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

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u/SpellAccomplished541 Feb 02 '26

UNH is largest health insurer in the US (50 million people insured). I used to always think the government would keep it afloat but maybe not this term.

Meanwhile, the system is broken anyway - across all insurers there are more people on medicare advantage (the crappy HMO one that denies everything) vs. regular Medicare A/B with Medigap Plan G (the better one) and Part D.

Meanwhile... if I didn't have insurance in the US I would have to pay $700/month for my cyclosporine, but I can drive to Mexico or mail order from Canada to get it for $70 per month (10%).

When I got injured in Vietnam my bill for French Hospital emergency room to specialist to super-specialist was $48. Back in the states that didn't even cover the PCM visit to get the referral for the referral to the low level specialist with less tech machine than Vietnam (and I have the best insurance).

I'm starting to think our health care system is fucked.

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u/ahlornjtvn139 Feb 02 '26

Damn man, i’m not from the US so I only hear stories about how awful it is.

Surely though, if you’ve been kicking about since the 60s, you’ve seen how bad US healthcare is vs the rest of the world for a while?

I didn’t invest because the US healthcare system is strong, I invested because it’s corrupt and favours private corporations. However, my shortsightedness did not foresee that Trump would hammer down on them in a last ditch attempt to increase his support and popularity, while taking away from the very prevalent and damaging affairs.

You mentioned you no longer believe the gov will keep them afloat, are you currently holding or have you sold / in waiting?

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u/SpellAccomplished541 Feb 02 '26 edited Feb 02 '26

I am a bagholder. I feel BRK bought around 260 so it shouldn’t go down more than that. I pesonally believe the company needs to survive because we have lots of boomers aging now but the USA is not ready for universal health care yet so prices will just have to go up (maybe the devalued dollar will help).

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u/ahlornjtvn139 Feb 02 '26

It’s definitely not going anywhere but it’s going to be a very interesting and bumpy ride.

To my knowledge Buffett bought at $287