Berkshire vs. a Short Seller: The Homebuilder Caught in the Middle

30‑Second Take

Why now? Berkshire Hathaway has been buying Lennar almost every week since mid-September. Its latest Form 4 shows another 2.4 million shares bought on October 1 and 2 at an average of about $79.44, lifting its stake to roughly 12% of the company.

Then Hunterbrook, a research firm that is short the stock, published a report on October 2 alleging that Millrose, the land-banking company Lennar spun off in 2025, has been buying hundreds of finished Lennar homes to rent out.

Its argument is that this props up Lennar's sales numbers. The stock fell about 9% across Friday and Monday to a fresh 52-week low.

So you're now being offered the stock below Berkshire's most recent purchase price, with a live controversy attached.

Trade Setup

Timeframe: Position trade (6 to 12 months)

Edge type: Following a long-term buyer into a short-report selloff

Here's the frame. The Hunterbrook report doesn't claim Lennar's homes aren't selling. It claims part of the recent demand came from a related party. That matters, but it's a question about the quality of a slice of orders, not about whether the business works.

Berkshire doesn't trade around headlines, and it has kept buying as the stock slid. If Lennar answers the report clearly, the selloff could reverse fast. If it stays silent or the Millrose sales turn out to be large, the stock can stay under pressure. That's why the sizing below matters more than the entry.

Snapshot Table

Chart

1-Month Trading Summary: LEN is down about 7% over the past month and close to 30% year-to-date, and it now trades roughly 45% below its 52-week high. It drifted sideways in the low $80s through late September while Berkshire was buying, then broke down after the Hunterbrook report.

Monday's drop of almost 7% was its worst day since 2024, on about three times normal volume. Higher Treasury yields didn't help, with the 10-year back above 5.3%.

Bull Case 

Why It Works

Lennar is one of the two largest homebuilders in the country. It still delivered about 20,800 homes last quarter and guided to 22,000 to 23,000 deliveries this quarter, so the volume engine is intact even in a weak market.

Homebuilders tend to look cheapest when earnings are depressed and most expensive near the peak. Owning them when the headlines are ugly is usually how the money gets made.

The Catalysts

The first catalyst is Lennar's response. Companies that answer a short report point by point usually stop the bleeding. As of Monday's close, Lennar hadn't publicly responded.

The second is Berkshire itself. Every new Form 4 is public, and continued buying at these prices would be a loud vote of confidence.

The third is the fiscal fourth-quarter report in mid-December, where margins and orders will show whether demand is real.

What The Numbers Say

The stock trades at roughly 11 times trailing earnings and pays a $2.00 annual dividend, about a 2.7% yield at current prices.

Gross margin was 15.8% last quarter and is guided to 15.5% to 16% this quarter. That is thin for Lennar, so even a modest improvement as incentives ease would flow straight to earnings.

Bear Case 

What Could Break It

Rates are moving the wrong way. The Fed raised rates in September; its projections point to more hikes, and the 30-year mortgage rate was 7.28% in Freddie Mac's latest survey. A housing recovery may be further out than bulls want.

The Millrose question also cuts deeper than one month of sales. If related-party purchases turn out to be a meaningful share of orders, analysts will cut estimates, and the low multiple won't look cheap anymore.

The Valuation Risk

A cheap multiple on falling earnings can get cheaper. Lennar has been leaning on incentives and rate buydowns to move homes, and that keeps margins under pressure for as long as rates stay high.

Following Berkshire isn't a guarantee either. It invests on a multi-year horizon and can sit through a drawdown that would hurt a smaller account.

How To Size It

Start with a small position, no more than a third of what you'd normally commit. Add only after Lennar responds to the report or the next Berkshire filing shows it is still buying.

If the stock keeps making new lows after Lennar has responded, step aside and reassess. Don't average down blindly into an open controversy.

Quick Checklist 

✅ Lennar's response to the Hunterbrook report reviewed
✅ Latest Berkshire Form 4 checked for continued buying
✅ Fiscal Q4 earnings date confirmed (expected mid-December)
✅ Position sized small enough to hold through a volatile stretch

Deep‑Dive Links

• Latest earnings report

• Analyst ratings and price targets 

• Short interest data

• Company profile and investor relations

That’s all for today’s Everyday Alpha. We’ll have a new pick for you every morning before the market opens, so stay tuned!

Best Regards,
—Noah Zelvis
Everyday Alpha