Berkshire Hathaway expands its presence in the property market
Rising inflation and interest rates have hit the global property market hard. But in the second half of 2023, momentum in the sector has improved, making experts optimistic. Warren Buffett is among those who are positive about the market’s recovery. In 2023, his investment holding company Berkshire Hathaway invested in DR Horton, one of the largest developers in the US.
Berkshire Hathaway bought more than USD 700 million worth of shares in the developer, as well as smaller stakes in two other companies in the sector, Lennar and NVR. Such moves by the investment giant suggest that its specialists expect the housing market to grow. Given DR Horton’s focus on residential property, the sector should see a recovery.
Warren Buffett’s investment holding company is respected in the financial world. Investors and competitors closely watch its actions. This is because of its long track record and high success rate.
At the same time, Berkshire does not reveal all the details of its strategy and plans for the future. In most cases, Buffett takes over the management of the company’s largest investments (USD 1 billion and above). The total reported stake for the three developers is USD 800 million. Who manages this portfolio is, therefore, still being determined.
Changes to Berkshire’s investment portfolio
The company made significant changes to its holdings during the year. For example, during the second quarter, it sold some of its holdings in General Motors Corporation and Globe Life. It acquired a stake in Capital One. It also divested smaller holdings in Vitesse Energy, McKesson and others.
Berkshire focused on the Japanese market, increasing its holdings in the five largest trading houses. On average, investments in the country’s key companies increased by around 8.5%.
The holding company has been interested in Sogo shosha, Japan’s largest trading houses, for several years:
– in 2020, it acquired around 5% of each of these companies for a total of USD 6.2 billion;
– at the end of 2022, the stake increased to 6%;
– in the spring of 2023, Buffett’s stake in each of the 5 Japanese companies rose to 7.4%.
In addition, Berkshire has announced plans to expand its presence in Japan by investing in other local companies. The investment holding company’s attention to the trading houses boosted their share prices by more than 30%. For example, Marubeni Securities, part of Sogo shosha, has tripled in value since 2020.