Michael Burry's Strategic Shift to Molina Healthcare Amid Industry Turmoil

Michael Burry, widely recognized for his famed contrarian investment approach during the housing crisis, once again embraced a distinctive trade amid late 2025's challenging health insurance sector dynamics. Confronted with a landscape dominated by escalating medical costs and mounting regulatory pressures, Burry divested his considerable position in UnitedHealth Group Inc. (NYSE:UNH) during the third quarter of 2025. He subsequently redirected his investment into Molina Healthcare, Inc. (NYSE:MOH), signaling a strategic pivot in focus towards a company with a unique revenue composition.

The health insurance industry witnessed notably rough trading conditions recently. On one particularly difficult trading day, major insurers collectively faced significant stock price declines following a surprisingly low Medicare reimbursement rate proposal from the Centers for Medicare & Medicaid Services (CMS) for 2027. Molina Healthcare’s shares declined 8%, a less severe drop compared to UnitedHealth’s 19% fall and Humana, Inc. (NYSE:HUM)’s 21% tumble. This differential market response underscores the varying perceived vulnerabilities among insurers navigating the upcoming regulatory environment.

Burry's pivot to Molina embodies a classic contrarian investment philosophy. Through a series of discussions on his Substack platform, he characterized Molina as a "generational buy" opportunity, drawing parallels to Warren Buffett's early, influential investment in Geico. The core of Burry’s argument centers on Molina’s business model, where approximately 75% of its revenue originates from Medicaid contracts rather than Medicare. This is a critical distinction, given that many competitors are experiencing losses on their Medicaid offerings.

Molina’s ability to sustain profitability hinges on its prudent operational discipline and conservative accounting practices. In a sector where other insurers struggle to maintain financial health under Medicaid agreements, Molina’s efficient management and focus on this niche market is set apart. This operational resilience suggests that Molina could be better equipped to withstand ongoing industry strain than rivals more heavily reliant on Medicare or less disciplined in their financial approaches.

Assessing recent performance, Burry’s timing appears advantageous. His exit from UnitedHealth preceded a sharp 20% decline in that stock's value, while Molina’s shares demonstrated considerably more resilience, with an 8% drop following the CMS announcement. Prior to these developments, Molina’s stock had shown positive momentum, breaking above its 100-day moving average and embarking on a seven-day winning streak in early January 2026. This rally propelled the stock price by more than 13%, an impressive move amid a generally challenging market climate.

A related dimension of Burry’s thesis includes speculation about Molina as a potential acquisition target. He has publicly indicated that if managing substantial capital, acquiring the entirety of Molina Healthcare would be a preferred option given the company’s clear trajectory toward sustainable long-term growth. This view notably elevates Molina’s prospects above those of major technology firms like Apple, according to Burry’s assessment, highlighting his conviction in the company’s strategic positioning.

Despite sliding during the broader sell-off, Molina outperformed industry peers including UnitedHealth, Humana, and CVS Health Corp. (NYSE:CVS). Early indicators for the year 2026 imply that Burry’s calculated move into Molina Healthcare may ultimately be vindicated, continuing a pattern of prescient, countercyclical investment decisions.

These metrics reflect the nuanced investor sentiment following recent regulatory announcements and underscore Molina’s differentiated risk profile within the health insurance sector.