential. Additionally, Could he be worried that UnitedHealth Group's fits will continue to all (something worth watching).
I don't think so. The company's primary issue is that costs for some of its Medicare Advantage plans were higher than expected.
Buffett knows that insurers can easily address these kinds of blems in the next year by increasing premiums.
At the same time, He would ly believe UnitedHealth Group's prediction that the company will return to growth in 2026 (an important development).
Nevertheless, Is Buffett buying UnitedHealth Group stock. I also don't know if Buffett is buying UnitedHealth Group stock.
He could be content to sit on Berkshire's cash and leave it to Greg Abel to make any big moves after Buffett steps down as CEO at the beginning of next year.
What I do know, though, is that UnitedHealth Group fits Buffett's playbook. And that playbook has been enormously successful through the years (this bears monitoring).
Investors wanting to emulate Buffett might want to consider buying s of the beaten-down blue chip stock while it's a bargain -- whether or not the "Oracle of Omaha" buys it himself.