Berkshire Buys Lennar Stock; Its Clayton Homes Unit Could Be Worth $25 Billion

Berkshire Hathaway has raised its stake in Lennar to 11%. Its Clayton Homes unit shows how substantial its housing business has become. (Michael M. Santiago/Getty Images)

Key Points

• Berkshire Hathaway raised its ownership stake in Lennar, the second-largest U.S. homebuilder, to 11% after purchasing about 1.7 million shares.
• The purchase pushed Berkshire Hathaway’s stake above 10%, a threshold that requires the company to disclose new purchases within two business days.
• Lennar is controlled by CEO Stuart Miller, who owns the bulk of the company’s super-voting Class B shares and would have to assent to any acquisition.

Berkshire Hathaway likes the out-of-favor housing sector. The question is how much bigger it wants to get after boosting its ownership stake in Lennar , the No. 2 U.S. home builder, to 11% last week.

Berkshire lifted its stake in depressed Lennar by about 1.7 million shares in its latest round of purchases, according to a form 4 filing with the Securities and Exchange Commission late Friday. That followed buys in prior sessions, and it now holds 26 million shares worth over $2 billion. It has doubled its holding in Lennar since the end of June.

Berkshire’s buying has helped support Lennar stock, which on Monday was down 0.2% at $82.03, outperforming shares of rivals like industry leader D.R. Horton , which fell 1.5%.

Some investors figure that Berkshire’s buying could help put a floor underneath the stock. Lennar has been among the worst performers in the industry this year, falling almost 20% and it trades for less than half its 2024 high of almost $185.

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Berkshire’s largest housing business is Clayton Homes, the leader in manufactured housing, and it bought Taylor Morrison, a midsize Sunbelt home builder, for $8.5 billion including debt in late July. Berkshire also owns a group of housing-related companies, including Shaw, which makes flooring and carpet, and paint brand Benjamin Moore.

“It’s a classic Berkshire Hathaway playbook to identify an out-of-favor part of the market and invest especially when they have a core competency of understanding from certain operating subsidiary businesses,” says Mac Sykes, a portfolio manager at Gabelli Funds.

Clayton has been a huge winner for Berkshire since its purchase in 2003 for under $2 billion. Clayton is one of Berkshire’s top 10 subsidiaries by profit and might be in the top five. It isn’t easy to determine how Berkshire’s many operating businesses rank in profits because Berkshire releases little specific profit information on many of its subsidiaries. Clayton could be worth $25 billion or more, Barron’s estimates.

Clayton dominates the manufactured housing business with about a 50% share in an oligopoly that includes the publicly traded Champion Homes and Cavco Industries . The smaller companies each have around 20% of the market, which totals about 100,000 new homes a year.

Wall Street views manufactured housing as a better business than traditional homebuilding because it’s simpler, has only a few big players, and generally doesn’t involve capital-intensive and potentially risky land purchases.

Manufactured homes are affordable for lower-income Americans—often families earning $60,000 a year or less—given a price range of $100,000 to $200,000 per home. That’s before the cost of placing them in manufactured-home communities, where the homes are now more permanent than they once were and generally don’t move once put in place.

Champion and Cavco trade for about 25 times projected 2026 earnings, compared with 10 to 15 times for some large home builders. Clayton earned $1.9 billion last year before taxes on about $13 billion in revenue. This year’s results should be similar based on first-half financials.

Apply a multiple of 15 to 20 times Clayton’s potential $1.5 billion of after-tax 2026 earnings and Clayton could be worth $25 billion or more.

Clayton has significantly expanded its site-built home business through acquisitions and that division, Clayton Properties Group, now controls over 60,000 home sites around the country and had a $1 billion order backlog at the end of 2025.

One driver of the Taylor Morrison deal was Berkshire CEO Greg Abel’s desire to expand Clayton’s site-built business. He has moved to integrate the businesses where warranted since the deal closed.

Clayton also has a big financing business with about $30 billion of loans in its portfolio.

In his inaugural shareholder letter in February Abel praised Clayton’s model, writing that it “has proven resilient through short-term shifts in the broader housing market” because of its efficient manufacturing, construction and integrated financing.

Berkshire’s Lennar stock purchases raise a question: How much larger does Berkshire want its stake to become, and would it be interested in owning the whole company? Lennar now has a market value of almost $20 billion, a sum easily digestible for Berkshire.

The Berkshire purchases likely are likely driven by the company’s value-oriented investment manager Ted Weschler, with the assent of Abel who oversees the entire Berkshire’s equity portfolio of about $350 billion. Weschler has authority over about 6% of the portfolio, or roughly $20 billion.

Berkshire is clearly enamored of Lennar given its move above a 10% stake. Crossing that threshold requires it to disclose new purchases within two business days. Berkshire generally likes to operate quietly when it buys and sells stocks and doesn’t usually take an equity stake over 10% because of the disclosure rules.

Lennar has some of the lowest margins among major companies in the industry and it trades below its book value of about $90 a share. Its earnings in its current fiscal year ending in November are depressed and should total about $5 a share, down from $8 in its fiscal 2025 and about $14 a share in 2024.

Lennar is exposed to the weak entry-level market, where affordability is a big problem as mortgage rates have moved above 7%. It also spun off its land holdings into a separate company, Millrose Properties, a move that has depressed margins.

The bull case, as Barron’s outlined earlier this year, is that Lennar’s profits should revive with a stronger housing market and that the company’s book value and low debt should provide downside support to the stock.

Lennar is controlled by CEO Stuart Miller who owns the bulk of the thinly traded Lennar supervoting Class B shares. He would have to assent to any acquisition by Berkshire. His family has controlled the Miami company for decades.

Lennar didn’t respond to Barron’s request for comment and Berkshire had no immediate comment.

Berkshire may simply be content to build its stake in Lennar as a play on a recovery in housing and the company’s fortunes, or it might want to add Lennar to its housing empire. Its intentions may become clearer in the coming months.

Write to Andrew Bary at andrew.bary@barrons.com

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