Goldman Sachs’ Best Hedge Fund Stock Picks: Top 20 Stocks

16. UnitedHealth Group Incorporated (NYSE:UNH)

Number of Hedge Fund Investors in Q2 2024: 114

GS’ Number Of Funds: 16

UnitedHealth Group Incorporated (NYSE:UNH) serves the needs of more than 50 million people in the US when it comes to healthcare plan coverage. This provides it with the key benefit of stability, even in an environment where utilization rates for its services are high and strain its balance sheet along with high inflation driving up medical costs. UnitedHealth Group Incorporated (NYSE:UNH)’s sizeable resources, as evidenced by $25.4 billion in cash and equivalents and $14.1 billion in trailing twelve month net income, also means that the firm can return capital to shareholders in the form of dividends. UnitedHealth Group Incorporated (NYSE:UNH) also stands to benefit from long term secular trends particularly those surrounding higher elder care costs and the rise in popularity of weight loss drugs and cancer treatments. These could expand its coverage market and allow it to grow revenue.

UnitedHealth Group Incorporated (NYSE:UNH)’s commented on its expectations for the rest of the year during the Q2 2024 earnings call:

“We’re also well positioned for growth in 2025. In the selling season to date, the most sophisticated thoughtful buyers of health benefits and services in the US, such as large employers, unions, states, seniors, all continue to choose the offerings of UnitedHealth Group, when they’re looking for managed care, pharmacy services or a Medicare Advantage plan that provides the best value. This consistent growth reflects customers’ recognition of the need for a company like ours. As you know, UnitedHealth Group strives to help reduce the fragmentation and lack of coordination that drives up costs and erodes care outcomes in the $5 trillion US healthcare marketplace. We aim to better coordinate and align incentives among caregivers, payers, and pharmacy, enabling us to focus on the whole patient throughout their health journey.

We believe this increases value for customers and consumers, improves people’s experience and health, reduces redundancies and waste, and ultimately leads to a more sustainable health system. For example, the proven health and economic value to consumers and taxpayers of Medicare Advantage. A recent study by Milliman found that the cost of taxpayers of Medicare Advantage is 4% less than traditional fee-for-service Medicare. At the same time, Medicare Advantage provides seniors well over $2,000 per year in additional value through lower out-of-pocket cost and important services like dental, vision and hearing, none of which fee-for-service Medicare covers. That means a lot to the majority of the people Medicare Advantage serves, who have limited economic resources and otherwise would lack access to such services.”