The old saying that "birds of a feather flock together" doesn't always apply to the world of the super-wealthy. Rich investors often follow their own paths rather than buying the same assets. So when several of them gravitate to the same stock, it's worthy of notice.
An example of such herding occurred recently. Billionaires Warren Buffett and David Tepper, as well as investor Michael Burry (featured in the movie The Big Short) just bought UnitedHealth Group (UNH 1.24%) stock. Should you?
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Buying frenzy
Buffett's initiation of a new position in UnitedHealth Group for Berkshire Hathaway's portfolio in the second quarter of 2025 made big waves. For one thing, the legendary investor has been a net seller of stocks for 11 consecutive quarters, so any significant purchase is newsworthy. Berkshire's stake in UnitedHealth tops $1.5 billion.
This wasn't Buffett's first time owning the health insurance stock. He first bought shares of UnitedHealth Group in late 2006 and added to his position in subsequent quarters before eventually selling the entire stake in the fourth quarter of 2009.
Tepper amassed a fortune running his Appaloosa hedge fund. He increased Appaloosa's stake in UnitedHealth Group by a whopping 1,300% in Q2. The healthcare giant now ranks as the hedge fund's second-largest position, making up nearly 12% of its total portfolio.
Burry rose to fame after making a fortune betting against subprime mortgages ahead of the financial crisis of 2007 and 2008. He isn't a billionaire like Buffett and Tepper, but is quite wealthy with an estimated net worth of around $300 million. Burry found UnitedHealth Group stock appealing in Q2 as well. His Scion Asset Management hedge fund bought 20,000 shares of the health insurer in recent months.
Why UnitedHealth Group is now so popular
There's a simple reason why Buffett, Tepper, and Burry like UnitedHealth Group these days: It's rare for a blue chip stock to be available at a steep discount. But UnitedHealth is a bargain right now.
Shares of the health insurer remain more than 50% below the peak set in the fourth quarter of 2024 despite a bounce stemming from these famous investors' purchases. UnitedHealth Group's price-to-earnings ratio of 13 reflects its lowest valuation in more than a decade.
The main reason behind UnitedHealth Group's sharp decline is an unexpected drop in earnings. The company's medical costs have been much higher than anticipated in 2025, especially with its Medicare Advantage plans. UnitedHealth slashed its full-year guidance earlier this year and withdrew the guidance altogether one month later.
Another concern for investors is that the U.S. Department of Justice is conducting criminal and civil investigations of UnitedHealth Group's Medicare billing practices. The company released a public statement saying that it's cooperating with these investigations and "has full confidence in its practices."
Buffett, Tepper, and Burry knew about the high medical costs when they bought shares. And they likely were aware that a DOJ investigation was probable, since The Wall Street Journal published a story breaking the news in May 2025. However, all three super-wealthy investors bought UnitedHealth Group stock anyway. Why? I suspect they view the issues as temporary and believe UnitedHealth Group will rebound strongly over time.
Should you buy this stock, too?
I think the sell-off of UnitedHealth Group stock was overdone. And I even predicted that Buffett might buy shares of the beleaguered health insurer well before Berkshire Hathaway's 13-F filing for Q2 revealed that he had indeed done so. It probably won't come as a surprise, therefore, that I view UnitedHealth Group stock as a good pick for investors who aren't as rich as Buffett, Tepper, and Burry.
Having worked for several years in the health insurance business myself, I know that UnitedHealth Group has a simple remedy to its higher-than-anticipated medical costs: raising premiums. That's exactly what the company plans to do, but most of those premium hikes won't take effect until 2026.
The DOJ investigation is a bit of a wild card. However, UnitedHealth Group survived a lengthy civil investigation of its Medicare billing practices in the past.
I've been wrong about stocks in the past and could be wrong about UnitedHealth Group. But the odds that Buffett, Tepper, and Burry are all wrong about the same stock probably aren't very high.
