Berkshire Crosses 12% of Lennar as Abel Says No Quick Recovery — While Morgan Stanley ($65 PT) and Melius (Sell) Fade the Rally
Berkshire's accumulation accelerated into the weakness its own buying helped spotlight. Form 4 filings show Berkshire bought ~2.4 million more Lennar Class A shares over two days (Oct 1–2) at $78.37–$81.90 — roughly $193 million — plus ~15,000 B shares, taking it to 28,438,045 Class A + 568,028 Class B (>11%). A Schedule 13G/A dated Oct 7 reports Warren E. Buffett and Berkshire Hathaway Inc. each beneficially owning 26,034,436 Class A shares, or 12.5%, with shared voting and dispositive power (National Indemnity separately reports 21,502,349 shares, 10.3%). Because the stake exceeds 10%, Berkshire is an insider for reporting purposes — "Berkshire's buying now reaches the market almost in real time." CEO Greg Abel said in early September he does not "envision a quick recovery" in housing, calling housing an industry Berkshire is "invested in for the long term"; Berkshire's Taylor Morrison acquisition ($8.5B announced September, see Berkshire Hathaway to Acquire Taylor Morrison Homes in $8.5 Billion All-Cash Bet on US Housing) plus the Lennar stake make Berkshire, by its own telling, America's fourth-largest homebuilder.
The stock under the buying. LEN closed $74.44 on Oct 5 (-6.73% that day, a new 52-week low, below Berkshire's $78.37–$81.90 purchase range) after the Hunterbrook/Millrose report (Lennar's Biggest Buyer Is Its Own Spinoff: Hunterbrook's Millrose Report Knocks LEN to a 52-Week Low and Draws a Class Action); it recovered to $76.69 by Oct 9 — still 41.1% below its 52-week high, 16.8% under its 200-day average, at 0.911 P/B with negative quarterly free cash flow (see /markets/LEN/2026/10/12). 24/7 Wall St.: "Berkshire has permanent capital, and it is adding to a stock that keeps falling1… The consensus target of $79 implies upside of just 6.86%. Lennar is down 26.45% this year while the S&P 500 gained 13.62%." Ratings mix: one Strong Buy, one Buy, nine Holds, three Sells, five Strong Sells.
Sell side lines up against Berkshire's trade. Morgan Stanley initiated Lennar at Underweight with a $65 target (Oct 2) — "Morgan Stanley Just Bet Against Berkshire Hathaway's Favorite Homebuilder" — and Melius Research initiated at Sell (Oct 6). Argus cut targets across the complex: NVR to $5,744 (Oct 10, price $5,899) and Meritage to $60 (Oct 11, price $58.81). The bear case is the Q3 print itself: adjusted EPS $1.23 missed the $1.30 consensus, home-sales gross margin slipped to 15.8% from 17.5%, and full-year delivery guidance was cut to 80,000–81,000 homes, with Q4 gross margin guided to 15.5%–16.0% — "no turn yet." CEO Stuart Miller: Lennar is "compromising margin in order to maintain volume," with incentives at ~12% and rates around 7%; the land drag "will not finish quickly."
What to watch. DHI's Oct 29 fiscal Q4 print (D.R. Horton Heads to October 29 Fiscal Q4 Print Under Margin Pressure at 52-Week-Low Territory) is the first read on whether entry-level demand held through the 7.4% rate shock; NVR's Q3 (Oct 22 per MarketBeat/Quartr, Oct 28 per Zacks — watch thread pending) tests the asset-light model's margin floor (NVR's Q2 2026 Earnings: Strong Order Volume Masked by Severe Gross Margin Compression); and Lennar's December print now carries the extra question of whether deliveries were organic or affiliate-supported.
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An instance of Peak housing pessimism is when permanent capital buys the builders. — Berkshire accelerating its Lennar accumulation to 12.5% of Class A into a fresh 52-week low while nineteen analysts hold sell-or-hold ratings is permanent capital buying precisely at peak pessimism. ↩︎