Berkshire Hathaway has sharply expanded its position in Lennar, nearly doubling its stake in the nation's second-largest homebuilder in a move that underscores Warren Buffett's conglomerate's willingness to buy into weakness when it sees long-term value. The purchases come at a difficult moment for the U.S. housing sector, where affordability has deteriorated, mortgage rates remain elevated and homebuilder earnings are under pressure.
As of late Friday, Berkshire reported owning almost 25.4 million shares of Lennar's common stock and another 549,000 shares of its Class B super-voting shares, bringing its total holding to 25.9 million shares valued at about $2.1 billion. That amounts to 10.9% of Lennar's roughly 238 million shares outstanding across both classes. The position is up 93% from the 13.4 million shares Berkshire disclosed in its mid-August second-quarter 13F filing, which captured holdings as of June 30.
The size of the increase is notable even by Berkshire's standards, though the stake remains relatively modest within the broader portfolio and is likely the work of portfolio manager Ted Weschler rather than Buffett himself. Still, the pace and scale of the buying suggest conviction in a sector that has been battered by higher borrowing costs and a slowdown in demand.
Because Berkshire crossed the 10% ownership threshold on September 21, it was required to disclose the stake quickly under SEC rules that classify such holders as potential insiders capable of influencing company management and policy. Any further transactions must also be reported within two business days. On Monday, Berkshire said it had bought Lennar shares worth $212.4 million between September 17 and September 21. A separate filing after Friday's close showed another $136.4 million in purchases on Wednesday, Thursday and Friday.
The buying has not been lost on the market. Lennar shares rose as much as 6.8% in Tuesday trading after the first filing was released the night before and held onto much of that gain over the following days, ending the four-day stretch up 5.2%. Even so, Berkshire's continued accumulation came while the stock was still under pressure, falling 9.2% through Friday's close and down 20.1% for the year.
The backdrop helps explain why the stock has been weak. Lennar reported quarterly earnings last week that came in below Wall Street expectations, while revenue declined 8%. Its outlook for the current quarter also disappointed investors. The company's chief executive told analysts that houses are less affordable and that there are fewer qualified buyers, with 30-year mortgage rates hitting 7% and squeezing demand.
For some analysts, Berkshire's move fits a familiar pattern. CNBC.com quoted CFRA Research analyst Cathy Seifert as calling it a "classic Berkshire value play." She also noted Berkshire already has a "pretty significant presence" in housing through Greg Abel's $6.8 billion acquisition of Taylor Morrison Home, announced in June, with plans to combine those operations with Berkshire's Clayton Homes.
Abel, who oversees Berkshire's non-insurance businesses, recently said in a CNBC interview that he does not see "any type of immediate recovery" for U.S. homebuilders, but he expects Taylor Morrison to be a "very strong asset" five to 10 years from now because the "American dream will continue to exist." Berkshire's housing-related holdings also include Shaw Industries, Johns Manville and Benjamin Moore, giving the conglomerate broad exposure to the homebuilding and home-improvement ecosystem.
The Lennar stake raises a broader question about whether Berkshire is simply buying a cyclical stock at a depressed valuation or positioning itself for something larger. Barron's Andrew Bary suggested Berkshire "probably would like to buy all of Lennar," a deal that could cost about $25 billion. But any such ambition could run into the reality of Lennar's control structure, including Chairman and CEO Stuart Miller's 70% ownership of the company's controlling Class B shares.
For now, Berkshire's message appears clear: even as the housing market struggles under the weight of higher rates and weaker affordability, it is willing to keep adding to a builder it appears to believe will eventually benefit from a recovery. In a sector where sentiment remains fragile, Berkshire's buying is a vote of confidence not in the present, but in the years ahead.