2026-09-23

Berkshire Pushes Lennar Stake Past 10% - Why Buy a Stock 7 of 19 Analysts Rate 'Sell'?

Written & reviewed by the TradeSmrt editorial team · 2026-09-23

In this article

What Happened
Why Berkshire Is Betting Against the Sell-Side Consensus
What to Take Away From This
FAQ
Sources

What Happened

Shares of homebuilder Lennar jumped as much as 6.6% intraday on Tuesday, September 22, touching $83.24 before closing up 4.44% at $81.55. The trigger wasn't an earnings beat or a product announcement - it was a routine SEC filing. Warren Buffett's Berkshire Hathaway disclosed that it bought more than 2.7 million shares of Lennar's Class A and Class B stock between September 17 and September 21, paying a weighted average of $74.80 to $79.41 per share. The purchase alone cost $212.4 million, and it pushed Berkshire's total Lennar position to 23.7 million shares worth roughly $1.8 billion. That brought Berkshire's ownership stake above 10% of the company - a threshold that, under U.S. securities law, requires major holders to disclose their trades on a near-real-time basis, which is exactly how the market learned about the purchase so quickly.

The catch is that Lennar has been anything but a winning stock. Shares are down more than 32% over the past year, and the company's most recent quarterly results - fiscal third-quarter 2026 - missed expectations across the board. Earnings per share came in at $1.19, below the $1.28 consensus and roughly half of the $2.29 posted a year earlier. Revenue fell 8.6% year-over-year to $8.05 billion, also short of the $8.32 billion analysts had penciled in. Wall Street's reaction has been correspondingly cold. Of the 19 analysts covering Lennar, only one rates it a Strong Buy, nine rate it Hold, two rate it a moderate Sell, and seven - more than a third of the group - rate it an outright Strong Sell. Citigroup trimmed its price target to $85, RBC Capital cut its target to $69 while keeping an Underperform rating, and Barclays lowered its target to $70 under an Underweight rating. The average Wall Street price target sits around $79 to $80 - actually below Tuesday's closing price once Berkshire's buying had already pushed the stock up. In other words, while the sell-side was telling clients the stock already looked expensive, Berkshire was doing the opposite: buying more.

Why Berkshire Is Betting Against the Sell-Side Consensus

Understanding this purchase starts with a leadership change at the top of Berkshire itself. Greg Abel took over as chief executive on January 1, 2026, succeeding Warren Buffett after decades at the helm. Abel's first major move as CEO was the $6.8 billion acquisition of homebuilder Taylor Morrison, announced in June. Buffett later commented on the deal by saying Abel "did that faster than I could have done it, smoother than I could have done it, and I never talked to the CEO about it" - effectively confirming the call was Abel's alone. Since then, Abel has raised Berkshire's Lennar position by roughly 30% and rebuilt a small stake in D.R. Horton after Berkshire had previously exited a larger position in that builder. Seen in that light, this week's Lennar purchase isn't an isolated bet - it's the latest step in a housing-market thesis Abel has been building consistently since taking the reins. The disconnect between Abel's buying and Wall Street's selling comes down to time horizon. Sell-side analyst ratings are typically anchored to earnings expectations over the next twelve months, and right now that outlook is genuinely weak: the 30-year fixed mortgage rate climbed to 6.95% last week, squeezing housing affordability just as Lennar posted a soft quarter. Berkshire's buying, by contrast, is built around a much longer runway - often five to ten years or more. The logic is that once the current rate cycle eventually turns, homebuilders that are cheap today because of near-term margin pressure could be worth significantly more once demand normalizes. Berkshire has been building out a housing-sector portfolio across Lennar, D.R. Horton, and Taylor Morrison throughout fiscal 2026, and Abel has signaled he eventually wants to combine Taylor Morrison with Berkshire subsidiary Clayton Homes' site-built operations into one unified platform. UBS analysts have noted that such a combination could create one of the five largest homebuilders in the country by volume.

This pattern of buying quality businesses precisely when the broader market is fleeing a sector has deep roots at Berkshire. During the 2008 financial crisis, when panic-selling gripped bank stocks industry-wide, Buffett stepped in with major preferred-stock investments in Goldman Sachs and Bank of America - bets that paid off handsomely over the following years, made at a moment when fear about the banking system's survival dominated headlines rather than any single company's fundamentals. This week's Lennar purchase follows a similar structure: broad market pessimism about housing demand under a high-rate regime, met with a targeted bet on specific companies' balance-sheet strength and competitive position rather than the macro narrative. The key difference is who's making the call. Buffett drove the 2008 financial-crisis buying personally; this Lennar purchase carries Abel's fingerprints instead, which is part of why the market is watching it closely as an early signal of how Berkshire's investment philosophy evolves in the post-Buffett era.

What to Take Away From This

Analyst consensus and a major shareholder's actual trading answer different questions. Sell-side price targets are usually anchored to the next twelve months of earnings, while a long-term holder like Berkshire is often underwriting a five-to-ten-year cycle. When the two disagree, the first question isn't "who's right" - it's "which time horizon is each one actually pricing in."
A 10%-plus ownership stake comes with a free, real-time information source. Once an investor's stake crosses 10%, U.S. securities law requires near-real-time disclosure of further trades. Those filings offer a look at what one of the market's most scrutinized long-term investors is actually doing with its capital, not just what it says in a shareholder letter.
Weak earnings and a cheap valuation can show up in the same stock at the same time. Lennar's EPS was cut roughly in half year-over-year, but its share price had already priced in a lot of that pain, falling 32% over twelve months. Bad news and a cheap price aren't mutually exclusive - value investors specifically look for the overlap between the two.
A change in leadership can bring a change in investment style. Greg Abel's housing bets read as a more assertive, sector-consolidating approach than the more conservative acquisition pattern associated with the Buffett era. When a large institution changes leaders, its portfolio tendencies can shift with them.
Rate-sensitive sectors can generate "bad numbers" and "cheap prices" as the same headline. A 30-year mortgage rate near 7% is an unambiguous near-term headwind for homebuilder earnings, but it can simultaneously look like an entry point to an investor positioned for the eventual rate-cycle turn. That's a reason to evaluate a whole sector's valuation cycle rather than reacting to a single quarter in isolation.

FAQ

Why did Berkshire Hathaway increase its stake in Lennar?

New Berkshire CEO Greg Abel appears to be building a long-term bet on a U.S. housing market recovery. After the $6.8 billion Taylor Morrison acquisition in June, Abel has rebuilt a stake in D.R. Horton and grown Berkshire's Lennar position by roughly 30%, expanding a homebuilding portfolio that looks past current-quarter results toward eventual demand recovery once mortgage rates ease.

If most analysts rate Lennar a Sell, why is Berkshire buying?

The two are answering different questions on different timelines. Analyst Sell ratings largely reflect the next twelve months of expected earnings against the current share price, while Berkshire's purchases typically reflect a much longer investment horizon. Today's high mortgage rates and soft earnings are a real near-term headwind, but a long-term investor can view the same conditions as a discounted entry point.

Why does crossing a 10% ownership stake trigger public disclosure?

Under U.S. securities law, an investor holding more than 10% of a company's shares is treated as having insider-like access to information about that business, and must disclose subsequent trades relatively quickly. That requirement is what let the market see Berkshire's Lennar buying within days rather than learning about it only in a future quarterly filing.

Sources

This article is an original synthesis and analysis based on the reporting below, not a reproduction of the original articles. Please check the source articles directly for the most current figures.

⚠️ This article is for informational purposes only and is not investment advice. Market conditions change constantly - always verify the latest data before making investment decisions.