Planting Seeds for Long Term Growth-Our Latest Moves - August 5, 2025
We’ve had some excellent short-term decisions lately that have boosted our returns relative to the S&P 500. A few recent standouts:
Fannie Mae and Freddie Mac bonds have been moving sharply higher.
Oracle and Comfort Systems — both benefiting from the AI boom (think: cooling all those new data centers).
Cemix, the Mexican cement manufacturer, riding steady demand.
These have been rewarding trades, but today we made a move that’s more about the long-term shade tree than the quick harvest.
Stepping Back into UnitedHealth (UNH)
UnitedHealth has been in the headlines lately. We once held it broadly through last February, selling around $438 per share. Since then, it hit a trough, bounced a little, and then slid to a fresh low of $234.
I believe most of the potential sellers have already exited. That opens the door for a fresh entry into what I consider a well-run, financially strong company. We re-acquired shares today at $247 — quite a savings from our prior exit price, and far from its all-time high above $630.
Why This Opportunity Matters
UnitedHealth usually commands premium valuations because it avoids situations like this. In its sector, a P/E of nearly 22 is typical — not because it’s cheap, but because of its scale, profitability, and the powerful demographic tailwind of an aging America.
Today’s P/E is 11.5. That doesn’t mean it’s “half-price” — recovery isn’t guaranteed — but it does mean we’re getting an unusually favorable entry point for an A+ credit-rated company.
Profitability is slightly dented but still strong.
Management’s guidance was cautious — but refreshingly honest.
The dividend yield is now close to 4%, up from its typical ~1.2%.
At our price, that’s nearly $9.00 per year in dividends, with a 15-year track record of 10% annual growth.
If that pace continues, it’s not hard to imagine UNH paying nearly $20 per share annually within seven years on an investment under $250 today.
As my brother likes to say: “If you want to sit in the shade… plant a tree.” UNH is one of those trees.
What We Sold to Buy
As is usually the case, we sold something to fund the purchase. Chubb (CB), the insurer Warren Buffett favors, was acquired in the mid-$250s over a year ago. It’s done fine, but with projected earnings growth of only 12–15% from here, it wasn’t as compelling.
We recently added Reinsurance Group of America, which overlaps in function with Chubb in a portfolio our size. So we sold CB at nearly $270 and swapped share-for-share into UNH. The change also boosts our projected income, as Chubb’s dividend was minimal.
Dividend Update
For our dividend-focused readers: this is a quiet month for quarterly payouts. Only Energy Transfer (a holding we recently expanded) pays this month on a quarterly basis. Nearly 40 of our holdings will be sending their regular monthly dividends instead.
Written by: Alex Skabry