Buffett's Holdings Change: Still Defensive

Berkshire's holdings for Q2 have been disclosed.

The overall pattern has not changed, still having 52.74% in cash and only 47.26% in stock Holdings.

In the second quarter, the holdings ratio was even slightly reduced, mainly by reducing the position in Apple by 3.4%.

Three stocks were added: the real estate developer Lennar with a holding ratio of 0.3%, D.R. Horton with a holding ratio of 0.1%, and the steel giant Nucor with a holding ratio of 0.3%. The most noteworthy is UnitedHealth Group UNH, which recently dominated social media.

UNH, short for UnitedHealth Group Inc, is a health insurance company for the American people. The high cost of medical expenses has been a chronic issue in American society. Ordinary people cannot afford to see a doctor without health insurance. Therefore, as long as the U.S. government maintains a loose fiscal policy, it is good news for UNH. Additionally, UNH's recent prices are also quite favorable.

In December 2024, a 26-year-old man named Luigi Mangione shot and killed Brian Thompson, the president of UNH, outside the Hilton Hotel in Manhattan, New York City, using a 3D-printed handgun. He believed that insurance companies were "uncharitable to the wealthy" and had a habit of refusing claims. Police found three shell casings at the scene, each marked with a permanent marker with the words "deny," "defend," and "depose," which are commonly used terms by insurance companies when they refuse to process claims.

This man is not a resentful member of the lower class, but a typical "rich second generation": born in Maryland, his family owns resorts, country clubs, and golf courses. He graduated with a master's degree in engineering and computer science from the University of Pennsylvania (Ivy League). He is as handsome as the sons of Greek gods. When arrested, he was wearing an "orange prison uniform", and later appeared in court in a dark red sweater, both of which sparked a global fashion storm. In other words, this is a typical modern Robin Hood story — which significantly damaged the image of UnitedHealth Group. Since the stock price peaked at around $630 in November 2024, UNH's stock price has been affected by rising healthcare utilization, regulatory investigations, and executive changes, with a maximum drawdown of over 50% during 2025, and at one point falling below $300.

According to Buffett's stock selection logic, the former belongs to fundamentals, and the latter belongs to "margin of safety." Companies with good fundamentals that experience external shocks and plummet are relatively good targets—UNH also belongs to defensive stocks, and when the market goes through a recession cycle, such stocks tend to be more resilient than tech stocks like M7.

Several reasons combined make it no surprise that Mr. Buffett has included UNH as one of the top 20 holdings with a 0.61% holdings ratio. Along with him purchasing UNH in the second quarter were Michael Burry and David Tepper. The former became famous during the 2008 financial crisis, and the movie "The Big Short" was based on him. The latter is a giant in the hedge fund industry and also shone during the 2008 financial crisis.

From Berkshire's holdings perspective, the old man is still worried about the current market, which overall aligns with what he said at the shareholders' meeting in May, "there are big opportunities in 3-5 years (implying, not now)." After all, the valuation of U.S. stocks has already exceeded his comfortable "margin of safety," and Trump's flip-flopping is also a source of risk that concerns the big shots.

I don't know why, but recently I feel that the US stock market and the A-shares have been moving in a similar rhythm.