Say No To Trading
Public Markets Investor, Opportunistic Buying & Cost-Basis Management
US homebuilders look attractive because America remains structurally undersupplied with housing, and Berkshire Hathaway is buying quality builders while Wall Street focuses on near-term affordability pressure. Berkshire added about 2.74 million Lennar shares as elevated mortgage rates weigh on builder valuations, after acquiring Taylor Morrison and investing in D.R. Horton and NVR. Follow the smart money, but always mind the price. x.com x.comÂ
Lennar's shift toward an NVR-style asset-light model could let free cash flow and buybacks compound value even without a rerating. Having spun out Millrose and moved much of its land off the balance sheet, Lennar needs far less capital to grow, so when housing normalizes similar economics could return on a much smaller base. The market still prices it like the old land-heavy builder. NVR created value by shrinking its share count, not via a premium multiple. Ted Weschler is buying heavily. x.comÂ
Homebuilders like D.R. Horton look ugly while rates weigh on them, and it is not time to buy yet. D.R. Horton may soon become an ugly long-term buy, but not yet. x.comÂ
Lennar trades poorly as yields climb, hitting new 52-week lows, and it builds poor-quality homes. It is also engaging in activities aimed at propping up its earnings. x.comÂ
Lennar is a bad bet, because housing will not rise while a record affordability crisis is already here, and homebuilders should do poorly in coming quarters. The stock is fighting around $117, its 2021 peak and where its monthly 50-period moving average sits, and a drop below its 2005 level would be a big problem. x.comÂ
The market is overlooking several top-tier businesses that trade at low earnings multiples. ResMed trades at 18.57x, Kinsale Capital at 13.11x, Brown & Brown at 16.48x, Allegion at 17.34x, Automatic Data Processing at 21.29x, Installed Building Products at 21.23x and NVR at 14.28x. x.comÂ