Weekly Issue #10
Lennar (LEN) — $77.08 at Friday’s close
Lennar is the second-largest homebuilder in the United States. It delivered 82,583 homes last year, it came through the worst housing collapse in living memory, and at Friday’s close it cost 0.85 times its book value and 14.6 times its earnings over the last twelve months. I own it, I wrote about it in September, and on October 6 I bought more.
The price is the reason I could. The shares are down 25% this year and 37% over twelve months. Mortgage rates hit 7.40% last week, the highest since November 2023. Third-quarter orders fell 9.2%, and the margin on each home sold was 15.8%, down from 17.5% a year earlier.
What I was watching was Berkshire Hathaway. Its filings show 28.4 million Lennar Class A shares on October 2, which is 12.2% of the company, up from 7.0 million at the end of last year. It also bought Taylor Morrison outright in July and already owned Clayton Homes. Together with its share of Lennar, that is roughly 5% of the new single-family homes sold in the United States, by my arithmetic.
Lennar lost about $3.5 billion across 2007, 2008 and 2009. In 2021 it earned $4.4 billion.
What it came through
From 2006 to 2011 Lennar’s deliveries fell from 49,568 homes to 10,845, and its stock fell 91% from July 2005 to March 2009. It survived, bought assets from builders that did not, and by 2019 it was delivering more homes than in 2006 (after buying CalAtlantic in 2018). Its margin and orders both fell before its deliveries did, and that is worth knowing: orders are falling now, by a much smaller amount, in a market with far less of the credit trouble of 2007. My view is that one housing collapse survived is the best evidence I have that the business can take a bad stretch. It is a reason to hold through a falling price, not a promise to you that it will recover.
Lennar (LEN) — $77.08 at the Oct 16 close, 25% down this year
| The check | Reading | Verdict |
|---|---|---|
| Price to earnings | 14.6× | ✓ Under Graham’s 15, on earnings that are well below peak |
| Price to book | 0.85× | ✓ Below book value |
| Gross margin on home sales | 15.8% | ⚠ 17.5% a year ago; below every year from 2010 to 2025 |
| New orders, third quarter | −9.2% | ⚠ 20,879 homes against 23,004 |
| Homes delivered, third quarter | −3.4% | ⚠ 20,840 homes against 21,584 |
| Dividend yield | 2.6% | $2.00 a share a year |
Ratios from company filings and market data (see LEN’s own page →). Price ratios at the Oct 16 close; earnings ratio on the last four reported quarters ($5.29 a share, as filed); book value of $90.62 a share from the August 31 balance sheet. LEN’s own page shows which annual report it used, the year ended November 30, 2025, before this year’s drop in earnings, so its earnings ratio is lower than the one above. It updates when the next annual report is filed.
What I can’t know
Whether the Millrose report is right. On October 2, Hunterbrook Media reported that Millrose, the land company Lennar spun off, bought more than 700 finished Lennar homes in about a month, at least 356 of them in the last week of Lennar’s quarter. Lennar’s deliveries beat the bottom of its range by 340. Hunterbrook’s fund says it is short Lennar. I can’t confirm the counts, Lennar’s 10-Q doesn’t mention them, and I found no public reply from either company as of October 18. Lennar fell 6.7% on October 5, and I added on October 6.
Why Berkshire is buying, or whether it will keep going. No one at Berkshire has explained it. Only about half of the shares it added since June are in dated filings: 7.4 million bought from September 17 to October 2. The other 7.9 million came between June 30 and September 17 with no dated trades. No new purchase has been reported since October 2.
Berkshire cannot steer Lennar. It holds the Class A shares, which carry one vote each, so it has about 6.7% of the votes. The Miller family’s shares carry ten. What Berkshire runs is Taylor Morrison and Clayton.
Whether this is a bad stretch or a long one. If orders keep falling for several years in a row, that is something I would want to look at. One bad quarter is not.
Skin in the game
I own Lennar, and I added to my position on October 6 at $74.75 a share. When I wrote about Lennar in September I listed three things I would watch, and I said I would add if the price fell about 10% from my $82. The price did. Margins held up. Deliveries did not: they came in 3.4% lower than a year earlier. I added anyway. What moved me was how much Berkshire was buying, which I could see in the tracker inside my own app. I like the business, and when the best-known value investor in the world keeps buying a stock I own, I pay attention. That is a gut feeling, not a forecast.
Buffett wrote in October 2008: “Be fearful when others are greedy, and be greedy when others are fearful.” Buying more of a company I still believe in after the price falls is that idea at my own scale, and it can still go wrong.
Which account?
Lennar pays $2.00 a share a year, a 2.6% yield. US withholding tax on that is 15%, or 30 cents a share. It does not apply inside an RRSP, you can claim it back as a foreign tax credit in a non-registered account, and it is lost in a TFSA. For a stock that could stay cheap for years, the RRSP is the cleanest home for the dividend; the TFSA is the best place for any gain, but it also throws away any loss.
The workfile
Everything above is the short version. The workfile has Lennar’s deliveries, orders and margins for every year from 2005 to 2026, Berkshire’s holdings quarter by quarter, the ranking of the largest builders, and what I checked and could not confirm. It’s in this week’s workfile →
Your turn 👇
Which stock should we run through the checks next? Hit reply with a ticker.
Send me your pick →Curtis Travis is a retired AACI appraiser (B.Comm) and founder of Travis Valuation. He owns shares of Lennar, Amazon, Walmart, Costco, TD, Scotiabank, Dick’s, Berkshire Hathaway and OMAB, all named in past issues — and he added to his Lennar position on October 6, 2026. Prices, ratios, the share count, orders, deliveries and margins are as of the Oct 16, 2026 close or the latest filing, from market data and Lennar’s own SEC filings, not figures the Travis Valuation app carries. Berkshire’s holdings are from its SEC Forms 3 and 4, Schedule 13G and 13F filings, through October 7. The mortgage rate is Freddie Mac’s weekly average. Prices move. Informational only — not a recommendation, and not tax advice. Do your own diligence.