Kevin Hern, the Republican Representative from Oklahoma, made a notable transaction in UnitedHealth Group (UNH) stock last month. He purchased between $1,000 and $15,000 worth of UNH stock, which has since appreciated by 16%.
UNH earnings report triggers stock gains
A robust UNH earnings report was the primary driver behind these gains. Although the stock initially dipped following the earnings announcement, it quickly rebounded during regular trading and has continued to rise.
Despite a cybersecurity breach earlier this year, which is expected to cost the company $2.05 per share, UNH showed a 6.5% year-over-year improvement in revenue, highlighting its strong performance.
Additionally, the company raised its dividend by 12% last month, marking the 15th consecutive year of dividend increases.
Kevin Hern’s timely trade raises questions
Politicians frequently trade US stocks, and such activities are regulated by the Stock Act, which requires them to disclose transactions within 45 days.
Previously, disclosures were only required annually. However, the Stock Act does not prevent politicians from trading stocks of companies over which they may have influence.
Kevin Hern sits on the Ways and Means Committee and is a member of the Health Subcommittee.
Through his roles, he directly influences policies related to Medicare, which is a significant source of revenue for UnitedHealth Group.
UnitedHealth Group’s Medicare and Retirement segment is its largest revenue source, accounting for 26% of the company’s total revenue, with inflows expected to reach $139 billion this year. This raises concerns about Hern’s stock transactions, given his involvement in Medicare policy.
Long-term interests in UNH stock
While this recent trade is notable, Hern appears to have a long-term interest in UNH stock.
He has been accumulating shares since the Biden administration took office.
His first purchase in September 2021 was substantial, ranging from $250,000 to $500,000. Since then, the stock has appreciated by 42%, providing him with a solid 13.24% compound annual growth rate (CAGR). Hern has continued to add to his holdings every three months.
Finally, the question remains whether politicians who influence policies like Medicare should be allowed to trade in companies significantly impacted by those policies. This is a matter for the American public to consider, though it is unlikely that regulators will promptly address the issue.
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