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LEN - Lennar Corp


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What would be the reason Bill Miller, Harry Burn & Third Avenue Fund sold some of their stakes in LEN. I know it ain't really significant for their portfolios and I don't know much about Lennar Corp either, but it looks quite attractive with an average growth of 15% and a EV/Operating Income of 12.

Thoughts?

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I don't know why either.  I could presume that they have a good profit in their position and they want to realize the profit and move on.  Or perhaps they just found another, seemingly better opportunity than Lennar.  From a macro perspective, they could believe that events are going to develop in the future that are going to harm housing, employment, etc.

 

I personally like and follow Lennar out of all of the public home builders.  I think they have a good business, operation and long runway.

 

It is certainly possible that those 3 investors know something that I do not.

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I own LEN and trimmed a bit recently due to the run-up in the share price.

 

Basic story is the same for all of the homebuilders.  There have been a deficit of new housing starts versus household formation for the last several years and so we are in an apparent deficit.  Add to that the low interest rates and you having a housing demand tailwind.

 

With Lennar specifically, you had the Cal-Atlantic acquisition, which they seem to have handled nicely.  So, they have nice scale.  Also, they have been trying to option more land and move to a more "asset-light" model that was recently discussed on another thread.

 

I think there are some general concerns about the industry that keeps them from being highly valued.  Builders are hugely dependent on interest rates.  I think rates stay low, but I also would have never predicted a year or two ago that they'd be where they are today.  Unknown and uncontrollable.  An "asset light" model should help make Lennar a bit less risky, but they are seeking asset light relative to homebuilders.  Finally, everyone is at least a bit growth constrained at least because you need the land, the labor and the materials. Saas companies they are not.

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