Famed for his market timing, Doug Kass tells us he’s spotted a new trend underway and tells us Warren Buffett is poised best to benefit.
Specifically Kass thinks markets are on the brink of a massive recovery in housing.
“We have a number of factors conspiring to mark what I believe will be a very durable multi-year recovery that could last through the decade,” says the president of Seabreeze and CNBC Contributor.
Those ‘factors’ follow:
- Housing affordability is at a near record low
- New home production is extremely low relative to household formation and demographic trends (a lot of pent up demand should be unleashed.)
- Economics of home ownership are titled away from renting
- Positive turn in jobs market
- Mortgage rates are at generational lows
- Consumer confidence is incrementally positive.
A recovery in housing should benefit banks as well as housing material companies and of course you could always build a basket, but Kass says don't bother - Berkshire Hathaway gives you the best of both worlds.
“Berkshire owns 7.6% of Wells Fargo,” Kass tells us. “It has $5 billion preferred in BofA. Also it owns Benjamin Moore paint, Clayton Homes, Star Furniture and Nebraska Furniture Mart.”
And Kass says the stock is cheap. “By my calculations Berkshire trades at 30% discount to intrinsic value. Berkshire is my best name, by far,” says Kass
Fast Money trader Brian Kelly agrees with the thesis. “I’m in it via USG – but I think Doug is right.”
Trader Steve Grasso is a little more cautious. Grasso thinks the market faces serious headwinds and as a result, he suggests waiting. As he so often says, 70% of all stocks trade in tandem with the market.
* Doug Kass is also a contributor to the Street.com, Jim Cramer’s Real Money Pro web site
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Trader disclosure: On Apr 16, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Joe Terranova is long VRTS; Joe Terranova is long IBM; Joe Terranova is long MCD; Joe Terranova is long EMC; Joe Terranova is long GS; Joe Terranova is long JOY; Joe Terranova is long HPQ; Joe Terranova is long LQD; Steven Grasso is long CUBA; Steven Grasso is long GERN; Steven Grasso is long HPQ; Steven Grasso is long HSPO; Steven Grasso is long MU; Steven Grasso is long NAT; Steven Grasso is long NYX; Steven Grasso is long P; Steven Grasso is long PRST; Steven Grasso is long VVUS; Steven Grasso is long XRX; Steven Grasso is long ZNGA; Steven Grasso is long ORCL; Steven Grasso is long UAL; Steven Grasso is long LNG; Steven Grasso is short AAPL; Steven Grasso is short QQQ; Patty Edwards is long for clients AAPL; Patty Edwards is long for clients WFC; Patty Edwards is long for clients GDX; Patty Edwards is long for clients GLD; Patty Edwards is long for clients KMB; Patty Edwards is long for clients ERF; Patty Edwards is long for clients INTC; Patty Edwards is long for clients JOY ; Patty Edwards is long for clients SBUX; Patty Edwards is long for clients COP; Patty Edwards is long for clients AMZN; Patty Edwards is long for clients PEP; Patty Edwards is long for clients HD; Patty Edwards is long for clients BRK.B; Patty Edwards is long for clients JNJ; Patty Edwards is long for clients BMY; Brian Kelly is long SPY; Brian Kelly is long IWM; Brian Kelly is long USG; Brian Kelly is long KRE; Brian Kelly is long CAF; Brian Kelly is long GERMAN BUNDS; Brian Kelly is short EUROTOXX 50 FUTURES; Brian Kelly is short BRITISH POUND; Brian Kelly is short SWEDISH KRONE
For Doug Kass
Doug Kass is long XLF
Doug Kass is long BAC
Doug Kass is long C
Doug Kass is long BRK.B
For Sam Isaly
Sam Isaly is long JNJ
Sam Isaly is long ISRG
Sam Isaly is long PFE
Sam Isaly is long FRX
Sam Isaly is long LLY
Sam Isaly is long WLP
Sam Isaly is long PFE
Sam Isaly is long RHHBY
Sam Isaly is long NVS
Sam Isaly is long BMY
Sam Isaly is long SNY
Sam Isaly is long MRK
For JC O’Hara
Nothing to disclose
For Peter Keith
Piper Jaffray usually provides bids and offers for the securities of Home Depot, Inc. (The) and will, from time to time, buy and sell Home Depot, Inc. (The) securities on a principal basis: HD
Piper Jaffray usually provides bids and offers for the securities of Lumber Liquidators, Inc. and will, from time to time, buy and sell Lumber Liquidators, Inc. securities on a principal basis: LL
Piper Jaffray has received non-investment banking securities-related services from or has had a client relationship with Lowe's Companies, Inc. in the past 12 months: LOW
Piper Jaffray usually provides bids and offers for the securities of Lowe's Companies, Inc. and will, from time to time, buy and sell Lowe's Companies, Inc. securities on a principal basis: LOW
CNBC.com with wires.
