Warren Buffett became an investing legend through buying stocks. However, over the past 12 consecutive quarters, he has been a net seller of stocks.
The billionaire has sold roughly $24 billion worth of stock in 2025 so far for Berkshire Hathaway's (BRK.A +0.00%) (BRK.B +0.05%) portfolio. But that doesn't mean he hasn't found some stocks attractive. Buffett has spent around $779 million buying shares of one company, in particular. And this relatively small purchase is sending a big message to investors.
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Buffett likes Lennar
There aren't many stocks that Buffett and his team have found appealing enough to buy in both the first and second quarters of 2025. However, Lennar (LEN 2.62%) (LEN.B +0.00%) is one of them.
Lennar has two share classes. Berkshire Hathaway first initiated a position in the homebuilder's Class B shares in 2023. He added 202 Lennar Class B shares in Q1 but bought more than 28,000 additional shares in Q2.
Berkshire has built an even larger stake in Lennar Class A shares. In Q1 of 2025, the conglomerate initiated a position with the purchase of around 1.93 million shares. It added another 5.1 million shares or so in the next quarter.
It's probably a safe bet that Buffett likes Lennar's valuation, especially in a market that's priced for perfection. Lennar's forward price-to-earnings ratio is below 14. By comparison, the S&P 500 (SNPINDEX: ^GSPC) trades at 23.5 times forward earnings.
I suspect the legendary investor also likes Lennar's stock buybacks. The company repurchased around $517 million worth of its shares in the quarter ending May 31, 2025, and another $506 million in Q2.
NYSE: LEN
Key Data Points
A sign from the "Oracle of Omaha"
Is Buffett really sending a big message to investors with the purchases of Lennar? I think so. And that message is further amplified by Berkshire Hathaway buying shares of fellow homebuilder D.R. Horton (DHI 2.23%) earlier this year.
The message I believe Buffett is sending is: The housing market presents a tremendous opportunity over the next few years. The transactions involving Lennar and D.R. Horton seem to support this view. Lennar is one of the largest homebuilders in the U.S. D.R. Horton ranks as the biggest homebuilder in the nation based on volume, a position it's held for more than 20 years.
Buffett studies numbers. He undoubtedly knows that the U.S. faces a housing shortage that some estimate to be in the ballpark of 4.7 million homes. J.P. Morgan (JPM 0.35%) pegs the shortage at closer to 2.8 million homes. Regardless of which number we pick, the country needs a lot more houses.
There's one clear solution to the U.S. housing shortage: Build more houses. Buffett knows this, too. He appears to be betting that this bodes well for both Lennar's and D.R. Horton's growth prospects.
Early indications favoring Buffett's message
One early indication that Buffett might be on the right track is the trend in mortgage rates. These rates have decreased for four consecutive weeks and are now at the lowest level in over a year. When mortgage rates fall, more Americans can afford to build new homes.
Did Buffett anticipate when he bought shares of Lennar earlier this year that the Federal Reserve would cut the federal funds rate, with the action helping pull mortgage rates lower? I don't know, but I wouldn't be surprised if he thought it was a distinct possibility.
Regardless of whether the "Oracle of Omaha" demonstrated truly oracular powers with his investments, lower mortgage rates are great news for Lennar. The company has responded to challenging market dynamics with incentives and price adjustments. It could scale back on these efforts going forward, with the results flowing down to its bottom line.
