Major Investors Split on UnitedHealth’s Prospects as Billionaires Buy While Morgan Stanley Exits

A sharp divergence has emerged among major institutional investors regarding UnitedHealth Group’s outlook. While several prominent billionaire investors have increased their stakes in the healthcare giant, Morgan Stanley has liquidated its entire position, highlighting conflicting views on the company’s trajectory.

Mixed Signals from Major Funds

The investment community appears deeply divided on UnitedHealth’s future. On one side, investment firm Arnhold LLC demonstrated confidence by boosting its stake by 7.9%. Conversely, Morgan Stanley executed a complete exit from its position, signaling significant concerns about near-term performance.

This institutional split raises fundamental questions about whether current valuations adequately reflect underlying risks. Some market participants anticipate a recovery, while others point to persistent regulatory challenges and declining profit margins as reasons for caution.

Operational Challenges and Revised Guidance

UnitedHealth’s recent quarterly performance provided little encouragement for investors. The company reported earnings per share of $4.08, falling substantially short of market expectations. More concerning was management’s decision to significantly lower 2025 full-year guidance to a minimum of $16.00 per share.

Should investors sell immediately? Or is it worth buying Unitedhealth?

The primary driver behind these disappointing results was a 20% surge in medical costs, which reached $78.6 billion in the last quarter. While revenue showed growth, profitability contracted sharply. Market observers now question whether UnitedHealth can adjust its pricing structures sufficiently to restore historical margin levels.

Regulatory Investigation Adds Uncertainty

Compounding these operational headwinds, UnitedHealth faces a significant regulatory investigation. The U.S. Department of Justice has launched a probe into the company’s Medicare billing practices, a development that could potentially result in billions of dollars in financial impact.

The investigation focuses specifically on Medicare Advantage operations, which represent a substantial portion of UnitedHealth’s revenue stream. Should the inquiry lead to financial penalties or stricter pricing controls, the consequences could materially affect the company’s financial performance. Market analysts suggest this regulatory risk may not be fully reflected in the current valuation.