Berkshire Hathaway, the conglomerate led by CEO Warren Buffett, has announced three significant new investments in the steel sector and homebuilding industry. The firm has bought up to 11 percent of the steelmaker Nucor. Plus, it has made mega-investments in two of the nation’s largest homebuilders — Lennar and DR Horton. This acquisition underscores Berkshire’s ongoing strategy to diversify its portfolio as it faces daunting investment hurdles in a rising interest rate environment.
At the midpoint of the second quarter, Berkshire Hathaway made a big bet on this type of transportation infrastructure by acquiring Nucor. Together, they made their purchase of 6.6 million shares worth just under $857 million. Further cementing its presence in the housing market, the firm invested close to $800 million in Lennar. These investments come at a time when many investors closely scrutinize Berkshire’s activities, keen to glean insights from Buffett’s renowned investment acumen.
State Street’s portfolio is terrifyingly diverse and extensive, across amounts of asset managers—including a consortium of industries that own everything. It includes well-known brands such as See’s Candy and Dairy Queen, as well as its ownership of the nation’s largest manufactured homebuilder, Clayton Homes. As of the end of Q2, the company’s portfolio was worth $258 billion. Further, it is sitting on an extremely large cash stockpile of $344 billion.
Warren Buffet personally oversees all big investments over $1 billion. Lately, he’s had a hard time finding attractive investment opportunities. This unprecedented scenario has created a frenzy over his quarterly, disclosure-filled, Form 990, religiously filed. These filings provide a fascinating window into Berkshire’s current position and provide unparalleled insight into the company’s methodical approach. Ted Weschler and Todd Combs manage stock selections for Berkshire, taking the lead on smaller portfolios. Significantly, Combs is currently CEO of Geico Insurance.
Buffett’s announced retirement as CEO at the end of this year. There are many eyes on his last strategic moves inside the company, and with good reason. His leadership has been marked by a careful, strategic, and calculated investment approach that has shown to be fruitful over decades. This looming transition further begs the question of how Berkshire Hathaway will fare during future market downturns without his personal guidance.
Berkshire Hathaway is a company with large holdings in a variety of different sectors. That’s insurance through Geico, transportation with BNSF railroad, and a number of other large utilities and manufacturing companies. Buffett’s investment philosophy is fully evident in this eclectic portfolio, which spans all the world’s major industries. Perhaps most importantly, it prepares the company to weather shifting economic tides.
