Buffett buys US$1.6 billion UnitedHealth stake, sells T-Mobile

Warren Buffett’s Berkshire Hathaway bought shares of UnitedHealth Group in the second quarter, sending the health insurer’s stock soaring in post-market trading.

The chief executive officer of the Omaha, Nebraska-based conglomerate acquired five million shares in UnitedHealth, granting Berkshire a stake worth US$1.6 billion, according to a filing on Thursday (Aug 14). Berkshire also sold its US$1 billion stake in T-Mobile US during the period, exiting the telecommunications operator.

Buffett’s investment in UnitedHealth comes as the health company faces multiple crises. Last year, a UnitedHealth executive, Brian Thompson, was shot to death in Manhattan.

UnitedHealth, along with other US health insurers, has also faced unexpected increases in medical costs. In April, it reported earnings below Wall Street estimates for the first time in more than a decade, sending the stock price plummeting. It has since replaced its CEO and announced plans to replace its chief financial officer.

The disclosure of Berkshire’s UnitedHealth stake pushed the insurer’s shares up as much as 9.6 per cent in post-market trading on Thursday.

Apple, BOA trim

Buffett also sold 20 million shares of Apple during the period, after slashing his holding in the iPhone manufacturer last year. Berkshire’s Apple stake remains its largest equity stake by market value, despite it falling by about US$9.2 billion in the three months ended Jun 30.

Berkshire also renewed its effort to trim its holding in Bank of America (BOA), selling 26 million shares and bringing its stake down to about 8 per cent at the end of June. Buffett started whittling down the bank investment last year, without providing any explanation for the move.

One of its equity bets, a stake in consumer foods giant Kraft Heinz, has been a headache for Buffett’s company. The conglomerate took a US$3.8 billion impairment charge on its investment earlier this year, and kept its holding unchanged in the second quarter.

Meanwhile, Berkshire tweaked its investment in US homebuilders, building its stake in Lennar and selling shares of DR Horton. The company also bought more shares of steel manufacturer Nucor. Those changes were omitted in a previous filing as the company requested confidentiality treatment from the Securities and Exchange Commission. BLOOMBERG