Buffett seems to be focused on American homebuilders right now. He added a stake in Lennar Corporation (LEN) sometime in the second quarter of 2023, according to recent regulatory filings.
The Florida-based company is one of the largest homebuilders in the country. That puts it in a favorable position given the shortage of homes across America. Between 2012 and 2022, there were 6.5 million more households formed than homes constructed. If this gap continues to widen, demand for homebuilding could skyrocket.
Buffett seems to be betting on this trend. He also added two other homebuilders, NVR (NVR) and DR Horton (DHI), to his portfolio during the second quarter.
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Buffett added a stake in British alcoholic beverage giant Diageo (DEO) in the first quarter of this year. But this isn’t the first time the Oracle of Omaha has dipped into sin stock. Back in the 1990s, his firm acquired a sizable stake in Guinness, the beer brand that would eventually be combined with other brands to form Diageo.
At the time, Buffett even compared the investment to his most famous bet. “In the sense of where they earn their profits — continent-by-continent — Coca-Cola and Guinness display strong similarities," he wrote in a letter to investors that year.
Now, Diageo is back in the Berkshire portfolio, and that’s probably a sign that the company is undervalued. The stock trades at more than 19 times earnings per share and offers a 2.6% dividend yield. Compare that to Bitcoin’s dividend yield of 0% and non-existent price-to-earnings ratio.
Warren Buffett is clearly bullish on energy, at least in the medium term. That’s why he started accumulating a stake in Occidental Petroleum Corp (OXY) last year and now controls over 25% of the company’s outstanding shares.
The price of crude oil has rebounded in recent months. In fact, it hit a 10-month high recently and experts expect demand to keep a price floor on the commodity for the year ahead. That’s a major tailwind for oil producers like Occidental.
Buffett’s bet on energy giants is now a key part of his portfolio. Considering how cheap these companies are (Occidental stock trades at 11 times earnings), retail investors should consider taking a closer look too.
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