Berkshire Hathway goes big on United Healthcare

Today we're looking at Warren Buffett's Berkshire Hathaway (BRK-B)'s decision to sell Apple (AAPL) shares while adding United Health (UEEC) group shares.

Video Transcript

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Well, today we're looking at Warren Buffett's Berkshire Hathaway's decision to sell Apple shares, while adding United Health Group shares. Let's start with Apple. Berkshire sold 20 million shares of Apple in the June quarter, marking the first time it's reduced its stake in the consumer electronics giant since last year. Apple though still remains the company's largest holding, and remember Buffett praised its chief executive officer, Tim Cook, at Berkshire's annual meeting just in May. Now, Apple shares recently traded about 30 times its projected earnings over the next 12 months. That's according to FactSet. And as you can see, the stock has slipped over 7% this year. Okay, let's move on to United Health now. And Berkshire has acquired 5 million shares and that's had quite the impact in the pre-market. As you can see, shares there are up over 10%. Now, it was once a health care stalwart, but has struggled in the midst of a litany of challenges including a pullback in Medicare funding, the shooting death of a top executive and controversies over its business practices. In May, chairman Stephen Hemsley returned to his former role as CEO to help engineer a turnaround. Now United Health shares have lost more than 46% of their value this year alone. In fact, they've lost about half over the past year. The healthcare conglomerate has signaled prolonged pain with a new far lower profit forecast, as it sees billions of additional costs in the upcoming quarters. Now overall, though, Berkshire was a net seller of stocks in the second quarter, unloading $6.92 billion of equity securities while buying $3.9 billion. That's according to its financial statements. Now, it's continued to stockpile cash and has refrained from repurchasing its own shares in the midst of the market's recent record-breaking rally. The cash trove actually grew to $344 billion, including equivalents at the end of June.

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