ASX Trader: Warren Buffett's latest $1.6bn move has Wall Street buzzing

Herald Sun

10 hours ago

Over the past five years, while investors chased momentum in tech, the health care sector quietly faded into the background.
Once seen as a defensive powerhouse, it devolved into a frustrating, range-bound underperformer - especially in the Australian market.
But that dynamic is beginning to shift.
The signs of a bottom are emerging not just on the charts, but in sentiment.
With inflation cooling and long-term yields stabilising, health care, a traditionally rate-sensitive sector, is creeping back onto institutional radars.
Balance sheets are clean, valuations are compelling, and reliable cash flows are once again in demand.
Watch the 4600 level closely - it marks the top of the red zone.
A breakout there could confirm the trend shift and usher in a new phase of outperformance. CSL: The five-year trap
Let's talk about the elephant in the room, CSL Limited.
Arguably Australia's flagship biotech company, CSL has spent the last half-decade trapped in a wide, grinding range between $240 and $315.
Traders have been conditioned to sell into strength, with the $315 level acting as psychological resistance reinforced by years of repetition.
Here's the problem: that mindset is about to be punished.
Most investors who've traded CSL over the last five years have done so with a tactical mindset - buying the dips and selling at $315, pocketing short-term gains.
But that conditioning has blinded many to the bigger picture.
The company has spent this consolidation phase, expanding its R&D footprint, and positioning itself globally in plasma therapies and vaccine innovation.
If CSL breaks through $310 with conviction - especially if driven by earnings re-acceleration or a re-rating of the health care sector - those short-term traders will be forced to chase the stock at new highs.
That's exactly how secular trends are born: disbelief, followed by FOMO. Technically speaking: The setup is building
From a charting perspective, CSL's long-term weekly structure is coiling tighter.
Volatility is compressing at its multi-year range, suggesting a breakout may be brewing. Relative strength against the ASX 200 is improving, and key moving averages are beginning to flatten and curl higher.
A decisive close above $310–$315 would likely trigger a measured move targeting $400 and beyond.
CSL this week posted a 14 per cent increase in underlying net profit, accounting for currency fluctuations, to $US3.3bn for the 12 months to June 30 from $US2.91bn a year earlier.
Australia's largest pharmaceutical company CSL plans to spin off its Seqirus business into a separate ASX listing in FY26 as part of a major strategy change to boost growth with about 3000 of the company's workforce to be cut.
This isn't just about CSL.
Look at the broader basket: Ramsay Health Care (RHC) is stabilising after a steep drawdown. ResMed (RMD) is grinding at all-time highs.
Sonic Healthcare (SHL) is showing early signs of accumulation.
Even US mega-cap names like UnitedHealth and Eli Lilly are reaffirming global leadership. BUFFETT BUYS HEAVILY INTO HEALTH CARE
Adding fuel to the thesis: Warren Buffett's recent move to buy heavily into the health care space is telling.
Berkshire Hathaway unveiled a US$1.6 billion stake in UnitedHealth Group - acquiring over five million shares marking what analysts are calling a 'classic Buffett move'.
Despite regulatory scrutiny and operational challenges, Buffett's contrarian bet reflects his core strategy of disposable-value investing - buying quality when it's unloved .
His action has sparked a 'Buffett bounce' across health care equities and ETFs.
As Buffett himself might say, 'We don't have to be smarter than the rest - we just have to be more disciplined than the rest'.
And in health care today, discipline and patience may just be about to pay off. Positioning for the reversal
The biggest mistake investors make at turning points is failing to shift their mindset.
Health care isn't a swing trade anymore, it's setting up for a structural re-rating.
Investors should be identifying high-quality franchises with durable competitive advantages, strong cash flow, and scalable platforms in global health services.
CSL may well become the poster child for this shift.
The range traders who've sold at $300 time and again may find themselves watching helplessly as CSL makes a breakaway run.
Those who've done the work, held through the base, and understood the bigger picture will be the ones rewarded. In summary:
• The health care sector is showing signs of a long-term bottom after five years of stagnation.
• CSL is primed for a potential breakout above its multi-year resistance at $315.
• Many traders will likely repeat the past - sell at $300 - only to regret it.
• This time, the move could be different. Fundamentals, sentiment, and technicals are aligning.
• Don't just trade CSL. Understand it. Because when the breakout comes, it won't wait.
Originally published as ASX Trader: Buffett's latest $1.6bn move has Wall Street buzzing