Buffett invests in health plans
Posted Sept. 10, 2007
Multibillionaire investor Warren Buffett has quadrupled his investment in the nation's two largest private-pay health plans -- Indianapolis-based WellPoint, and Minnetonka, Minn.-based UnitedHealth Group.
According to Securities and Exchange Commission filings, Buffett's Berkshire Hathaway holding company increased its investment in WellPoint to 4.2 million shares from 979,000, and in United to 4.8 million shares from 1 million.
Omaha, Neb.-based Berkshire Hathaway's ownership stake in each company is still small, though -- in each case less than 1%.
But Buffett's successful investment track record tends to catch Wall Street's attention. The stocks of both companies had fallen about 10% to 15% since peaking in the spring, but shares ticked upward after news of Buffett's purchases became known on Aug. 15.
On Aug. 24, a Citigroup analyst noted that health insurance company stocks may be attractive because, he believes, they are trading for less than they are worth. Analyst Charles Boorady said health plan stocks have felt pressure because of fears the companies' financial growth is unsustainable, but he wrote to investors that he believes that growth in Medicare spending will help kick-start health plan growth.
Note: This item originally appeared at http://www.ama-assn.org/amednews/2007/09/10/bibf0910.htm.