Warren Buffett's Berkshire Hathaway makes interesting bet on these homebuilders

Published Mon, Aug 14 20234:30 PM EDTUpdated Mon, Aug 14 20234:54 PM EDT

Warren Buffett's Berkshire Hathaway bought shares of a few homebuilders in the last quarter, a new regulatory filing revealed. The Omaha-based conglomerate picked up $726 million worth of D.R. Horton shares, $70 million worth of NVR shares as well as $17.2 million worth of Lennar in the second quarter, the filing showed. These stakes are relatively small for Berkshire, whose equity portfolio is worth nearly $350 billion. They could have been purchased by Buffett's two investing lieutenants, Todd Combs and Ted Weschler, who oversee about $15 billion each. The Berkshire bet comes at an interesting time for the housing market. With the typical 30-year mortgage rate above 7%, some worried that the U.S. housing market could suffer a big downturn. But instead, sales of newly-built homes have remained strong as existing homeowners have been reluctant to sell their houses and give up favorable mortgage loans that have far lower rates. The SPDR S & P Homebuilders ETF (XHB) is up nearly 39% in 2023 after slumping almost 30% last year. Buffett's sprawling conglomerate is no stranger to the homebuilding industry. Berkshire bought Clayton Homes 20 years ago for $1.7 billion, and also owns paint company Benjamin Moore. Top holdings Berkshire shares just hit a record high last week on the back of strong second-quarter results. The parent of GEICO insurance reported a near $26 billion unrealized gain from its investments, and much of this gain came from its gigantic stake in Apple . The tech giant fueled the market rally in the second quarter, climbing nearly 18%. Berkshire's Apple holding has ballooned to $177.6 billion. Longtime holdings Coca-Cola , American Express and Bank of America remained some of Berkshire's biggest bets at the end of June. Also during the second quarter, Berkshire added to its relatively new stake in Capital One Financial , bringing it to nearly $1.4 billion. The McLean, Virginia-based lender, known for its big credit card business, fared relatively well during the recent banking crisis, with shares rising more than 3% in the first quarter. The stock is now up more than 17% this year. Meanwhile, Berkshire halved its longtime holding in General Motors last quarter, reducing it to a stake worth $848 million at the end of June. The Chevrolet and GMC truck owner has underperformed the market this year, posting only a 1% gain.