One of Warren Buffett's concluding major stock selections as the chief executive of Berkshire Hathaway is beginning to resemble an uncommon error in judgement. Regulatory filings revealed in August that Berkshire had discreetly accumulated a substantial position in the health insurance behemoth UnitedHealth, acquiring just over five million shares following a dip in the stock's valuation.
A Classic Buffett Move Loses Its Shine
Initially, this acquisition stabilised UnitedHealth's share price and was perceived as a quintessential Buffett investment—targeting a temporarily battered yet fundamentally dominant enterprise. However, a combination of unfavourable developments has subsequently tarnished the appeal of this strategic play.
Double Blow Sends Shares Tumbling
UnitedHealth's stock experienced a precipitous drop of approximately twenty percent in a single trading session last week and has remained at depressed levels. This severe sell-off was triggered by the company reporting lower-than-anticipated earnings and issuing a cautious forward-looking statement, disappointing analysts on Wall Street.
The market reaction was compounded by escalating pressure from Washington. The Trump administration has proposed maintaining Medicare Advantage payment rates at nearly unchanged levels for 2027, dealing a significant blow to insurance providers like UnitedHealth that depend heavily on this government-supported programme.
Myriad Challenges for the Insurer
UnitedHealth has been contending with a series of additional difficulties beyond market and regulatory headwinds. These include ongoing federal scrutiny regarding its Medicare pricing strategies, the operational and reputational fallout from a major cyberattack, and the tragic, shocking killing of a senior executive in late 2024.
In December 2024, the company's CEO, Brian Thompson, was shot and killed in Manhattan. Stephen Hemsley, the former chief executive who steered the firm with a firm hand from 2006 to 2017, has returned to assume the leadership role.
The Final Chapter of a Legendary Career
Warren Buffett, now ninety-five years old, declared in May of last year that he would relinquish his role as Berkshire Hathaway's chief executive by the end of 2025. This positions the UnitedHealth investment as one of the last significant stock picks in his illustrious six-decade investing tenure.
The precise price Berkshire paid for its stake remains unclear. However, analysis from the investing publication Benzinga suggests the stock is now trading close to, or even below, the level at which Berkshire disclosed its position. This potentially leaves Buffett's final high-profile acquisition as CEO in a loss-making position, or 'underwater'.
Context and Scale of the Potential Loss
Any paper losses on this position are inconsequential for Buffett personally, who ranks tenth on Bloomberg's billionaires list with an estimated fortune of one hundred and forty-five billion dollars. For context, UnitedHealth shares have endured a brutal month, declining around fifteen percent overall. At their lowest point, they had fallen roughly twenty percent from their recent peak before recovering marginally.
This is not Berkshire's first foray into UnitedHealth stock. Between 2006 and 2009, Buffett held 1.18 million shares of the healthcare company in his portfolio before divesting the entire stake in 2010 as part of a broader withdrawal from the health insurance sector.
The Buffett Effect on Markets
Berkshire Hathaway, which owns dozens of companies including the insurer Geico, battery manufacturer Duracell, and the restaurant chain Dairy Queen, remains a market bellwether. Buffett's investment decisions are meticulously scrutinised by both Wall Street institutions and retail investors, frequently prompting sharp market movements as capital follows his lead.
This phenomenon, often termed 'the Buffett effect', was evident earlier in 2025 when he increased stakes in five Japanese trading houses, sending their stock prices soaring. A similar pattern occurred in late 2024 after it emerged Berkshire had purchased five hundred and sixty-three million dollars worth of stock in Occidental Petroleum, Sirius XM, and VeriSign.
The Power of a Sell Decision
Conversely, Buffett's decisions to sell can also negatively impact share prices. In February of last year, regulatory filings revealed he had sold shares in DaVita, a healthcare company. The stock promptly fell by more than eleven percent.
In his final annual letter to shareholders as CEO, released in November, Buffett wrote that he is 'going quiet' after nearly sixty years at Berkshire's helm. Under his leadership since 1965, Berkshire Hathaway's performance has dramatically outstripped that of the S&P 500 index, cementing his legacy as one of history's most successful investors.
