Warren Buffett Ignores His Own Advice With Home Builder Stock: Are Other Stocks At Risk?

Has Warren Buffett abandoned his investment thesis? Perhaps he couldn’t resist the allure of profits from home builder D.R. Horton Inc DHI, whose price popped 70% in 2023.

The Oracle of Omaha jettisoned his stake in D.R. Horton after holding it for less than a year.

That’s according to a filing with the U.S. Securities and Exchange Commission, in which Buffett’s company, Berkshire Hathaway Inc BRK, disclosed that it sold its entire holding in D.R. Horton during the three months between October and December.

The shares ended December at around $152. See chart below.

Also Read: ‘Hallelujah’ For Shale: Why Warren Buffett Likes American Oil Companies

In August, Berkshire revealed that it had invested in D.R. Horton as well as two other U.S. home builders, Lennar Corporation LEN and NVR Inc NVR during the April-June quarter.

At this point, shares in D.R. Horton — of which Berkshire Hathaway acquired 5,969,714 — were trading somewhere between around $95-$115 each.

This kind of move is uncharacteristic of Buffett’s investment behavior.

The Berkshire Hathaway way, as so often cited by both Buffett and his late business partner Charlie Munger, is to buy and hold.

Munger’s take on it was: “The big money is not in the buying or selling, but in the waiting.”

And Buffett has already been pulled up on this by commentators at ResiClub, a U.S. housing market research company.

ResiClub analyst Lance Lambert said: “It's interesting that Warren Buffett would so quickly sell off his D.R. Horton stake and exit the home builder bet.

“After all, the Oracle of Omaha wrote in his 1996 letter to shareholders that: ‘If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.'”

Are Other Sell-Offs From the BH Portfolio Likely?

Perhaps investors shouldn’t worry too much about whether Berkshire Hathaway will jettison other stocks from its portfolio.

In his annual letter from earlier this week, Buffett remained effusive about many of the company’s long-term holdings.

On Coca-Cola Co KO and American Express Company AXP he said: “We did not buy or sell a share of either Amex or Coke — extending our Rip Van Winkle slumber that has lasted well over two decades.”

He was similarly enthusiastic about the U.S. oil companies in the portfolio, including Occidental Petroleum Corporation OXY and Chevron Corp CVX.

Now Read: Berkshire Hathaway Report, Shareholder Letter Released: What’s Going On With The Stock?

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