Pelican Bay Capital Management, an investment management company, released its third-quarter 2025 investor letter. A copy of the same can be downloaded here. PBCM Concentrated Value Strategy returned 7.8% in the quarter, compared to a 5.3% return for the Russell 1000 Value Index. YTD, the fund returned 11.2% compared to 11.6% for the index. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its third-quarter 2025 investor letter, PBCM Concentrated Value Strategy highlighted stocks such as UnitedHealth Group Incorporated (NYSE:UNH). UnitedHealth Group Incorporated (NYSE:UNH) is a diversified healthcare company that operates through UnitedHealthcare, Optum Health, Optum Insight, and Optum Rx segments. The one-month return of UnitedHealth Group Incorporated (NYSE:UNH) was -9.61%, and its shares lost 48.15% of their value over the last 52 weeks. On November 7, 2025, UnitedHealth Group Incorporated (NYSE:UNH) stock closed at $324.21 per share, with a market capitalization of $293.682 billion.
PBCM Concentrated Value Strategy stated the following regarding UnitedHealth Group Incorporated (NYSE:UNH) in its third quarter 2025 investor letter:
“The health insurance industry has faced significant pressure this year. Profitability in Medicaid and Medicare has weakened due to aggressive pricing from competitors like CVS and UnitedHealth Group Incorporated (NYSE:UNH), as well as higher-than-expected utilization of behavioral health, GLP-1 drugs, and elective surgeries.
Additionally, investor sentiment soured on the sector following allegations of Medicare Fraud and illegal claims denial practices at UNH, the industry’s bellwether. The major Health Insurance companies fell 30-50% following these revelations in April. ELV was not spared and fell nearly 40% from peak to trough. Based on our due diligence, we believe the misconduct is isolated to UNH and stems from their aggressive corporate culture and management incentives that demanded an imposing EPS growth rate target of 14-16% per year. In fact, we believe ELV is poised to win market share in the multi-state private insurance business as large corporations renewing their insurance contracts seek alternatives to UNH.
Thus, the recent weakness in ELV has created a tremendous buying opportunity as we acquired our shares for $310. As the fog around the UNH fraud clears and investor confidence in the insurance industry taking better control of medical cost increases, we would expect the multiples for this business to improve. We think a 13-15x valuation multiple is appropriate for ELV, resulting in an intrinsic valuation range of $440-600.”
UnitedHealth Group Incorporated (NYSE:UNH) is in the 18th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 159 hedge fund portfolios held UnitedHealth Group Incorporated (NYSE:UNH) at the end of the second quarter, which was 139 in the previous quarter. In the third quarter of 2025, UnitedHealth Group Incorporated (NYSE:UNH) generated revenues exceeding $113 billion, representing a 12% year-over-year growth due to the expansion of domestic memberships. While we acknowledge the risk and potential of UnitedHealth Group Incorporated (NYSE:UNH) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than UnitedHealth Group Incorporated (NYSE:UNH) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered UnitedHealth Group Incorporated (NYSE:UNH) and shared The London Company Income Equity Strategy’s views on the company. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
