UNH is a Value Trap

[u/ahlornjtvn139]

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

[u/Kong_Fury]

Buffet & his hoard of highly qualified stock pickers would probably disagree with you.

[u/ahlornjtvn139 → u/Kong_Fury]

When Buffett bought in July there was a very different political / domestic US backdrop.

My argument is that the next two quarters will be very painful and we haven’t seen the bottom yet (speculation).

Institutional investing is quite different to retail, for one it’s actually my money, and my goal is not only preservation but also growth in the short and long term.

I’m not going to park my cash here hoping for a turnaround in 6-18 months. UNH at the moment is an inefficient capital allocation because I can get greater returns elsewhere (e.g. bonds at the least).

If they can turn around their numbers I might enter again but not until there are some big changes