The London Company, an investment management firm, recently released their third-quarter 2025 investor letter outlining their Income Equity Strategy. The letter highlighted the performance of US equities, which saw a significant rally in the third quarter due to factors such as the Fed rate cut, solid corporate earnings, and enthusiasm around AI. The portfolio managed by The London Company appreciated by 6.0% gross (5.8% net) in the quarter, outperforming the Russell 1000 Value Index, which saw a 5.3% increase.
One of the key stock selections mentioned in the investor letter was UnitedHealth Group Incorporated (NYSE:UNH). UnitedHealth Group is a diversified healthcare company operating through various segments like UnitedHealthcare, Optum Health, Optum Insight, and Optum Rx. Despite a one-month return of -10.57% and a 44.56% loss in share value over the last 52 weeks, UnitedHealth Group closed at $330.83 per share on November 4, 2025, with a market cap of $299.679 billion.
The London Company’s investor letter provided an in-depth analysis of their initiation of UnitedHealth Group as a holding in their portfolio. They highlighted UnitedHealth Group’s position as the largest and most diversified health insurer in the US, with strong platforms in UnitedHealthcare and Optum. The integrated model of the company, along with its vast provider networks and data-driven capabilities, were mentioned as key strengths that provide competitive advantages and high barriers to entry.
The letter acknowledged the near-term challenges faced by UnitedHealth Group, such as elevated medical costs impacting margins and stock performance. However, The London Company expressed confidence in the company’s ability to reprice future plans to reflect higher costs, supporting a return to historical margin levels. With a recurring revenue base, diversified earnings, and financial strength, UnitedHealth Group was seen as offering attractive downside protection at its current valuation.
In addition to UnitedHealth Group, the investor letter also highlighted the company’s position as the 18th most popular stock among hedge funds, with 159 hedge fund portfolios holding shares of UNH. The letter also mentioned UnitedHealth Group’s strong revenue growth in the third quarter of 2025, exceeding $113 billion, driven by the expansion of domestic memberships.
While UnitedHealth Group was recognized as a solid investment opportunity, The London Company also suggested exploring AI stocks for greater upside potential and less downside risk. For investors seeking undervalued AI stocks, The London Company recommended a free report on the best short-term AI stock.
Overall, The London Company’s investor letter provided valuable insights into their investment strategy and key holdings, such as UnitedHealth Group Incorporated. The company’s analysis of the healthcare giant showcased a deep understanding of the industry dynamics and the potential for long-term growth. As investors navigate the ever-changing market landscape, staying informed about top stock picks and emerging trends will be crucial for making informed investment decisions.
