Editor's note: This is part three of a 13-part series about companies whose shares have amassed 100,000% returns for investors and the path taken to generate such impressive gains over the long term. See below for links to the other stocks in this series. Part one is: McDonald's Stock: How Small Changes Have Led to 100,000% Returns. Part two is: How Amazon Stock Became a Member of the 100,000% Return Club.
Mergers and acquisitions are exciting. Captains of industry think of big ideas about how to change the landscape of different industries and then set out to try and accomplish it with billions of other people's money. The sexy part is chasing the deal. The hard part of mergers and acquisitions is integrating what you have bought to deliver the profits or the cost savings that you forecast.
Many fail at this. Some of the worst mergers and acquisitions in history include Sears and Kmart, Citicorp and Travelers Group, Microsoft and Nokia, and, of course, no list would be complete without mentioning AOL and Time Warner.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
What UnitedHealth Group (UNH) has done perhaps better than any other company in American history is to buy companies – which, as mentioned, is something any company can do – and then integrate them into a cash-generating machine, which, as mentioned, is something few companies can do.
Testimony to UnitedHealth Group's skill in integrating the companies it buys shows up on its bottom line. Specifically, since 2005 (the oldest year for which its financial performance figures are readily available), the company has never reported a loss. Quite the contrary. UnitedHealth has grown its earnings from $3 billion that year to $23.1 billion in 2023. This represents average earnings growth of 12.0% per year. First, very few companies have gone nearly 20 years without a loss, especially those who are acquisitive.
Second, almost nothing of value grows at 12% per year. The U.S. economy doesn't (about 3%). The Standard & Poor's Index doesn't (about 7.7% over the last 20 years). The Nasdaq Composite Index doesn't (about 10.9% over the last 20 years).
But UnitedHealth does.
Since 2004, UnitedHealth has made approximately 17 major acquisitions of insurance, healthcare and healthcare technology companies. And these are the ones that are easily discoverable since they were disclosed in news releases. And the bar for issuing news releases is high.
Companies must disclose transactions that are considered "material" which is defined as greater than 5% of the issuer's assets. Since UnitedHealth's assets at the end of 2023 were $273 billion, this means any acquisitions smaller than $5.8 billion (5% of $273 billion) may not be generally known.
The things that can go wrong when one company acquires another range from the unexpected to the inane. Sometimes their technology proves incompatible. Sometimes integrating the operations takes orders of magnitude longer than imagined. Sometimes there are cultural clashes. Sometimes customers balk, then walk, at the changes that are imposed on them.
Whatever the various sources of distress, they either retard earnings growth or they deliver losses. Slowing growth is bad news on Wall Street because the market is in the growth game. It's the single most important variable influencing stock values.
The only thing Wall Street likes less than slowing growth are losses. Some losses are more consequential than others. Losses predicted on software incompatibilities, or boardroom clashes, while not embraced, can still leave room for optimism of brighter days ahead. But a write-down of say, $99 billion, attributable to all the reasons above, and then some, which was taken just two years after AOL and Time Warner merged can be fatal for a company's future and investor's capital.
Even a company whose overriding strategy is M&A can spook investors because the risks of integration are well known. And this is what puts UnitedHealth Group's performance in context, and helps explain a 400,000% return.
Notably, UNH has suffered a precipitous decline of late, from about $550 to $467. That's the thing about the stocks in the 100,000% club. They don't just go up. They go down too. UNH went from a high of nearly $65 in 2005 to a low of $19 in early 2009, a stunning loss of two-thirds of its value. There are similar stories for Nvidia and Amazon. Over the long haul, UNH had risen more than 300,000% but for an investor to earn this, they needed conviction and lots of it.
Note: This content first appeared in Louis Navellier's latest book, The Sacred Truths of Investing: Finding Growth Stocks that Will Make You Rich, which was published by John Wiley & Sons, Inc.
Related content
-
The Most Popular Apps for Retirement Planning in 2025A J.D. Power survey ranks retirement planning apps based on customer service and satisfaction. Does your financial app make the cut?
-
Don't Disinherit Your Grandchildren: The Hidden Risks of Retirement Account Beneficiary FormsStandard retirement account beneficiary forms may not be flexible enough to ensure your money passes to family members according to your wishes. Naming a trust as the contingent beneficiary can help avoid these issues. Here's how.
-
Don't Disinherit Your Grandchildren: The Hidden Risks of Retirement Account Beneficiary Forms
Standard retirement account beneficiary forms may not be flexible enough to ensure your money passes to family members according to your wishes. Naming a trust as the contingent beneficiary can help avoid these issues. Here's how.
-
This Is How Life Insurance Can Fund Your Dreams NowBeyond a death benefit, life insurance can provide significant financial value and flexibility through 'living benefits' while you are still alive, helping with expenses like education, business ventures or retirement.
-
Potential Trouble for Retirees: A Wealth Adviser's Guide to the OBBB's Impact on RetirementWhile some provisions might help, others could push you into a higher tax bracket and raise your costs. Be strategic about Roth conversions, charitable donations, estate tax plans and health care expenditures.
-
One Small Step for Your Money, One Giant Leap for RetirementSaving enough for retirement can sound as daunting as walking on the moon. But what would your future look like if you took one small step toward it this year?
-
This Is What You Really Need to Know About Medicare, From a Financial ExpertHealth care costs are a significant retirement expense, and Medicare offers essential but complex coverage that requires careful planning. Here's how to navigate Medicare's various parts, enrollment periods and income-based costs.
-
I'm a Financial Planner: Could Partial Retirement Be the Right Move for You?Many Americans close to retirement are questioning whether they should take the full leap into retirement or continue to work part-time.
-
From Mortgages to Taxes to Estates: How to Prepare for Falling Interest RatesAs speculation grows that the Federal Reserve will soon start lowering interest rates, now is a good time to review your financial plans for housing, estate, taxes, investing and retirement to make the most of potential changes.
-
This Is How Lottery Winners Build Lasting Legacies, From a Financial ProfessionalWinning a massive lottery jackpot, like the recent $1.4 billion Powerball, requires seeking immediate legal and financial counsel, protecting your identity and winnings and planning your legacy.
