Unexpected deal: Buffett's Berkshire reveals new $1.6 billion investment

Warren Buffett's Berkshire Hathaway has disclosed the purchase of a stake in struggling insurance company UnitedHealth, whose shares have fallen by half since the beginning of the year. Because of the company's current reputation, the deal was a surprise to the market, CNBC notes, but perhaps predictable given Buffett's history of buying assets at an undervalued price. UnitedHealth shares attracted other high-profile investors in the second quarter, including Michael Burry of Scion Asset Management and David Tepper of Appaloosa Management.

According to regulatory reports on Form 13F filed by Berkshire with the U.S. Securities and Exchange Commission (SEC), Warren Buffett's investment company bought more than 5 million securities of stagnant insurer UnitedHealth for about $1.6 billion in the second quarter, making it the 18th most heavily weighted stock in Berkshire's portfolio, following Amazon and Constellation Brands, CNBC quoted VerityData as saying.

UnitedHealth shares had lost nearly 50% since the beginning of the year by the time Berkshire filed its filing. After publication, they jumped 10.5% in extended trading.

The largest private health insurer has become a symbol of Americans' discontent with the rising cost of health care, CNBC notes. This became especially evident when in December the CEO of UnitedHealthcare, the division that handles the Medicare program, was shot and killed by a disgruntled customer. UnitedHealth is now under investigation by the U.S. Department of Justice for Medicare billing practices.

In April, the company withdrew its full-year earnings forecast and CEO Andrew Whitty resigned. In July, UnitedHealth provided a new forecast, but it came in well below Wall Street's expectations, which further hit its value.

UnitedHealth's cheaper securities attracted other investment gurus in the second quarter. Among them is Michael Burry, known for predicting the 2008 mortgage crisis. The Burry-managed fund Scion Asset Management invested $6 million in the insurer's shares and call options on 350,000 securities with a face value of more than $100 million. Appaloosa Management, a hedge fund managed by David Tepper, also increased its investment in UnitedHealth by more than 1,300%, bringing the position to $764.3 million. It is now the second-largest stock in the fund's portfolio, CNBC reported.

Because of the company's current reputation, the deal was a surprise to the market, CNBC notes, but perhaps predictable given Buffett's history of buying assets at an undervalued price. "The Oracle of Omaha follows a value investing strategy and bets on undervalued companies with strong fundamentals - high return on equity, low debt load and the ability to generate stable cash flow, Investopedia explains." According to the publication, Buffett avoids complex models and prefers clear businesses with a transparent management team. One of the key factors he emphasizes is the presence of an "economic moat" that protects the company from competition.

The total size of Berkshire's stock portfolio is about $300 billion, so analysts suggest that not Buffett himself, but his investment managers Todd Combs and Ted Weschler could be behind the purchase, CNBC writes.

Market participants expected Buffett to reveal in his second-quarter report a mysterious investment that he has been hiding since the beginning of the year. The fact that Berkshire may have been secretly accumulating some stock is indicated by documents, Barron's wrote. In May, while reporting on investments for the first quarter, Berkshire asked the regulator for the ability to keep one or more positions confidential. Buffett has used this tactic in the past, when he formed a large stake over several quarters and did not want to disclose the company, so as not to provoke a rise in quotations. However, it appears, CNBC notes , that the mystery asset was a combination of several positions and likely included increased stakes in real estate developers DR Horton and Lennar, as well as steel producer Nucor. Following the release of the Form 13F, DR Horton shares jumped 3.7% in extended trading, Lennar jumped 5.7% and Nucor jumped 6.5%.

It was suggested that Buffett's secret investment is an industrial company, and the total value of the package could reach almost $5 billion. Many analysts named Caterpillar among the favorites. UPS, FedEx, Deere and other options were also mentioned . At the postmarket on Thursday, securities Caterpillar fell in price by 1.6%, UPS - by 0.2%, quotes FedEx rose by 1%, and Deere - by 0.1%.

- Berkshire completely got rid of its stake in telecom operator T-Mobile in the second quarter. The value of the stake held by the investment company was $1 bln.

- Buffett also continued to reduce positions in Apple, selling 20 million of its shares. Nevertheless, the iPhone maker remains the largest paper in the legendary investor's portfolio by market value, Bloomberg notes .

- Berkshire's stake in Bank of America has also decreased again. From July 2024 to the end of the first quarter of 2025, Buffett has already reduced his stake by almost 40%. In the second quarter, the investment company sold another 26 million shares in the bank.

- The investment company also acquired small stakes in advertising agency Lamar Advertising and security systems manufacturer Allegion.

This article was AI-translated and verified by a human editor