Arvind Mallik, Jonathon Fite, and Paul Ucheoma of KMF Investments presented their thesis on UnitedHealth (US: UNH) at Wide-Moat Investing Summit 2026.

Thesis summary:

UnitedHealth is the largest managed care firm in the US by revenue ($447.6B in FY2025) and by people served (~50M). Jonathon, Arvind, and Paul describe a vertically integrated “payvider” that owns both sides of the cost stack, pairing the UnitedHealthcare insurance arm (~77% of revenue) with Optum, the health services arm spanning OptumRx (the third-largest PBM), Optum Insight (data and analytics), and Optum Health (care delivery). That integration produces the lowest MLR, the highest margins, and the highest ROE and ROIC in its peer group, plus a flywheel in which Optum’s data improves insurance pricing.

The thesis rests on a solvable dislocation. Across 2024 and 2025 the industry mispriced Medicare Advantage (MA) as post-pandemic utilization caught up to and then exceeded actuarial assumptions, with medical costs running 7-10% above reimbursement growth. UNH’s MLR rose from the low 80s to ~89% in 2025, operating earnings fell ~40%, and the shares dropped from roughly $600 to a low near $237. Arvind frames the error as annually repriceable rather than a multi-decade liability, with the MLR set to revert toward its historical 80-85% range.

Management has acted. Stephen Hemsley returned as CEO and bought $25M of stock at ~$288.57; Wayne DeVeydt joined as CFO. The company is exiting unprofitable MA and ACA business (shedding 3M+ members), raising rates, spending $1.6B on AI toward a $1B G&A reduction, and reaffirming a 13-16% EPS CAGR target. Jonathon notes Hemsley’s variable pay is entirely equity-based and locked until 2030, and that buybacks resume in H2 2026, with DeVeydt calling the stock the company’s best available acquisition.

The shares recently traded near $400, up more than 60% from the low. At that level Arvind’s reverse DCF implies roughly 5% growth, against a 7%+ demographic top-line tailwind and the 13-16% EPS target. KMF’s FCF-based DCF, assuming 16% FCF growth and ~1% annual share-count reduction, yields intrinsic value of $500-600, leaving room for mid-double-digit compounding from here. Sellside targets cluster at $410-466.

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About the instructors:

Arvind Mallik is a Managing Partner of KMF Investments, a pure Pay-for-Performance Private Investment Partnership based in Denton, Texas. KMF seeks long-term capital appreciation by investing in companies whose intrinsic value is significantly higher than the market price. Since its founding in 2008, KMF has found opportunities in world dominating franchises, hard assets below replacement costs, businesses at large discounts to liquidation value, and firms with beneficial exposure to rising interest rates. Prior to founding KMF Investments, Mr. Mallik was a Senior Manager in the Strategy practice of Accenture. At Accenture, he helped global companies formulate and execute strategies to enter new markets, develop innovative new services and solutions, and reduce their operating costs to improve shareholder returns. Mr. Mallik obtained a BS in Chemical Engineering and BS in Bioengineering from UC Berkeley, and an MS in Chemical Engineering from MIT. He graduated with highest honors from both institutions.

Jonathon Fite is a Managing Partner of KMF Investments, a pure Pay-for-Performance Private Investment Partnership based in Denton, Texas.KMF seeks long-term capital appreciation by investing in companies whose intrinsic value is significantly higher than the market price. Since its founding in 2008, KMF has found opportunities in world dominating franchises, hard assets below replacement costs, businesses at large discounts to liquidation value, and firms with beneficial exposure to rising interest rates.Prior to founding KMF Investments, Mr. Fite was a Senior Manager in the Strategy practice of Accenture, where he helped companies improve shareholders returns. He is also a Lecturer for the College of Business at the University of North Texas. Mr. Fite graduated with honors from the University of Arkansas with a BS and MS in Industrial Engineering.

Paul Ucheoma serves as Director of Investment Research at KMF Investments, a value-oriented firm based in Denton, Texas, founded in 2008. He leverages a strong background in data analysis to identify compelling investment opportunities with clear catalysts to unlock shareholder value. Previously, Paul served as Vice President of Research at Cultivar Capital, Inc., where he oversaw and refined the investment research process for the firm’s publicly traded ETF, and contributed to portfolio rebalancing and asset allocation decisions at both the client and firm-wide level. Paul earned both his bachelor’s and master’s degrees in Finance from the University of North Texas, has passed CFA Level II, and holds a Series 65 license. Born and raised in Dallas, Texas, Paul enjoys music, traveling, and spending time with his wife.

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