Michael Burry Channels Warren Buffett In Molina Healthcare Stock
Renowned investor Michael Burry published a detailed thesis Monday evening on Substack arguing that Molina Healthcare is a premier investment opportunity, even comparing it to Warren Buffett's legendary acquisition of Geico.
- MOH stock is climbing. See the chart and price action here.
Burry suggested that while Buffett's move into Geico was a brilliant “steal,” Molina today offers a less risky profile and potentially better business prospects due its focus on Medicaid programs, according to Business Insider, which cited the investment manager’s substack write-up.
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He highlighted Molina's impressive growth potential and its history of high returns on invested capital.
He even went so far as to say that if he were “sitting on enough billions,” he would buy the entire healthcare company outright because it "has a clearer path to significant double-digit long-term growth than Apple.”
‘Buffett, if he were in his 40s…’
“Maybe Buffett, if he were in his 40s and only just ramping up his insurance investments, would buy it here for a much smaller Berkshire,” Burry added, per Business Insider.
Despite a large drop in MOH stock price and a turbulent environment for health insurers characterized by rising costs and legislative shifts, Burry remains bullish.
He views Molina's focus on Medicaid and its efficient, agent-free business model as a “profitable niche” within a complex political landscape.
Under the leadership of CEO Joe Zubretsky, Molina has seen a dramatic turnaround involving stock buybacks and conservative accounting.
Burry concluded that MOH stock could possibly land below $100 due to federal budget concerns and "would be a generational buy at that price."
“Here we have the best loss ratio, the best expense ratio, the best win rate, and the most conservative accounting in one insurer,” Burry said.
MOH Price Action: Molina Healthcare shares were up 4.16% at $173.46 in Tuesday's midday trading, according to data from Benzinga Pro.
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