Shares of mid-cap insurer Molina Healthcare rose more than 4% in trading on Tuesday, December 30, after investor Michael Burry, whom the main character in The Big Short was based on, called the company a “diamond in the rough” and a potential takeover target. He compared Molina with GEICO, the insurer that became one of Warren Buffett’s most successful investments, and said if he were "sitting on enough billions," he would acquire Molina outright.
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Burry described Molina Healthcare as an attractive investment in a post on his Substack. In his view, investors are undervaluing the company because “most [of them] simply do not understand insurance companies well enough to invest in them.”
He pointed to Molina’s solid fundamentals and emphasized its operational discipline, which he said stands out against the backdrop of mounting pressure across the health insurance sector. According to Burry, the company is well positioned to outperform peers on profitability and to emerge stronger once industry conditions improve.
Molina shares have fallen sharply this year, losing more than 40% of their value. In 2024, the stock traded at highs of around $415 per share but has since dropped to about $173 per share and, according to Burry, could fall below $100 per share if markets react negatively to potential federal budget cuts. “Molina would be a generational buy at that price,” he wrote, adding that the company’s current challenges are likely to be temporary.
Burry argues that the undervalued insurer could become a takeover target once the market recognizes it as a “diamond in the rough.” He drew a parallel with Buffett’s investment in GEICO, which started in 1976. In 1996, Berkshire Hathaway acquired the auto insurer fully. Burry said investing in Molina today carries even less risk, as it represents a “better business proposition in many ways.”
He added that Molina has “a clearer path to significant double-digit long-term growth than Apple” and that if he “had enough billions,” he would acquire the company himself.
In November, Burry’s hedge fund, Scion Asset Management, disclosed that it had opened a long position in Molina shares in the third quarter, accounting for about 35% of its portfolio. Shortly thereafter, Burry deregistered the fund and launched a blog where he now regularly publishes commentary on widely followed stocks.
About Molina
Molina Healthcare provides health insurance and related services under U.S. government programs, including Medicaid and Medicare. Founded in 1980 to expand access to health care for low-income families, the company has grown into one of the largest managed-care providers in the U.S., expanding primarily through mergers and acquisitions.
Despite sustained pressure on the shares this year, Molina has gained nearly 19% over the past month. Wall Street remains cautious: 13 of 21 coverage analysts rate the stock “hold,” five rate it “buy,” and three “sell.” The average target price stands at about $173 per share, implying roughly 4% upside from the most recent close.
