Lennar Corporation (NYSE:LEN) traded at around $77 on October 6, up 3.77% on the day and 39.05% lower over twelve months.
Berkshire Hathaway has been buying through the decline, with a stake now above 11% of the company worth roughly $2.2 billion. Buying a ninth of a homebuilder below its own book value is a statement about what the land is worth.
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The Purchase Is an Argument About Inventory:
Lennar’s book value is $90.68 a share against a price near $77. At most companies, that gap means little, because book value records goodwill and brands that may be worth nothing in a bad year.
A homebuilder is the exception. Its balance sheet is mostly land and finished houses, carried at what Lennar paid. So buying at 0.85 times book means paying less than the company paid for the inventory, at a business still turning a profit.
What lets Lennar wait is the structure behind it. A current ratio of 10.13 and debt-to-equity of 28.20% are the difference between selling land cheaply and holding it. That is the whole Berkshire trade, which is to buy hard assets below replacement cost and let the cycle do the rest.
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What Today’s Sellers Are Reading Instead:
The income statement is why the stock sits where it does. Revenue fell 8.70% in the most recent quarter, and earnings fell 52.00%. A top line down single digits with profit down by half is operating leverage running backwards, because a builder’s costs do not fall as fast as its closings.
Net margin of 4.09% shows how little cushion sits between that and a loss. Short sellers have pressed the point, with 10.24% of the float sold short against a company trading below its own book value. One figure has turned recently. The forward multiple of 14.72 now sits below the trailing 15.06, which says the market expects profit to stop falling.
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The Valuation Case:
Lennar traded at around $77 on October 6 and is worth $18.38 billion. Sustainability rests on mortgage rates, which neither Lennar nor Berkshire influences. What the company controls is whether it must liquidate land cheaply.
On price, the measures disagree. Against assets, the stock is cheap at 0.85 times book, and against earnings it is ordinary at 15.06 times. Enterprise value to EBITDA of 11.48 counts the $6.12 billion of debt, and on that basis much of the discount disappears.
The 2.69% yield on a forward rate of $2.00 is not what anyone is buying here.
Conclusion:
Berkshire is buying land and houses for less than Lennar paid, backed by a balance sheet that can hold through a downturn. At 0.85 times book with a current ratio of 10.13, that is a coherent trade. However, revenue fell 8.70% while earnings fell 52.00%, and a 4.09% net margin leaves very little room before a weaker quarter turns negative. Short interest of 10.24% is positioned against exactly that. The number to watch is book value per share, because at $90.68 it is the only part of this case still holding.
Market Sentiment:
Lennar Corporation was held by 65 hedge funds with a combined stake value of about $4.56 billion at the end of Q2 2026 in the Insider Monkey database. This is down from 66 hedge fund holders with a cumulative investment value of around $4.04 billion in the previous quarter.
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This article is originally published at Insider Monkey.
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