An Insider Bought Dow Component UnitedHealth

Page 1 of 2

A Form 4 filed with the SEC has disclosed that Rodger Lawson, a member of the Board of Directors at UnitedHealth Group Inc. (NYSE:UNH), bought 2,000 shares on January 18th at an average price of $54.42 per share. Lawson now owns close to 17,000 shares of the stock directly. UnitedHealth, a health insurer who joined the Dow Jones Industrial Average last year, has risen 25% since a year ago. Insiders should hesitate to purchase more shares of the company’s stock, since they already benefit financially when business is good and see their income decline in bad times. The exception would be if the benefits of diversifying are trumped by a particularly strong chance of a gain in the stock price; this in our view is why stocks bought by insiders tend to do well (read more about studies on insider trading).

THIRD POINT

UnitedHealth’s revenue was up 11% in the fourth quarter of 2012 compared to the same period in 2011, but margins contracted and as a result earnings were actually down slightly. The 12% growth rate in medical costs was particularly notable. For the year as a whole, the company reported a 9% increase in sales and a 7% increase in net income. The market capitalization of $58 billion- the largest among publicly traded health insurers- values UnitedHealth at 11 times trailing earnings. Analyst expectations are for low growth in the next couple years and so current-year and 2013 P/Es are in the 9-10 range. These are low valuations, and even if the company does not see much of an increase in earnings it could be a good buy at these prices. We’d also note that UnitedHealth Group Inc. has a beta of 0.5, indicating that it is somewhat protected from market downturns.

UnitedHealth Group Inc. was one of the most popular healthcare stocks among hedge funds in the third quarter of 2012, according to our database of 13F filings (find more healthcare stocks hedge funds loved). Billionaire Dan Loeb’s Third Point reported a position of 2 million shares, an 11% increase from three months earlier (see more of Loeb’s stock picks). Renaissance Technologies, whose founder Jim Simons is now a billionaire, and fellow billionaire Leon Cooperman’s Omega Advisors were two other hedge funds with significant positions in UnitedHealth. Check out more favorite stocks from Renaissance Technologies and from Omega Advisors.

Recent performance and valuation at UnitedHealth turns out to be similar to that of its peers:

Page 1 of 2

Dividend Stock Alert - Billionaire Robbins' Top Dividend Idea With 70% Upside Potential

Get Paid 3.5% Per Year While Waiting For The Stock Appreciate 70%

Larry Robbins' Glenview Capital Opportunity Fund returned 101.7% in 2013 and Robbins personally made $750 million. The same fund returned 25.3% in 2014. In this FREE REPORT we will share Robbins' top dividend idea that yields 3.5% and has been increasing its dividends for 39 consecutive years. Robbins thinks the stock has the potential to appreciate 70%.

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Click here to Read Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 74 percentage points in 2.5 years. Our beta is only 1.2 (download a FREE newsletter and see the details inside)

Lists

Best Selling Magazines in the World

Shortest People in History

The Most Celebrated Holidays in the World

Most Expensive Handbag Brands in the World

Top Selling Comic Book Issues of this Century

The Most Powerful Women in Politics

Best Paid DJs

Most Rebellious Female Artists

Best Paid TV Actresses of 2014

Best Paid Actors of 2014

Most Expensive Horses in the World

Tallest People Ever

Most Encouraging Feminist Celebrities

Best Paid Supermodels of 2014

Top 10 Suburbs for Retirement in 2015

10 Wealthiest Cities in America

Top 10 TED Talks for Entrepreneurs

Best TED Talks on Education

25 Most Dangerous Places to Live in America

Top 10 Ski Resorts in the United States – 2014 List

Top 10 Most Remote Places in the World

Most Visited Museums in the United States

Wealthiest Photographers in the World

Most Famous Gay Athletes

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!