Berkshire Nearly Doubles Down on Lennar as the Housing Slump Drags On

Berkshire Hathaway is leaning harder into American housing. The company has nearly doubled its stake in Lennar, the nation's second-largest homebuilder, since the beginning of July — buying aggressively into a stock that keeps falling. As of late Friday, Berkshire held almost 25.4 million Class A shares plus 549,000 Class B super-voting shares, according to CNBC, a combined 25.9 million shares worth about $2.1 billion.

The filings tell the story

The purchases pushed Berkshire past the 10% ownership threshold on September 21, which under SEC rules classifies the company as a Lennar "insider" and requires it to disclose further transactions within two business days. The resulting filings show Berkshire bought $212.4 million of Lennar shares between September 17 and 21, then added another $136.4 million of purchases Wednesday through Friday, CNBC reported. The 25.9 million-share position now represents 10.9% of Lennar's roughly 238 million shares outstanding across both classes — up 93% from the 13.4 million shares Berkshire held as of June 30, per its mid-August 13F portfolio snapshot.

The position is likely the work of portfolio manager Ted Weschler rather than Warren Buffett, according to CNBC's reporting. Buffett appears in the article only in general newsletter context; Todd Combs isn't mentioned.

Buying into weakness

Berkshire's buying came as the stock was sliding: Lennar fell 9.2% during the quarter through Friday's close and is down 20.1% so far this year. Last week the company posted quarterly earnings below Wall Street's forecast, with revenue down 8% and a disappointing outlook for the current quarter. Its CEO told analysts that houses have become less affordable and that fewer buyers qualify with 30-year mortgage rates around 7%.

That weakness is exactly the point for value investors. CFRA Research analyst Cathy Seifert described the move as a textbook Berkshire value investment, noting the company already has a substantial footprint across housing, reported CNBC. At Barron's, Andrew Bary suggested Berkshire might ultimately like to own the whole company — it could afford the roughly $25 billion price tag — but would have to contend with Stuart Miller's 70% control of the super-voting Class B shares. The Millers may share Berkshire's view that the stock is undervalued, trading at less than half its 2024 peak near $200 and below book value, Bary noted.

A housing portfolio, not a hunch

The Lennar bet fits a broader Berkshire pattern. The company already owns home-improvement and building-products businesses including Shaw Industries, Johns Manville, and Benjamin Moore. And CEO Greg Abel announced in June that Berkshire would acquire Taylor Morrison Home for $6.8 billion, combining it with Berkshire's Clayton Homes unit. Abel told CNBC he sees no quick turnaround for U.S. homebuilders, but expects Taylor Morrison to be a strong asset five to 10 years out because, in his words, the "American dream will continue to exist."

Buffett-era Berkshire has never tried to time housing cycles. This time the message is the same: buy the slump, wait a decade.

Written by the BidAsk Newsroom. Based on reporting from the sources below.