On Monday, August 14, Warren Buffett’s Berkshire Hathaway (NYSE: BRKA, BRKB) disclosed to the SEC that it bought home builders, added up on Capital One, and slashed its stake in Activision Blizzard in the second quarter.
The firm bought nearly 6 million shares worth $726 million in home builder D.R. Horton and snapped up 152,572 shares of Lennar Corp and a small batch of NVR.
D.R. Horton is up 35% year to date, while Lennar Corp is up 34%, both of them outperforming the S&P 500’s 17% return.
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The reason for this is new home sales have slightly rebounded in 2023, following the pullback last year after the mortgage rate shock. New home sales climbed 23.8% year-over-year in June 2023. That’s still 32.2% below the cycle’s peak at the height of the pandemic housing frenzy in August 2020.
Another reason for the homebuilders’ bet may be the anticipation of lowering interest rates going forward, which will make mortgages more affordable. Also, the US housing inventory is near a 10-year low, meaning there is more demand than supply.
Warren Buffett did not publically state the motive behind this move.
Berkshire sold more than it bought
Berkshire slashed its stake in Activision Blizzard by 70% and offloaded General Motors shares as well as Chevron shares. Berkshire also dumped its stake in drug distributor McKesson. Total sales are worth $5 billion.
Berkshire also spent $1.2 billion in stock buyback.
All this points to Berkshire selling more stock than buying in Q2, which means either Buffett doesn’t see many investing opportunities at the moment or he is waiting for bargains in the future.
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