Warren Buffett Is Selling Apple and Bank of America Stock and Piling Into an Embattled Healthcare Stock Down 46% This Year

Berkshire Hathaway's latest 13F filing indicates a strategic portfolio rebalancing, with the firm notably trimming its positions in top holdings Apple (7% in Q2, 30% over the past year) and Bank of America (4% in Q2, 41% over the past year), reflecting a cautious stance amid high market valuations. Concurrently, Berkshire initiated a new $1.57 billion contrarian bet on UnitedHealth Group, a healthcare insurer whose stock had fallen significantly this year due to rising medical costs and a DOJ probe. This move suggests Berkshire perceives deep value in UNH's underlying fundamentals, including projected double-digit revenue growth for 2025, robust free cash flow, and an attractive valuation, despite its current challenges.

Analysis

Berkshire Hathaway's Q2 13F filing reveals a calculated portfolio rebalancing, characterized by continued risk reduction in its top holdings and a significant contrarian investment. The firm trimmed its position in Apple (AAPL) by 7% and Bank of America (BAC) by 4%, bringing the total reduction over the past year to 30% and 41%, respectively. This move aligns with a broader conservative strategy of hoarding cash amid what is perceived as stretched market valuations and is potentially influenced by specific headwinds such as tariff-related issues for Apple and the cyclical nature of banking for Bank of America. Concurrently, Berkshire initiated a new $1.57 billion position in UnitedHealth Group (UNH), a healthcare insurer whose stock has declined approximately 46% this year. This investment was made despite significant challenges for UNH, including a downward revision of its full-year earnings outlook to $16 adjusted EPS due to a projected $6.5 billion increase in medical costs and an ongoing criminal investigation by the U.S. Department of Justice. Berkshire's move signals a deep-value play, predicated on UNH's strong fundamentals, which include projected double-digit revenue growth in 2025, a free-cash-flow yield above 10%, a recently increased dividend yielding 3.25%, and a dominant market position.

Key Decisions for Investors

• Berkshire's significant selling of Apple and Bank of America suggests a defensive posture on market leaders and cyclical stocks, prompting investors to review their own exposure to highly valued equities.
• The new $1.57 billion stake in UnitedHealth, despite its severe operational and legal headwinds, presents a potential long-term value opportunity for investors willing to look past near-term volatility and focus on the company's strong cash flow and market leadership.
• Investors in UnitedHealth should treat Berkshire's endorsement as a strong positive signal but must continue to closely monitor developments in the DOJ investigation and medical cost trends, which remain material risks.
• The substantial, year-long reduction in Berkshire's AAPL and BAC holdings could indicate a fundamental shift in conviction, warranting closer scrutiny by long-term holders of these stocks beyond simple profit-taking.