There have been signs this spring and summer that the U.S. housing market – while not in any massive full fledged recovery – is at least stabilizing. Most of those who bought homes with little to nothing down have either left the building (literally), or are in some government program which is keeping them where they are. Banks are no longer puking up foreclosures, and large pools of institutional money have been formed to invest in inventory. Many small time home builders have left the scene, leaving mostly well financed / public corporations – and even they are building at a pace far below normal. Of course many of the existing stock is damaged or neglected and needs work done. So there are a lot of interesting facets to the current housing market. And one very interesting company that has its hands in various niches. None other than Berkshire Hathaway.
Aside from one really lousy day Wednesday, the stock has been in a very bullish pattern the past few months, almost entirely unaffected by the random and violent swings in the broader market. Fundamentally the insurance (slash) railroad (slash) housing company has created an interesting portfolio.
Some snippets via Bloomberg:
- Buffett added to holdings of Wells Fargo & Co. (WFC), the largest U.S. home lender, bought real-estate brokers and bid on mortgage assets of bankrupt Residential Capital LLC as he bets on a rebound in housing in the world’s largest economy.
- Buffett said last month that …. U.S. housing was beginning to show signs of a rebound after the worst crash in seven decades. “For the last two years, I’ve seen everything except housing moving forward in the economy,” Buffett, 81, told Betty Liu in a July 13 interview on Bloomberg Television. “In the last few months, the rest of the economy actually has flattened out. Housing is picking up.”
- The number of available U.S. homes has been declining, a trend Buffett has said was inevitable as new households form. Properties for sale fell to 2.39 million in June from an average supply of 2.93 million in 2011 and 3.22 million in 2010, data from the National Association of Realtors show.
- Berkshire’s subsidiaries include Acme Brick Co., paint maker Benjamin Moore & Co., builder Clayton Homes and carpet manufacturer Shaw Industries. The firm has stakes in some of the country’s largest mortgage lenders, including U.S. Bancorp and Bank of America Corp. The Wells Fargo stake was valued at more than $13 billion at the end of March, making it the second- biggest holding in the company’s stock portfolio.
Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund's holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog