Buffett’s Berkshire Hathaway unveils new homebuilding bets with stakes of DR Horton, Lennar and NVR

Warren Buffett’s Berkshire Hathaway (BRK-A, BRK-B) revealed new positions in three US homebuilders on Monday, sending shares of each firm higher as the billionaire bets on the US housing market.

DR Horton (DHI), Lennar (LEN), and NVR (NVR) all rose Monday after Berkshire revealed the new positions in its group. Another 13F has been filed with the SEC. DR Horton and Lennar stock rose more than 2%; NVR stock rose more than 1% after the news.

Berkshire’s biggest new center is DR Horton, where the company owns nearly 6 million shares of the homebuilder worth more than $720 million as of June 30. Berkshire’s holdings in NVR were approximately $70 million, with its Lennar position at about $17 million as of the end of the second quarter.

These were the only three positions the company started during the quarter.

In the second quarter, DR Horton stock was up 24% while Lennar stock was up 19%. During the same period, the iShares US Home Construction ETF (ITB) closed up 21%, outpacing the S&P 500’s 8.5% gain. The three homebuilders that Berkshire has bought are the three largest holdings in the fund.

Homebuilder stocks have benefited from a lack of inventory in the US housing market, driving many potential buyers into new construction.

Berkshire has also cut the bulk of its exposure to gaming company Activision Blizzard (ATVI) and General Motors Corporation (GM) with an addition to its holdings in the Capital One (COF) credit card bank.

Berkshire sold about 70% of its stake in ATVI and 45% of its stake in GM.

Berkshire previously disclosed that Activision was being sold in a Regulatory filing in July The deal for the company to be acquired by Microsoft Corporation (MSFT) came close to reaching a resolution following a court ruling last month.

During Berkshire’s annual shareholder meeting earlier this year, Buffett said he and partner Charlie Munger, “have always felt that the auto industry is very difficult.”

SUN VALLEY, IDAHO - JULY 13: Warren Buffett, Chairman and CEO of Berkshire Hathaway, makes his way to a morning session at the Allen & Company Sun Valley Conference on July 13, 2023 in Sun Valley, Idaho.  Every July, some of the world's richest and most powerful figures from the media, finance, technology and political realms converge on the Sun Valley Resort for the exclusive week-long conference.  (Photo by Kevin Deitch/Getty Images)

Warren Buffett, Chairman and CEO of Berkshire Hathaway, makes his way into a morning session at the Allen & Company Sun Valley Conference on July 13, 2023 in Sun Valley, Idaho. (Photo by Kevin Deitch/Getty Images)

During the regional banking crisis earlier this year, many observers wondered if Buffett would step in to support troubled companies after Oracle of Omaha injected capital into Goldman Sachs (GS) and Bank of America (BAC) during the financial crisis.

But aside from increasing its position in Capital One, Berkshire hasn’t made any major changes to its exposure to the financial sector. KBW Nasdaq Bank Index (^ BKX) increased by 4.2% in the second quarter.

Between 2020 and 2022, Berkshire reduced its holdings in several bank stocks. In the first quarter, it sold from Bank of New York Mellon (BK) and Minneapolis lender US Bancorp (USB). During the second quarter, the company was a net seller of shares.

As of June 30, Berkshire’s holdings of Bank of America, Citigroup (C), Allie Financial (ALLY), and Jefferies (JEF) remained unchanged.

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