Back to top

Image: Bigstock

Follow UNH Insiders as They Buy $30 Million Worth of Stock?

What Does UNH Do?

Zacks Rank #5 (Strong Sell) stock UnitedHealth Group ((UNH - Free Report) ) is the largest health insurance company in the United States. UNH, which generated ~$400 billion in revenue last year, provides a variety of health care products and services, including health maintenance organizations (HMOs), point of service plans (POS), preferred provider organizations (PPOs), and managed fee-for-service programs. Meanwhile, the company boasts the largest and most diverse membership base within the managed-care organization market, giving it significant competitive advantages. Through several strategic acquisitions, UNH has transformed from a pure health insurer to a comprehensive healthcare provider.

UNH Faces Several Headwinds

Until recently, UNH stock was a model of resilience. Over the past year, however, UNH has had to weather a monumental storm of headwinds including a spike in medical costs and expenses, a cyber-attack, and the murder of UNH health insurance unit CEO Brian Thompson (and some of the backlash that came with it).

Zacks Investment Research
Image Source: Zacks Investment Research

Despite the barrage of negative news headlines, UNH shares traded just shy of all-time highs as early as last month. However, UNH shares have been destroyed since then, plunging more than 50% in a month and marking the healthcare juggernauts worst drawdown since the Great Financial Crisis of 2008.

Zacks Investment Research
Image Source: Zacks Investment Research

Why are UNH Shares Falling?

While the price action was firm until recently, investor confidence was rattled and shares unraveled rapidly after the unexpected departure of CEO Andrew Witty, a Medicare investigation into UNH, and suspended earnings guidance.

Should you Buy UNH Stock?

With negative news reaching a fever pitch, shares plunging, and investor fear rising, is now the time to buy shares of UNH?

Insiders Buy More than $30 Million of UNH

Heavy insider buying in a short period is one of the best “tells” savvy investors can observe for a prospective stock. Last week, UNH insiders put their money where their mouth is and bought a sizable amount of stock. The latest insider trading disclosure shows that returning CEO Stephen Hemsley, who had a previous and successful stint as UNH CEO from 2006 to 2017, bought $25 million worth of shares on Friday, May 16th. Meanwhile, UNH President and CEO John F Rex accumulated nearly %5 million worth of UNH while three directors also looked to take advantage of lower stock prices. Such concentrated insider buying leads me to believe that insiders are confident that the company’s issues will be resolved – and possibly soon.

Zacks Investment Research
Image Source: Zacks Investment Research

 Investors are Bearish on UNH Stock

“Google Trends” analyzes the popularity of search queries on the internet. The term “Short UNH” has spiked to its highest levels in history. Previous spikes have marked significant intermediate bottoms in the stock.

Zacks Investment Research
Image Source: Google Trends

UNH Technicals Show Bottoming Action

The UNH daily chart illustrates significant signs of downside exhaustion, including a hammer reversal candle, extreme volume (the highest since the Great Financial Crisis), and a near-maximum oversold reading.

Zacks Investment Research
Image Source: TradingView

Bottom Line

Though UnitedHealth Group faces a barrage of negative news, recent heavy insider buying and technical indicators suggest peak pessimism and a potential bottom in the stock.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


UnitedHealth Group Incorporated (UNH) - free report >>

Published in