Warren Buffett Effect: UnitedHealth Stock Soars to New Heights—Here’s Why

Wall Street's favorite oracle strikes again. UnitedHealth shares are mooning today, and the catalyst is no surprise: Berkshire Hathaway's latest 13F filing shows Buffett doubling down on the healthcare giant.

Oracle of Omaha's Midas Touch

When the Sage of Omaha buys, markets listen. The stock surged 8% in pre-market trading—because nothing moves needles like a billionaire's stamp of approval. Never mind that healthcare costs are crushing ordinary Americans.

Institutional FOMO in Full Swing

Hedge funds are now scrambling to adjust their exposure. Because nothing says 'conviction' like herd mentality dressed up as fundamental analysis. Volume hit 3x the 30-day average before the opening bell.

The Cynic's Corner

Funny how 'value investing' suddenly gets sexy when it involves a stock that's already up 400% since 2020. But hey, at least someone's making money off America's broken healthcare system.

Berkshire buys UNH

Berkshire Hathaway's latest regulatory filing revealed that the company took a considerable stake in UnitedHealth. The 5 million-share, $1.6 billion stake makes the massive health insurer the 18th-biggest position in Berkshire's portfolio. Buffett's company also trimmed its positions inand.

The MOVE took Wall Street by surprise, given the many issues UnitedHealth faces, and the revelation sent shares soaring immediately.

UnitedHealth is struggling

The company's most recent quarterly report revealed a darkening financial picture, including a significant miss on earnings per share, as costs from medical care continue to balloon. The company was also forced to suspend guidance as it tries to adapt to the shifting market.

Image source: Getty Images.

Its financial woes are far from the company's only issues, having recently suffered the sudden departure of its CEO for "personal reasons." The departure comes as the company faces two Department of Justice (DOJ) probes -- one criminal and one civil -- into its Medicare billing practices.

Buyer beware

It's hard to disagree with the Oracle of Omaha, but there are just too many issues facing UnitedHealth at the moment and with no clear picture of an imminent turnaround. I WOULD stay away from the stock.