Berkshire Hathaway has acquired nearly a 10% stake in Miami-based homebuilder Lennar, according to a recent securities filing, marking a notable move in the beleaguered housing sector. Between three trading sessions ending Monday, the Omaha-based conglomerate purchased approximately 2.7 million Class A shares of Lennar, increasing its holdings to 23.7 million shares valued at about $1.8 billion. In addition, Berkshire holds 528,000 Class B shares, which carry enhanced voting rights.
The announcement triggered a notable jump in Lennar’s stock, which rose as much as 6.6% on Tuesday to a high of $83.24. Despite the gain, Lennar’s shares have declined by more than 32% over the past year amid a challenging environment for the homebuilding industry.
Berkshire’s accumulation coincided with Lennar’s recent fiscal third-quarter earnings report, released last week, which missed market expectations. The company posted earnings per share of $1.23, below the analyst consensus of $1.29, while revenues declined 8% year-over-year. Lennar also issued a cautious outlook for the fourth quarter, citing rising mortgage rates and resulting affordability constraints as key challenges. During the subsequent earnings call, CEO Stuart Miller highlighted that 30-year fixed mortgage rates reaching 7% have curtailed the pool of qualified homebuyers.
The broader housing market continues to grapple with a combination of supply shortages and rising financing costs, contributing to subdued demand for new homes and dampened consumer confidence. The nationwide average 30-year fixed mortgage rate rose to 6.95% last week, up from 6.76% the prior week and significantly higher than the 6.26% average observed a year ago. This escalation has priced many first-time buyers out of the market, further pressuring homebuilders.
Analysts characterize Berkshire’s purchase as a classic value investment. Catherine Seifert, an analyst with CFRA Research, noted that Berkshire’s interest in Lennar aligns with its history of acquiring undervalued assets, describing it as a "classic Berkshire value play." This approach is consistent with Berkshire’s broader exposure to the homebuilding sector, which includes previous acquisitions such as Taylor Morrison and Clayton Homes, the latter purchased in 2003 for nearly $2 billion. The conglomerate also owns related building materials companies including Benjamin Moore and Johns Manville.
Berkshire Hathaway’s investment comes as the company, led by CEO Greg Abel since 2021, appears to be capitalizing on market weakness. The firm held cash reserves of approximately $367 billion as of the end of June, offering substantial capacity for contrarian investments in sectors under pressure.
Additionally, Berkshire’s leadership underwent a significant change on Friday, when Warren Buffett officially stepped down as chairman and was succeeded by his son, Howard Buffett, signaling a new chapter for the conglomerate.