Berkshire Increases Stake to 11.2% in Lennar, but Purchase Pace Drops to $13.5M Over Four Days
Berkshire Hathaway boosts its stake in homebuilder Lennar to 11.2% after a $2.1 billion investment, while the average daily purchase volume falls to $13.5 million, well below the previous peak of $58 million from the prior week.
In its latest filing with the SEC, Berkshire Hathaway reported purchasing $53.6 million worth of Class A shares and $329,000 worth of Class B shares in Lennar, bringing its total stake to 11.2% â equivalent to 26.6 million shares valued at $2.1 billion based on Fridayâs closing price. This increase comes as the pace of acquisitions has slowed significantly compared to previous weeks.
Berkshire Increases Stake to 11.2% in Lennar
During the second quarter, Warren Buffettâs company already held 5.4% of Lennar, equivalent to 13.4 million shares valued at $1.2 billion. This position represents a nearly 30% increase from the 10.3 million shares held at the end of the first quarter, which itself had risen by 43% from the 7.2 million shares owned at the close of the previous fiscal year. The gradual accumulation allowed Berkshire to cross the 10% threshold in September, triggering the additional disclosure requirements imposed by the SEC.
The new filing shows that Berkshireâs purchases were concentrated on Class A shares, which make up the majority of listed shares, while also including a smaller acquisition of the enhanced voting rights Class B shares. According to the press release, the total value of the stake, calculated based on Fridayâs closing price, amounts to $2.1 billion, solidifying Berkshireâs position among Lennarâs largest shareholders.
Purchase Pace Drops to $13.5M Average Over Four Days
During the prior week, Berkshire spent an average of nearly $58 million per calendar day, totaling $349 million over six of the seven trading days between September 17 and 25. This pace has significantly slowed: since Wednesday, the average daily purchase has been under $18 million, and the absence of a filing for Thursday indicates no transactions took place that day, bringing the four-day average to $13.5 million.
This deceleration could reflect a partial profit-taking strategy or anticipation of new macroeconomic data, particularly the evolution of mortgage rates impacting the housing market. The absence of a Friday filing, which will only be known after Mondayâs deadline, leaves some uncertainty regarding the continuity of the accumulation process.
Morgan Stanley Downgrades Lennar to Underweight, Targets $65
On the same day Berkshire increased its stake, Morgan Stanley published an âunderweightâ rating on Lennar, accompanied by a price target of $65, representing an 18.9% discount from Fridayâs closing price of $79.81. This revision came after the stock fell 2.8% in one day, reflecting analystsâ concerns about Lennarâs ability to benefit from a still-fragile housing market.
Morgan Stanleyâs report highlights that, despite Berkshireâs support, near-term prospects remain gloomy due to the credit environment and the slowdown in new home sales. The gap between Buffettâs optimistic vision and the analystâs prudent judgment underscores a divergence in interpreting current market risk.
US Housing Market Under Pressure: Mortgage Rates at 7.30%
The US housing sector faces a challenging financing environment, with the average 30-year mortgage rate reaching 7.30% according to the Mortgage Bankers Association, its highest level since late 2023. This increase marks six consecutive weeks of rises, discouraging potential buyers and curbing demand for new construction.
Analysts from CNBC emphasize that the combination of high rates and home prices still above those of the previous year creates a double drag on market recovery. In this context, Lennarâs ability to generate sustainable organic growth will depend heavily on the evolution of credit conditions and household demand.
Berkshire Bets on Long-Term US Housing Recovery
Warren Buffett has clearly indicated that his investment aims to capitalize on a potential long-term recovery in the US housing market. By accumulating shares gradually until crossing the 10% threshold, Berkshire has complied with SEC disclosure requirements while remaining under the public radar during periods of heightened volatility.
The purchase process, which has seen the portfolio grow from 7.2 million shares at the end of the previous fiscal year to 26.6 million shares today, illustrates a gradual accumulation strategy, avoiding large-scale purchases that could drive up the stock price and alert competitors. The recent decision to slow down could indicate that Berkshire is waiting for mortgage rates to stabilize before resuming more sustained purchases.
Implications for the S&P 500 and European Investors
Lennarâs weight in the S&P 500 remains modest, but Berkshireâs commitment could influence institutional investorsâ perception of the housing sector. European equity funds, particularly those accessible via the Amundi PE500 S&P 500 PEA ETF, may see their Lennar exposure slightly increase if the accumulation trend continues.
For French investors, Berkshireâs decision underscores the importance of monitoring US housing market financing indicators, particularly mortgage rates, which remain the primary barrier to sector recovery. A favorable evolution in rates could make builder shares like Lennar more attractive in diversified portfolios, even as analysts maintain a cautious short-term outlook.
