Weekly Issue #5
Berkshire has owned a homebuilder since 2003.
Eight months into the job, Buffett’s successor spent four times as much on another one — in cash.
Then he bought more of a second one — a stock Berkshire is already losing money on.
On Thursday that second one fell to $76.63 — the lowest it has traded in a year. It bounced on Friday and closed the week at $79.60. It is down 43% in twelve months.
Four moves on housing in twelve months, from the most patient buyer alive. One of them you can still buy.
Greg Abel took over on January 1. By July he owned Taylor Morrison, America’s sixth-largest builder, outright. In the same quarter he lifted Berkshire’s Lennar stake 30% and reopened a position in D.R. Horton, on top of the Clayton Homes and brokerage businesses Berkshire already owned.
Lennar (NYSE: LEN) — $79.60
America’s second-largest homebuilder (see LEN →). Its book value — everything it owns minus everything it owes — is $89.72 a share. It closed at $79.60.
You are being offered a dollar of a real company’s net assets for about ninety cents.
| The check | Reading | Verdict |
|---|---|---|
| Price vs book value | 0.89× | ✓ Below what it owns |
| Price vs earnings | 12.5 | ✓ Under Graham’s 15 |
| Dividend | $2.00/yr (~2.5%) | ✓ 31% payout |
| Graham screen | Passes 7 of 8 | ✓ Fails only on growth |
| Warning signs | 5 of 8 firing | ⚠ Earnings, revenue, book all falling |
| Off its high | −43% | ⚠ Set a fresh 52-week low this week |
One line on that table has a clock on it. The 12.5 is trailing earnings, and this Wednesday a strong quarter from last year drops out of the twelve-month window. Hit the estimate exactly and it becomes 14.8 — Graham’s limit rather than comfortably under it. That is the calendar, not bad news, and it is worth knowing before it happens rather than after.
By now you are thinking one word
And it is the right word to think. This company fell 91% in that crash. Its land partner went bankrupt. In February 2009 an analyst published 72% odds on Lennar itself going under.
|
1 in 4
Mortgages underwater
in 2008 |
1 in 60
Mortgages underwater
today |
Opposite problems. 2008 was a glut of houses built on bad credit. Today prices are still rising, and the trouble is that nobody holding a 3% mortgage will list their home. A payment problem, not a solvency one.
Forced sellers are what turn a price decline into a collapse. That fuel does not exist right now.
What Berkshire actually paid. No filing tells you. But every quarter’s share count is public, so you can trace it. At the end of September 2025 they held 7.2 million shares, with Lennar at $126. Today they hold 13.1 million and it is $80.
Berkshire has been buying Lennar all the way down for two years, and is underwater on it.
Their answer to being wrong on the price was to buy more, because the thesis was never about this year.
Now the part that could make every number above worthless.
Three things that could break it
Rates. If bond yields keep climbing, mortgage rates follow and buyers keep getting priced out. Nothing above survives that.
People. Net migration fell from 2.7 million to 1.3 million, and the Census projects roughly 321,000 this year. Population growth is 0.5%, the slowest since 2021. No political point — it is simply the input. And 63% of Lennar’s homes go up in Florida, Texas and California, the three states that won the last decade of migration.
Earnings, this Wednesday after the close. Analysts expect $1.29 a share. A weak number will not change my mind — everyone already expects a weak number. What would is fewer homes actually delivered, or gross margin compressing further on the ones that are.
A toe, not the whole foot
Berkshire just bought an entire homebuilder for $6.8 billion in cash. Lennar is 0.41% of its stock portfolio. Apple is 22%. That is not timidity, it is sizing.
I own Lennar at $82 and I am down about 3% — near enough to flat that you should not read this as either a victory lap or a rescue attempt. I would not start a full position three days before an earnings report, and I am not going to. If it falls another 10% or so and Wednesday leaves the reason standing, I will buy more.
And be clear-eyed about what this week looked like. It broke to a fresh low on Thursday on nearly twice its average volume, then took most of it back on Friday. A stock that falls 5% to a one-year low and recovers three-quarters of it inside two days, five days before it reports, is a market that does not know either. Nothing in this letter is a reason to be in a hurry.
Buying more because you like the price is not the same as buying more because the business is sound.
The only thing that separates those two is whether you wrote the test down before the fall. Buffett did both inside one quarter in 2009 — buying Goldman Sachs hand over fist while selling ConocoPhillips at a loss, because in one case the reason held and in the other it had gone.
Which account?
Lennar pays a US dividend of about 2.5%. In a TFSA the IRS keeps 15% of it, permanently. In an RRSP that is waived by treaty and you keep all of it. At this yield the RRSP is the natural home.
The workfile
Everything above is the short version. The full write-up runs to twelve sections: forty-one years of earnings in one chart, all thirteen valuation tools and why they flatly disagree, how Lennar survived a 91% fall and a bankrupt land partner, the one warning sign that turns out to be a spin-off rather than decay, and every idea I considered and threw out. It is in this week’s workfile → and it gets a dated addendum after Wednesday, whichever way it goes.
Curtis Travis is a retired AACI appraiser (B.Comm, P.App) and founder of Travis Valuation. He owns shares of LEN. Figures via Financial Modeling Prep and the Travis Valuation app, as of the Sep 11, 2026 close; Berkshire’s holdings are from its quarterly filings. They move. Informational only — not a recommendation, and not tax advice. Do your own diligence.