UnitedHealth Group (UNH) is a name we’re looking to short when the timing is right and we’d rather short the name sooner than later rather than miss any opportunity. We are less concerned with a strong Q412 earnings release and more concerned with accelerating cost trends from an early/strong flu season, employment trends and a new modeling tool.
The most recent employment data continues to suggest both rising maternity (significant driver of inpatient utilization) and acceleration of physician office visits, over the next few quarters. Our expert call that we hosted with Ken Burdick last week added to our concerns surrounding the Affordable Care Act. There will likely be further market disruption that comes with the implementation of the Act than previously thought.
All in all, the stock screens as a long right now but over time, we believe the opportunity to short UNH will present itself very soon as operating trends deteriorate.
