Did New Berkshire Hathaway Leadership Make a Costly Early Misstep
Yahoo Finance ·
Mortgage rates are rising, making it harder for people to afford a home. The housing market has been stalled for quite some time, as affordability issues existed even before mortgage rates began rising. This is a terrible backdrop for homebuilders like Lennar ( LEN +0.01% ) . And yet, Berkshire Hathaway ( BRKA +0.91% ) ( BRKB +1.05% ) , under new CEO Greg Abel, has been buying that stock, building its position to 10%, and it recently completed its $6.8 billion acquisition of Taylor Morrison Home. Is this a costly early misstep? Housing has long been a part of conglomerate Berkshire Hathaway's business. The company has a deep knowledge of the sector, which tends to be cyclical. The company's housing exposure was originally built under former CEO Warren Buffett. So Greg Abel isn't exactly charting his own course with his investments in home builders . Greg Abel's big departure from Buffett is that he has explicitly stated that Taylor Morrison Home will eventually be integrated with other Berkshire Hathaway businesses to create a larger division. Buffett usually allowed companies under the Berkshire umbrella to operate independently. But there's a similarity between Buffett and Abel that's important when it comes to housing: Buffett often bought stocks and entire companies when they were unloved. The housing market is deeply unloved today, with Lennar stock down 40% from its 52-week high.
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