Harness Money

It is no secret that housing is still in demand. Even with high interest rates, people are still paying up for housing. Primarily, because people locked in low rates during the pandemic and they do not want to move. Most people do not want to give up a low interest rate for a higher interest rate.

This is a good opportunity for U.S. treasuries which Warren Buffett has said he is tacking advantage of.

“Berkshire bought $10 billion in U.S. Treasurys last Monday. We bought $10 billion in Treasurys this Monday. And the only question for next Monday is whether we will buy $10 billion in 3-month or 6-month” – Warren Buffett

The U.S. housing market

There is low housing inventory for nice homes. There are plenty of poor homes to choose from on the market, but if you house is in nice condition there will most likely be a bidding war for it.

Warren Buffett is most likely looking at the same data as the average investor.

With increased immigration into the United States and low housing inventory, home builders will likely have a high demand for their products for years to come.

Here is the Yahoo Finance Berkshire Hathaway tracker.

It has now public knowledge from Buffett’s 13F filing, reported Aug. 15 that Buffett bought into 3 different U.S. home builders.

Berkshire Hathaway now owns roughly 5.7 million of D.R. Horton – DHI.

Berkshire Hathaway now owns 11,000 shares of Ryan Homes parent company NVR.

Berkshire Hathaway now owns 152,000 shares of Lennar – LEN-B.

The total value of his share is about $814 million.

Since Buffett bought into 3 different home building stocks, the trades seem less about the financial position of each company and more about the overall U.S. economy. There is future growth on the horizon for this particular market. Although that is most likely going to be slow growth. It takes times to build new homes on a large scale.

That being said, Buffett always looks at the financials of each individual business. The numbers of a business always matter. He would be unlikely to invest in a business if he did not like their financial statements.

This may also be a short term trade. Buffett likes to say that he is long term investor and he is for the most part. He is a long term investor in Apple, Coca-Cola and American Express.

But there are plenty of stocks that he has bought into and quickly turned around and sold. He recently purchased Activision-Blizzard, which is generally outside of his circle of competence. Time will tell if this is a long-term holding or if he is taking advantage of the current economic climate and will sell at the right moment.

These purchases are also just a drop in the Berkshire Hathaway bucket. Less than $1 Billion.

The total Berkshire Hathaway portfolio is worth about $348 billion, with the lion share coming his Apple stock ownership.

Here is the Berkshire Hathaway portfolio in 2023.