$Unitedhealth(UNH.US)

Stephen Hemsley, the CEO of UnitedHealth ($Unitedhealth(UNH.US)), is now watching the stock price fall... People often forget that he was once the CFO and knows the value of strategic buybacks.

Step 1: Blame the quarter, use extremely conservative guidance to set expectations as low as possible...

Step 2: Wait for the stock price to drop, then buy back shares on a large scale...

→ Currently authorized to repurchase 20 million shares (about 7–8 million shares were repurchased in Q2).

The company has $32 billion in cash on hand and can still generate $16 billion in free cash flow annually. With margins recovering, cash flow will continue to grow next year.

Considering antitrust pressure has closed the M&A window, they now have this cash, and the stock price has fallen to pandemic lows—what do you think they will do?

If they repurchase 20 million shares at $250 per share, that's $5 billion. They originally had a $3 billion quarterly buyback program, and it's highly likely they will use up the current authorization and then add another $5 billion buyback.

Additionally, at a dividend of $8.80 per share, repurchasing 20 million shares would save $176 million in annual dividend payments.

With margins recovering, the number of outstanding shares is expected to drop to about 850 million by the end of 2026...

Even at a 4% net margin (historically low), on $475 billion in revenue, that's $19 billion in net profit. Spread over 850 million shares, that's about $22 in earnings per share (EPS).

If the net margin recovers to 4.5% in 2027 and revenue increases to $500 billion, net profit will reach $22.5 billion. Assuming outstanding shares further drop to 815 million (with an additional $12 billion in buybacks), that's about $27 in earnings per share.

In other words, EPS is $16 in 2025 and $27 in 2027.

Every share repurchased now not only saves future cash dividend payments but also disproportionately increases EPS.

Given the company's investment-grade credit rating and low short-term debt—they can easily take on moderate leverage if necessary.