Speaker 1: 0:00

Hedge funds and even some Congress members and their very own CEO have been scooping up shares of this very stock. So Hamish tells me he does all the research around here now. So now you know why this channel is running the way it is. He's very cute and he's named Hamish because he's well, he's ginger, isn't he? I hope I have got some Scottish viewers that are now very offended. I can't do a Scottish accent Now.

Speaker 1: 0:24

You can see Congress members literally buying this just a few days ago. Tim Moore, what's the date today? Three days ago, you've got hedge funds. What's their top buy? Last quarter it was UNH United Health. Yeah, that's the stock we're talking about, and I've seen plenty of market dips and recoveries in my sort of 10 years as investing for myself and as a former banker and UnitedHealth Group, which is a major health insurance giant. Well, we know they're a pinhammer, I just showed it to you, but it creates an opportunity down simply why it collapsed the recent insider buying by the CEO and Wall Street and I mean not Wall Street, washington and hedge funds and the pros and cons of jumping in now, and this will also be a lesson for any other stock that just happens to collapse whether it's a time to buy. So I hope this is going to be educational for you. And remember, this isn't financial advice. It's all Hamish is doing, and if you think you're going to get some value out of this, just smash a V in the chat or in the comments down below. And if you're somebody who's actually serious about being a better investor, protecting your money, lowering your risk and potentially improving your outcomes, then I've got something better for you than this video, which is a live training session this very Saturday, 10 am New York time, and I will shake you up and I'll give you and arm you with some tools that will make you into a better investor. Now, if 10 am New York time is the middle of the night for you, or 1 am for you, or you've got you know, I don't know pottery session that time, or a tea party or something very important. There will be no replay and it's simply because those of you who watch the replays I can see it you don't really watch it and it just means you're not that interested, you're not ready for it, and that's okay. So when you're ready for it, you'll show up for yourself. If you don't, you don't. Those of you who will felixfriendsorg slash training is the link. It's down below in the description. We still have a couple of spots left to hit the thousand registration mark.

Speaker 1: 2:27

So back to UNH. The main trigger for UNH's collapse has been skyrocketing, rotting and rocketing medical costs. It's eating into their profits and with the company's medical loss ratio which is basically how much of their premium are they spending on claims right, they want to keep the premiums, they want to make a profit and it's hitting alarming levels. And in Q2, you can see it on the chart here. This was Q2, they missed expectations massive drop in earnings. They slashed the guidance for the year by almost half and that's terrible.

Speaker 1: 3:07

We have ongoing issues from prior years, like rising Medicare Advantage plan costs, which is sort of government-backed insurance for old people, and in addition, we have the Department of Justice doing an investigation into its Medicare Advantage program, which adds a lot more uncertainty and scares the bejesus out of investors. And the previous CEO resigns because, well, you know, he was the one to blame and everyone's very, very, very, very worried about it. The stock's down more than 50% as of this year, but and there is a but in May 2025, the new CEO, stephen J Hemsley, who was also the previous CEO, from about 2006 to 2017, if I'm not mistaken, he went out and spent $25 million buying his own stock. Efo joined and bought another $5 million of his own stock and you can see the little spikes up there. And it's pretty rare for insiders managers to buy their own stock because usually they get given share options and then they like to sell them, as you can see by all these little bars up here, which they do because they've got tax bills to pay or yachts to pay for or a fourth mistress or that sort of thing, or very lavish weddings. You know Bezos, and that gives us some confidence, because many reasons you sell, but there's only one reason you buy because you think the stock is going to go up. That's the only time you buy a stock, so it is trading at historically very low multiples. The forward PE ratio screams undervalued. It's dead cheap, all that kind of stuff.

Speaker 1: 4:47

This is a $400 billion revenue company. By the way, this is not a minor sort of a startup and I've got a very squiggly chart here for you, which I thought wrong and hard about not showing you, because everyone always tells me I give you too much detail, but I think detail helps. And what have you got on here? Well, the first thing is that if you watched a little bit of data, you actually know these things are going to happen. First, the blue line up here is ROI return on invested capital and you could see, in 2023 onwards, that started to slope down a little bit. Let me find a purplish chart, which is gross profit growth. This is profit growth there, right? So this is basically profit growth growth in purple. Feel free to take a screenshot of this before I scribble all over it.

Speaker 1: 5:37

And what happens in late 2023? Well, it freaking collapses, doesn't it? That was the warning signal. And then let's have a look at the stock chart in October 2023. And my guess would be where's October 2023? Here, yeah, stock starts to drop below the 50-day moving average line. There you see that yellow line. There it starts to slope down. It's flattening out. It's a really, really, really good lesson, this one. Here it was going up, it's going sideways. That's a big, big, big warning that the guys on Wall Street knew about. Then we start coming down pretty harshly here. Look at Wall Street selling a massive volume down there. That was a good clue. And then in green, green, green green, we have free cash flow. So the free cash flow here FCF, as I usually abbreviate it, free cash flow absolutely freaking collapses and that was also a bit of a warning sign. But this is actually why I put that on here, because look at the free cash flow, it's going back up, so the business isn't entirely dead. Yeah, it isn't growing and profits are in the you know, you know where doghouse. But there is some light here at the end of that tunnel and, as I said, heavy buying by the CEO suggests they believe the worst is priced in and this often precedes recoveries, in my experience.

Speaker 1: 7:05

Now, unh is a leader in healthcare. They have generally pretty strong fundamentals management plans premium hikes, cost cuts starting from 2026, and that could help get these miserable profits back out of the basement. So for patient investors, buying when others are fearful, as Warren Buffett advises, could pay off, especially with revenue growing despite the profit loss. There is also something there. Your president, donald J Trump, is doing his best, he says, to lower the cost of medication. Now, if that actually happens, then guess what? Unh is still collecting those premiums and they're paying out less for your medication, right, which could be something. Now, unh also owns Optum, which is a tech and services arm, and that provides some stability in this whole thing.

Speaker 1: 8:01

What about? What about the downsides of buying this right now? And some people have already gone out there and put their entire life savings on this thing because they watched half a youtube video. Yeah, um, you know who you are? Well, actually you don't, because you're no longer here. So so profits probably won't grow until 2026. Medical costs are expected to stay pretty high and some analysts are saying the stock could drop to $160 right now, which would be a pretty significant drop, and the ongoing Department of Justice probe well, it could lead to fines or changes. It's just uncertainty and, as I showed you, profits are falling. So, yes, some will say the stock's oversold.

Speaker 1: 8:47

One thing you can look at here and you can look at in trade vision pop an indicator on here which is called ad indicator. Whoops, you can't see that. There we go and you click on RSI, which is something people look up. I must say I don't really, but I know some people do and that right now is it's at 32, which is sort of undervalued-ish territory, can obviously go to zero, but if you look over time here, it's at a very, very, very low level. Right, you see that little horizontal dotted line across there. So yeah, it's true, but things can be oversold for quite a long period of time and a lot of people then get frustrated holding a falling knife.

Speaker 1: 9:39

Healthcare also just faces a lot of pressure from inflation, expensive drugs, and maybe they fix that, policy changes and so on, and that could delay it. So my thought process here is this is an interesting one to watch for sure. One thing I would look at is mansfield rsi, which is the rsi of smart people, and that tells you UnitedHealth performing better than its sector, better than its competitors. At the moment it is at minus five, which says no, it's underperforming the sector, so that's no good. So you want that to start at least moving up, and at the moment it is trending down, not up. So that's one thing to look at. And the second thing to look at would be, in my humble opinion, the moving average lines. So there is one here which is yellow, that's the 50-day moving average line, and then you've got this one here which is the 150. When you are above these, there is a lot less risk. So, looking at, if you're like a trader and you see it recovering over 300 with some momentum, mrsi improves some volume improvements, then that could be a relatively high risk entry point. Or you could wait for another $100 up because, look, even from 400 all the way back up to 600 is still a 50% upside with a lot less risk, which might be a better thing for a lot of investors.

Speaker 1: 11:03

You can also keep an eye on the news here. We have live news in Trade Vision. Here again, there's a link down below to Trade Vision and you can play around with that and it tells you, you know, what are the good points, including sources. It tells you what are the not so good points and that'll also tell you, well, what's actually going on here with all the litigation and everything else, and that'll keep you informed. To me it just feels too early. It's a falling knife by definition, and falling knives can go much, much lower. That's been my experience. I used to be a bottom fisher. I then realized that's actually the one thing that's keeping me poor, so I changed tune and I now buy things that are going up. So, yes, interesting company, good business model and all of that, but I think it's just a little early. But it's worth adding it to our watch list Now you think that was useful, write useful in the chat or in the comments.

Speaker 1: 11:54

If you didn't think it was, then put some expletives in there. We'll probably filter them out. And let me leave you with probably the chart of all charts for the present season, and that is companies have been beating expectations on earnings the highest level since the COVID recovery, and that generally is a good thing, and that generally is a good thing. Pretty rare that, at a level as high as we are, you would fall into a recession or something like that, which is the gray bits, by the way, the gray areas are recessions. The missus not your missus, but the missus. It's a cheap joke, isn't it? Can we get a pen? Apparently? Apparently not. Let me try that again. Bloody pen, bloody Microsoft. There we go. The misses are at 10%, so 10% of companies missed, and that's very low because the average sits at 13%. So we're below average, whereas our beats at the top that's the average there at about 48%, which is a massive beat to the upside, at about 48%, which is a massive beat to the upside, and that just shows you that companies are making more money than expected, that AI is actually generating cash, certainly for NVIDIA, and we probably still have another leg to go up here in this particular bull market.

Speaker 1: 13:30

Now there is one thing that I read today that makes me a little concerned, and that is Meta just borrowed money to pay for its data center AI expansion, and they didn't go to banks or traditional lenders or the stock market. They're going to private lenders. Why is that an issue? Well, yes, they'll lend you money. They're not regulated like banks, so they basically have very little oversight. But the problem is, if this is becoming a bubble I'm not saying it is, but if it were to become a bubble, then the banks didn't take on the debt, but inevitably the banks will hold the risk, because the private lenders will also work with the banks, right, or the private lenders will owe money to the banks. So you create this kind of unregulated risk outside of the banking sector through private lending, and that could be the next bubble. That could be the real thing that blows up at some point and I'm not saying it's happening right now. It probably won't happen for a while.

Speaker 1: 14:33

So we're going to keep enjoying the party, but we want to be careful and cautious. I had a quick look this morning. There are more sectors now in the stock market that are looking ugly than are looking good. So most of the market isn't looking good and therefore taking profits. Setting your stops is probably a good idea for a lot of stocks that are extended or are starting to come down or already coming down, and I'm going to be very, very careful with what I'm buying very, very careful, because this is one of those moments where the easy money has somewhat been made.

Speaker 1: 15:10

I think there's still a lot more money to be made there always is but it isn't going to be just, you know, throwing your money at an index factor. At least that's my opinion. Of course, you're very welcome to do that, and it's a thousand times better than not investing. So please don't let me put you off, but, yeah, it's going to get a little bit more interesting in this year. So if you got some value out of this video, share it with a friend, let me know down below in the comments and join me on Saturday at 10 am, new York time. Felixfriendsorg slash training for some inspiration and education. All the best.