2 Stocks Top Managers Are Selling

Susan Dziubinski: Each quarter, we take a look at the recent transactions of some of the top money managers around—who we call our Ultimate Stock-Pickers. Why? Because the portfolios of well-respected money managers can be fertile hunting ground for stocks to buy—and stocks to sell.

Today we’re looking at two stocks that were among the most widely sold securities among our Ultimate Stock-Pickers last quarter.

2 Stocks Top Managers Are Selling

1. Alphabet GOOGL
2. UnitedHealth Group UNH

Nine of our Ultimate Stock-Pickers sold shares of Alphabet stock last quarter. Interestingly, Alphabet was also the top stock purchased by our Ultimate Stock-Pickers during that same period. What gives? Bears would argue that macroeconomic issues will continue to weigh on the firm’s ad business for the foreseeable future. Bulls would point to the strong growth in the subscription and cloud businesses and opportunities with artificial-intelligence-based products. Based on the stock’s current price, Morningstar sides with the bulls on this one: We think shares are undervalued and worth $154 each.

Eight of our Ultimate Stock-Pickers sold UnitedHealth Group stock last quarter. One of the largest private health insurers, UnitedHealth posted strong results in the fourth quarter, particularly on a free cash flow basis, which led us to increase our fair value estimate. Management’s guidance for 2023 points to another strong year for the company. We think UnitedHealth has done a good job of remaining at the leading edge of the changes affecting the industry, and management has done an exceptional job of building an integrated business model. Nevertheless, we think UnitedHealth Group stock is about fairly valued, trading near our $462 fair value estimate.

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Morningstar senior analysts Ali Mogharabi and Julie Utterback contributed the research behind this segment.

Watch “4 Undervalued Financial Stocks for the Long-Term Market” for more from Susan Dziubinski.