Both Berkshire Hathaway and David Tepper Silently Dumped the Same Healthcare Giant in the Same Quarter
Berkshire Hathaway fully exited UNH in Q1 2026 as Tepper's Appaloosa also cut its stake, while 22 analysts kept buy ratings with a $407 target.
UNH shed 965,000 Medicare Advantage members in Q1 and plans to cut 2-3 million more, rebuilding margins through shrinkage rather than pricing power.
A federal OIG report found UNH's post-hospital care denial rates hit 51-80%, well above peers, while preliminary 2027 Medicare Advantage rates came in below expectations.
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Warren Buffett's Berkshire Hathaway (NYSE:BRK.B) fully exited its UnitedHealth Group (NYSE:UNH) position in Q1 2026, and David Tepper's Appaloosa Management meaningfully reduced its UNH stake in the same quarter. Chase Coleman also sold UnitedHealth shares in Q1. Meanwhile, the sell-side stayed bullish, with a consensus target of $407.38 and 22 buy or strong buy ratings against a single sell.
Two of the most scrutinized capital allocators in the business walked out the same door, in the same quarter. That is worth thinking about.
UNH is not a broken business. Q1 2026 produced adjusted EPS of $7.23 against a $6.61 consensus, revenue of $111.72 billion, and a medical care ratio that improved 90 basis points to 83.9%. Management raised full-year adjusted EPS guidance to greater than $18.25. The stock is up 22.66% year to date through June 17 and 32.82% over the trailing year.
The path to get there involved shrinking. UnitedHealthcare lost 965,000 Medicare Advantage members in Q1 2026 alone, and the 2026 plan calls for a 2.3 to 2.8 million membership contraction from exits of unprofitable contracts. Margin recovery achieved by shedding members is real. It is also structurally different from margin recovery driven by pricing power.
Three forward-looking pressures appear to be sitting on the trade. First, preliminary 2027 Medicare Advantage rate announcements came in below expectations, the same catalyst SGA Global Growth Fund cited on June 17, 2026 when it sold its entire UNH stake. Second, a federal OIG report on June 12, 2026 documented post-hospital care denial rates of 51 to 80% at UnitedHealth's Medicare Advantage plans, well above peers. Fairview Health Services said the same week it will stop accepting UnitedHealthcare Medicare Advantage in 2027, affecting more than 11,000 patients.
Third, Optum Health's profitability is rebuilding slower than the Street modeled. Q1 2026 Optum operating earnings of $3.3 billion still trail the prior-year $3.89 billion, even after Q3 2025's collapse to $255 million from $2.2 billion. Forward P/E sits at 22x, expensive against quarterly earnings growth of 0.7% and revenue growth of 2%.
Institutional exits do not automatically equal a verdict. Berkshire trims names for tax, concentration, and opportunity-cost reasons that have nothing to do with a company being doomed. Tepper rotates aggressively and frequently. Both have been wrong on individual names. UNH's 0.65 beta and 2.15% dividend yield still make it a defensive holding by construction.
The useful question is whether the bull case rests on assumptions Berkshire and Tepper rejected. Analyst price targets are anchored to Q1 2026's margin reset and a clean ramp into 2027. If preliminary 2027 Medicare Advantage rates land where they hint, and if denial-rate scrutiny translates into either rate pressure or forced approvals, both feed straight back into the medical care ratio. That single variable took UNH down to a 52-week low of $228.48.
For a retirement-focused investor, the takeaway is narrower than copying the billionaires. The bullish thesis depends on a 2027 rate environment that two sophisticated holders apparently no longer want to underwrite. Worth weighing before deciding whether the year-to-date rally is the recovery itself or the exit ramp.