Is UnitedHealth Group (UNH) a Smart Long-term Buy?

Polen Capital Management recently released its Q3 2020 Investor Letter, a copy of which you can download here. During the third quarter of 2020, the Polen Focus Growth Composite Portfolio returned 10.15% gross of fees, while the Russell 1000 Growth Index was up 13.22% and the S&P 500 Index was up 8.93%. You should check out Polen Capital’s top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.

In the said letter, Polen Capital highlighted a few stocks and UnitedHealth Group Inc (NYSE:UNH) is one of them. UnitedHealth Group Inc (NYSE:UNH) is a health and well-being company. Year-to-date, UnitedHealth Group Inc (NYSE:UNH) stock gained 20.3% and on November 10th it had a closing price of $353.69. Here is what Polen Capital said:

“UnitedHealth Group is both the leading health insurance company in the U.S. and the largest primary care provider. It has been building an integrated healthcare model that provides medical care and health insurance to individuals and corporations and to Medicare and Medicaid beneficiaries. Insurance accounts for roughly half of the company’s profits, and medical care delivery and technology accounts for the other half.

We believe this integrated, data-driven model is the future of healthcare delivery in the U.S. and should lead to lower medical costs over time without sacrificing quality of care. UnitedHealth is moving to a practice of rewarding providers that demonstrate strong wellness and health outcomes and away from a “pay for consumption of medical care” model that treats people only when they are already sick and where costs are very high. By focusing on preventative care and wellness, medical utilization could decline, and costs should follow.

We expect UnitedHealth Group to be able to grow earnings per share at a low-to-mid-teens rate over time with low cyclicality. In addition, we see little chance of a government-run health system in the U.S. due to the massive cost, especially at a time when federal budget deficits are tremendously high, plus several other factors. As such, we believe scaled players with strong integrated models that are already being utilized to run large parts of government programs will likely continue to play a large role for many years to come.”


Last month, we published an article revealing that Nomadic Value Investment Partners is bullish on UnitedHealth Group Inc (NYSE:UNH) stock. The investment firm said that the company performed amazingly well despite pandemic.

In Q2 2020, the number of bullish hedge fund positions on UnitedHealth Group Inc (NYSE:UNH) stock decreased by about 8% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t believe in UnitedHealth’s growth potential. Our calculations showed that UnitedHealth Group Inc (NYSE:UNH) is ranked #22 among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

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Disclosure: None. This article is originally published at Insider Monkey.