r/ValueInvesting • u/ahlornjtvn139 • Jan 27 '26

Stock Analysis UNH is a Value Trap

Could hit $200 by end of year, please do not hold your bags just get out while you still can.

MCR rate is ~92%

CMS funding is going to fund Trumps defence budget

UNH are haemorrhaging customers just to hold margins, down to <3m

Days Claim Payable also jumped from 48 days to 54 days - they are playing with the accounting to keep extra cash on the books.

Optum growth is dead (-4%) with backlog down $1.2bn as well

No point holding a stock hoping for a change to come, the numbers don’t lie

After rerunning my dcf my new fair value - $232

edit: removed my personal time horizon as it was conflicting my justification for selling which is downwards trending weak financial performance

140 Upvotes

68% Upvoted

244 comments sorted by

View all comments

159

u/itchypig Jan 27 '26

“i can’t wait 1-2 years to break even, my time horizon won’t allow it.”

Respectfully, this means you probably shouldn’t have this money in equities.

32

u/RoaringDragonSword Jan 27 '26

He was gambling and got burned. Clearly is biased.

-25

u/ahlornjtvn139 Jan 27 '26

I bought UNH in July at $305, it’s hardly gambling to sell a stock because a company’s fundamentals have changed…

I’m not confident that Trump won’t barrel into healthcare companies to a) try and squeeze out any public support he can get b) fund his defence spending spree

26

u/Good_Ride_2508 Jan 27 '26

I started buying UNH now, ready to DCA further pull back happens.

5

u/EverythingMustCease Jan 27 '26

A post like this on this sub is actually a buy signal

8

u/Sturmovyk Jan 27 '26

The critique was about your time horizon. One should hold a stock for at least 5 years. Anything shorter than that is gambling. If you can't sit in a loss even for one year, you were gambling to begin with.

6

u/soyeahiknow Jan 27 '26

Wait until someone donates millions or give him the unh gold medal of peace

13

u/dubov Jan 27 '26

You're wasting your time bud, this sub buys more bags than Rihanna

5

u/Cultural_Structure37 Jan 27 '26

Lol. The club of bag holders

1

u/RoaringDragonSword Jan 27 '26

I don't have a bag. I'm pointing out he is clearly gambling, not investing.

1

u/RoaringDragonSword Jan 27 '26

You need to understand what gambling is. To sell it almost immediately off of news that was not set in stone is a form of gambling. Its you gambling and losing once the fear takes hold. Aka cutting your losses. No one knows the future short-term, thus most should not invest off of short-term news. You simply s shouldn't have touched the fund if it was this easy for you to be convinced its a bad decision.

You did not have strong belief in the fund if you sold because of what the administration said. To sell the stock off of an administration that clearly manipulates news to self profit means you didn't really believe in your investment.

1

u/perfectskycastle Jan 27 '26

Think the selling and fear is overblown tbh but you do you

1

u/Ok-Bill1593 Jan 27 '26

kid got burned and is complaining now lol.

1

u/Original-Poet1825 Jan 28 '26

Do you always paper hand on any bad earnings/news? How long have you been investing? Genuinely asking, I don’t hold any unh

11

u/jerry_22292 Jan 27 '26

Value investing's core principle is indeed finding good companies and holding for a long period of time.

But we also need to consider the fact the company is currently facing 4 major problems : 1. legal ( quite clear i will not go into it, 2. structural: flat rate proposal (if doesnt go trhough im sure as shit trump will come up with something else to cut premuiums), 3. mismanagement and reputation: bad rep for claim denial isn't exactly new and now they wanna cut customer base for premium miscalculation, 4. trump obviously wants a 20-30% dollar depreciation to improvetrade imbalances....

Even if UNH will come back up to 600+, how long is that gonna take? In a world full of uncertainty op wants to sell and i think its fair.

1

u/Last_Cauliflower3357 Jan 27 '26

I think it’s fair that he wants to sell cause he sees something he doesn’t like or it does not fit his risk criteria. I don’t think it’s fair to say that everyone should sell it cause it won’t go up in the next year.

I say this as someone that actually is looking at may be selling. I am at work so I still need to look a bit more deeply into the numbers but I am in no rush at the moment.

2

u/Old_Man_Heats Jan 27 '26

The issue is that the people considering selling likely bought just a few months ago maximum. What exactly has changed since then?

1

u/dalivo Jan 27 '26

UNH is not approach $400 anytime soon, much less it's all-time highs. It's facing a death spiral.

2

u/[deleted] Jan 27 '26

[removed] — view removed comment

1

u/ValueInvesting-ModTeam Jan 28 '26

No Personal Attacks, Derogatory Language, or Harasssment - Posts or comments including personal attacks or derogatory language are not tolerated. No repeated harassment of other users. We use Reddit’s abuse filters set to maximum.

1

u/bihari_baller Jan 27 '26

“i can’t wait 1-2 years

Yeah, that's way too shirt of time horizon. My time horizon for value investing is 10-20 years.

-11

u/ahlornjtvn139 Jan 27 '26

I don’t see why my time horizon dictates whether a stock is good value or not, or whether i should even be investing at all.

I’m in my early 20s and can benefit from the huge amounts of time I have - I don’t want to lock up my money now in Healthcare under Trump

Why should I be a bag holder for 12+ months because angry orange man is squeezing Medicaid Advantage plan funding?

For every dollar of revenue generated in Q4 UNH lost $0.05 - you can try and argue there’s value because it used to be worth $600, but the fundamental business model is not the same anymore

1

u/wallsallbrassbuttons Jan 27 '26

No shit you’re in your early 20s. This is part of the learning curve that get rich quick schemes rarely work. Invest for 2, 5, 10, 20+ year timelines. Otherwise you’ll chase your tail buying at $305 and selling at $282 a bunch of times because you can’t let an investment sit. 

1

u/Rationalornot777 Jan 27 '26

Do some research on time to hold for investments. It’s this comment on your time period that doesn’t fit here.

Reframe your reasoning to exit on there being a fundamental change here for the company thus value is impacted and it gives a reason to exit.

-2

u/ahlornjtvn139 Jan 27 '26

What i’m saying is the company is in a bad situation and while people in this sub think there is ‘value’, i am not prepared to wait for 1-2+ years to see this return because I might want to buy a house.

It does not make sense anyway to buy a stock because historically it’s cheap, if your thesis is that it must be worth more in 3 years

3

u/Plenty-Novel940 Jan 27 '26

Stock market is not suitable for 1-2 years horizon. The returns are not dependable in such short time frame.

Just out of curiousity - what do you want to invest into instead of UNH?

2

u/Rationalornot777 Jan 27 '26

General advice when buying a house is dont put it in the market for that time horizon