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SEC filings confirm the stake increase

U.S. investment holding company Berkshire Hathaway lifted its stake in homebuilder Lennar to 11.2%, according to fresh Securities and Exchange Commission (SEC) filings. The disclosure, covering Monday, Tuesday and Wednesday, shows the company bought $53.6 million worth of Lennar's Class A shares and $329,000 of its higher-vote Class B shares.

After those transactions, Berkshire's Lennar position reached a total of 26.6 million shares. Based on Friday's closing prices, the stake was valued at about $2.1 billion.

  • At the end of the second quarter, Berkshire's stake in Lennar stood at 5.4%.
  • At that point, the portfolio held 13.4 million shares and the position was worth $1.2 billion.
  • At the end of the first quarter, the share count was 10.3 million, while it stood at 7.2 million at the end of last year.

The data show Berkshire steadily expanded its investment in Lennar throughout the year. The company continued buying in the third quarter even as the stock price remained weak.

Why did the pace of buying slow?

Once Berkshire's stake crossed 10% in mid-September, SEC rules required new transactions to be disclosed within two business days. Two separate filings released after that threshold showed the company bought about $349 million worth of shares across six of the seven trading days between Sept. 17 and Sept. 25.

That period amounted to an average of roughly $58 million in purchases per calendar day. By contrast, the daily average calculated through Wednesday this week fell to just under $18 million. The lack of any new filing by Friday night also suggested there may have been no additional buying on Thursday; in that case, the four-day average would drop to $13.5 million.

High borrowing costs continue to weigh on housing

Berkshire's move is being read as a bet on a long-term recovery in the U.S. housing market. The short-term outlook, however, remains cautious. Morgan Stanley on Thursday assigned Lennar an underweight rating and a $65 price target. That level is about 19% below the stock's Friday close of $79.81.

According to Mortgage Bankers Association data, the average 30-year fixed mortgage rate climbed to 7.30% after six straight weeks of increases, reaching its highest level since late 2023. High borrowing costs and home prices that are more expensive than a year ago are among the main factors limiting demand from prospective buyers.

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