UnitedHealth soars but Berkshire's new stake may still be in the red

Berkshire Hathaway's disclosure of acquiring over 5 million UnitedHealth Group (UNH) shares between April and June fueled a near 30% stock surge, despite uncertainty regarding the current profitability of Berkshire's investment. Conversely, Kraft Heinz (KHC) shares declined over 4% this week after announcing a plan to split, a move Warren Buffett publicly opposed, prompting investor concerns that Berkshire, KHC's largest shareholder, might divest its stake, which would require public disclosure.

Analysis

Berkshire Hathaway's Q2 2025 disclosure of a 5 million share purchase in UnitedHealth Group (UNH) has acted as a significant positive catalyst, driving the stock up nearly 30% since the mid-August filing. Despite this rally, the profitability of Berkshire's position remains uncertain given the wide Q2 trading range, and the stock is still down 30% year-to-date. The bullish case is further supported by a Morgan Stanley analyst upgrade, which raised the price target on UNH to $395 from $325 following positive discussions with management. In sharp contrast, Kraft Heinz (KHC) is facing a substantial stock overhang risk after shares fell 4.25% this week. The decline follows the announcement of a corporate split, a move publicly opposed by Warren Buffett, who represents KHC's largest shareholder. This has led to market speculation, noted by Gordon Haskett's Don Bilson, that Berkshire could divest its stake, an action that would require public disclosure within two days due to its size.

Key Decisions for Investors

• The institutional endorsement from Berkshire Hathaway, coupled with Morgan Stanley's price target increase to $395, signals a strong bullish case for UnitedHealth (UNH) for investors willing to look past its 30% year-to-date decline.
• Investors in Kraft Heinz (KHC) should exercise caution due to the significant governance risk and potential for a stock overhang created by Warren Buffett's public opposition to the company's split; monitoring for filings that would indicate Berkshire is selling its stake is critical.
• The divergent outcomes for UNH and KHC underscore the material impact of Berkshire's strategic moves, and investors should treat its 13F filings and public commentary as key indicators of both conviction and risk for its major holdings.