Bill Ackman just lobbed a massive grenade on UnitedHealth’s entire business model, and the best part? He didn’t even put his money where his mouth is. In a now-deleted post, Ackman claimed that UnitedHealth’s profitability was “massively overstated” because, surprise surprise, denying people medically necessary care is a great way to juice margins. Then, in classic Ackman fashion, he threw in a little “someone should really look into this” and called on the SEC to investigate, as if the regulators that let Wall Street get away with financial murder every day (read: short selling) would suddenly give a two cr*aps about a health insurance company screwing people over.

(Source: Giphy) 

UnitedHealth, of course, responded the best way they know how: calling Ackman’s statements false and misleading. They even went running to the SEC themselves just to cover their bases. Their defense? Health insurers have their profits capped by regulation, so the idea that they’re making obscene amounts of money by denying care is just ignorant. 

Which is hilarious, because anyone who has ever tried to get an insurance claim approved knows damn well these companies exist to take your premiums and then gaslight you into thinking your coverage doesn’t apply when you actually need it. (If I sound petty, it’s because I am—from personal experiences).

(Source: Investing.com) 

But alas, UnitedHealth’s stock took a hit, dropping 2.4% midday Wednesday, with a brief nosedive of over 4% before it stabilized. But in reality, investors aren’t exactly running for the exits just because some billionaire that’s presumably in Short Sellers Anonymous therapy, decided to stir the pot. Ackman, for all his ego, didn’t even take a short position on the stock, probably because the last time he went all-in on a short—his infamous $1 billion Herbalife disaster—he got absolutely dunked on by Carl Icahn and spent five years watching the stock double while he screamed into the void about pyramid schemes.

However, this is just another fuel to UnitedHealths PR fire as they’ve been dealing with the nightmare of CEO Brian Thompson being murdered in New York. His death sparked a wave of speculation about the industry’s deep-seated anti-consumer practices, and now Ackman’s just dumping gasoline on the fire. Whether or not the SEC actually does anything is irrelevant—the damage is done. The second you start making people wonder if a company is fraudulently inflating its earnings, the stock becomes a target for every short-seller looking to make a buck off the collapse.

(source: Yahoo Finance) 

Plus, when it comes to the brass tacks of it all, UnitedHealth isn’t exactly an innocent victim here. The entire health insurance industry operates like a cartel, where the business model is essentially legalized extortion. They take your money, deny your claims, and then have the audacity to act like they’re being unfairly persecuted when someone calls them out on it.

Meaning, Ackman might be a grandstanding billionaire who loves the sound of his own voice, but that doesn’t mean he’s wrong. The only question now is whether this turns into an actual reckoning for UnitedHealth or just another moment of outrage that gets memory-holed as soon as the next scandal drops.

(Source: Giphy) 

For now, keep an eye on Ackman and UnitedHealth to see where this story leads to and remember, to place your bets accordingly. As always, stay safe and stay frosty, friends! Until next time…

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Stocks.News does not hold positions in companies mentioned in the article.