" Berkshire reveals nearly doubled stake in slumping homebuilder

Berkshire Hathaway has increased its bet on a long-term recovery for the struggling U.S. housing market by nearly doubling its stake in Lennar, the nation's second largest homebuilder, since the beginning of July.

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(REUTERS File Photo/Andrew Kelly)

As of today, Berkshire reports owning almost 25.4 million shares of LEN and another 549 thousand of its Class B super-voting shares for a total of 25.9 million shares, currently valued at $2.1 billion.

That's 10.9% of Lennar's roughly 238 million shares outstanding for both classes.

And it's a 93% increase from the 13.4 million shares Berkshire owned as of June 30, according to the company's mid-August SEC 13F portfolio snapshot filing for its second quarter.

Despite the big increase, it's still a medium-to-small sized position by Berkshire standards and is likely the work of portfolio manager Ted Weschler.

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For most of the stocks in its portfolio, we will have to wait until mid-November for the next 13F to find out whether Berkshire was buying or selling during its third quarter ending this coming Wednesday.

In this case, however, Berkshire had to quickly disclose its stake had hit 10% on September 21 under an SEC rule that defines any holder at or above that trigger as an "insider" potentially able to "change or influence company management and policies."

The rule also requires that any additional transactions must be disclosed within two business days.

On Monday, Berkshire reported buying Lennar shares worth $212.4 million between September 17 and September 21.

Another filing late today disclosed an additional $136.4 million of purchases Wednesday, Thursday, and today.

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Lennar's stock price was up as much as 6.8% in Tuesday's trading after the first filing the night before and held much of it for a four-day gain of 5.2%.

Berkshire's Q3 buying came as the stock fell 9.2% through today's close. It's down 20.1% so far this year."

Last week, Lennar's quarterly earnings came in below Wall Street's forecast and revenue fell 8%.

Its forecast for the current quarter was also disappointing, with the CEO telling analysts houses are less affordable and there are fewer qualified buyers with 30-year mortgages hitting 7%.

CNBC.com quotes CFRA Research analyst Cathy Seifert as saying it's a "classic Berkshire value play."

She points out Berkshire has a "pretty significant presence" in housing following CEO Greg Abel's $6.8 billion acquisition of Taylor Morrison Home, announced in June. He plans to combine its operations with Berkshire's Clayton Homes.

Earlier this month, Abel said in a CNBC interview that while he does not see "any type of immediate recovery" for U.S. homebuilders, he expects Taylor Morrison will be a "very strong asset" five to 10 years from now because the "American dream will continue to exist."

The company's other housing and home improvement subsidiaries include Shaw Industries, Johns Manville, and Benjamin Moore.

A construction worker works at a Lennar residential housing development called Junipers in San Diego, California, U.S., June 18, 2024. REUTERS/Mike Blake
Lennar's Junipers residential housing development in San Diego, June 2024. (REUTERS/Mike Blake)

At Barron's, Andrew Bary suggests Berkshire "probably would like to buy all of Lennar," and could afford it at a cost of approximately $25 billion, but may be coming up against Chairman and CEO Stuart Miller's 70% ownership of the company's controlling Class B shares.

"One issue could be that the Millers think Lennar stock is undervalued-trading for less than half its 2024 high of almost $200 and below book value-and aren't interested in selling even at a premium to the currently depressed price."

 
GEICO joining Macy's Thanksgiving Day parade for first time

The GEICO Gekko and several of the insurer's other advertising characters, including the Caveman and Caleb the "Hump Day" camel, will be featured on a "Road Trip to Parade" float at this year's Macy's Thanksgiving Day Parade, according to a news release this week.

It is the first time the Berkshire Hathaway subsidiary, which is celebrating its 90th anniversary, has participated in the event.

The first parade was in 1924, but it was canceled during World War II, so this is the department store's 100th march along the streets of Manhattan.