UnitedHealth Group UNH has been a bitter pill for large-cap managers. It was previously an easy pick for its generous dividends, competitive strengths, brisk top-line growth, and well-regarded management team. But instead of providing ballast, in 2025, it has become a wrecking ball. The company has delivered profit-margin compression, operational slipups, a sudden replacement of its CEO, and civil and alleged criminal probes. By May 16, its shares had fallen 42% for the year, neck and neck with Marvell Technology MRVL for the worst performer among America’s 500 biggest companies. In the fashion of a speculative small-cap stock, it bounced 8% on May 19 and sank 6% on May 21. This is hardly the profile of a company typically embraced by dividend or quality-oriented funds.
Trouble started brewing in 2024. A cyberattack halted claims processing, caused $2 billion in direct expenses to the company, and stained management’s execution record. Medical costs surged as care utilization climbed. Regulatory pressure mounted. In December, tragedy struck when the company’s medical insurance segment leader, Brian Thompson, was fatally shot—an event that darkened investor sentiment.
This year’s selloff has taken UnitedHealth’s price/earnings ratio to historically low levels. Some bargain-hunting large-cap value managers have leaned in.
The Value Hunters
- Vanguard Equity Income VEIPX. Between January and March, the fund more than tripled its stake, lifting UnitedHealth to roughly 3% of assets. Lead manager Matt Hand blends contrarian instincts with a respect for quality. His approach isn’t to blindly scoop up the cheapest names. Instead, he looks for companies whose valuations have fallen out of step with their long-term fundamentals, often because of temporary market overreactions. He is cautious about distinguishing structural versus transitory change.
- Hartford Dividend & Growth IHGIX. Manager Matt Baker also boosted its stake to roughly 3% of assets as of March. He often targets companies that have fallen out of favor, operating on the belief that investor sentiment tends to overshoot both on the way up and the way down. UnitedHealth’s recent developments may fit the mold.
- Invesco Comstock ACSTX. This fund initiated a new position in January. Its contrarian investment approach looks for stocks trading at deep discounts as measured by a variety of industry-specific valuation financial metrics. Its management team bet the pessimism had gone too far.
By the end of March, over 55% of large-value funds owned the stock—up from 50% six months earlier—and more than a third held positions larger than those of popular large-value indexes.
Then the Wheels Came Off
April and May delivered a barrage of fresh blows that tested the resolve of funds owning UnitedHealth. On April 17, the company revealed a sharp rise in medical care usage among Medicare Advantage members. Meanwhile, the company’s Optum unit, which operates clinics and provides primary, specialty, and surgical care, had taken on patients with patchy medical records and flawed health-risk assessments. That led to meager government payments relative to the patients’ actual healthcare needs. The firm admitted it had failed to adapt well to new Medicare risk-scoring rules. On May 13, UnitedHealth suspended its 2025 guidance and replaced CEO Andrew Witty with Stephen Hemsley, the company’s current chairman and former CEO. A day later, The Wall Street Journal reported that a civil inquiry into Medicare billing practices had expanded into a criminal probe. The market was displeased.
Holding or Folding?
It’s too soon to know whether most managers are doubling down or bailing in response to the most recent bad news. Portfolio disclosures typically lag by several weeks. But in many conversations with Morningstar’s manager research analysts, value investors sound inclined to stay the course. They argue that the selloff overshoots the damage. UnitedHealth’s core strengths—its scale, diversification, and strong balance sheet—remain intact. Rate missteps can be corrected within the next 12 months, they say. Fixes to risk-scoring and benefit design, coupled with tighter cost controls and telemedicine, could restore margins by 2026.
The Growth Exodus
Many growth managers have refused to wait. Fidelity Contrafund FCNTX manager Will Danoff and his growth-focused colleagues have sharply reduced their exposure to UnitedHealth Group—a notable shift for a firm that had long treated the stock as a cornerstone holding. And Matthew Benkendorf, manager of Vontobel U.S. Equity VNUAX, exited the stock in 2024’s fourth quarter, citing the risks of regulatory attention on UnitedHealth’s size and vertical integration. The share of large-growth funds that are overweight the stock has slipped from 45% to 30% since last summer.
Blue Chips Bruise, Too
UnitedHealth’s faithful see a rebound in the making; pessimists see a healthcare giant past its prime. The company’s woes don’t just bruise the stock—they scramble the assumption that a company’s size, history, or market dominance will inevitably shield investors from trouble.
