"Burry, who recently pivoted from hedge fund manager to Substack writer, compared the health insurer to the auto insurer in a Monday article titled: "Molina Healthcare: Ghosts of GEICO Past." He labeled Buffett's purchase of beaten-down Geico stock in 1976 as the "real steal" - but said it was arguably riskier than buying Molina stock today, and called the company a "better business proposition in many ways too.""
"Burry wrote that Molina "has a clearer path to significant double-digit long-term growth than Apple," adding that if he were "sitting on enough billions," he would acquire the company outright. "Maybe Buffett, if he were in his 40s and only just ramping up his insurance investments, would buy it here for a much smaller Berkshire," he added."
Molina Healthcare is favorably compared to GEICO as an insurance investment and presented as a potentially superior business proposition. The company demonstrates consistently high returns on invested capital and an attractive valuation. Molina exhibits disciplined underwriting, tight cost control, active acquisition activity, and ongoing stock buybacks. The firm is characterized as having a clearer path to significant double-digit long-term growth than Apple. Ownership of companies with these traits is associated with achieving roughly 15% to 20% annual returns relatively safely over decade-plus time horizons. Historical GEICO performance is cited as an insurance-investment precedent.
#molina-healthcare #insurance-investing #underwriting-and-cost-discipline #acquisitions-and-buybacks
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