In this article, we discuss Warren Buffett’s top 3 recent buys. To read the detailed analysis of Warren Buffett’s investment strategy and his latest bets, you can go directly to Buffett Stock Portfolio: Warren Buffett’s Recent Buys.
3. D.R. Horton, Inc. (NYSE:DHI)
Stock added to the portfolio in: Q2 2023
Percentage of Berkshire Hathaway’s portfolio as of Q2 2023: 0.2%
D.R. Horton, Inc. (NYSE:DHI) is another home construction company that was added to Buffett’s stock portfolio in the second quarter of 2023. It is the largest home construction company in the United States. Berkshire Hathaway initiated a position in D.R. Horton, Inc. (NYSE:DHI) in Q2 2023 with approximately 5.97 million shares worth $726.454 million.
D.R. Horton, Inc. (NYSE:DHI) posted its Q3 2023 results on July 20. The company reported a GAAP EPS of $3.90, outperforming the estimates by $1.11. On top of that, the company’s revenue was up 10.6% year-over-year to $9.73 billion, exceeding the market expectations by $1.32 billion. Due to its solid earnings, D.R. Horton, Inc. (NYSE:DHI) raised its FY 2023 guidance. The company expects consolidated revenue in the range of $34.7 billion – $35.1 billion, up from prior $31.5 billion – $33.0 billion.
On July 24, Raymond James upgraded D.R. Horton, Inc. (NYSE:DHI)’s stock to Outperform from Market Perform after robust Q3 results. The firm has a $160 price target on the company stock.
Baron Real Estate Fund made the following comment about D.R. Horton, Inc. (NYSE:DHI) in its second quarter 2023 investor letter:
“Our investments in homebuilder companies – Toll Brothers, Inc., Lennar Corporation, and D.R. Horton, Inc. (NYSE:DHI) – performed well in the first six months of 2023. The share price of Toll Brothers increased nearly 60% and the shares prices of Lennar and D.R. Horton each gained more than 35%.
Year-to-date, each company has witnessed a meaningful uptick in demand to buy homes:
Home buyers continue to come off the sidelines and buy homes despite 30-year mortgage rates remaining in the 6.5% to 7.0% range. Several factors are contributing to the recent strength, including pent-up demand to buy homes and fears that mortgage rates could move higher. • The sticker shock of rapidly rising mortgage rates appears to have cooled down. Homebuilders have made homes more affordable to prospective home purchasers by offering mortgage rate buydowns to the mid-5% mortgage rate range while maintaining strong profitability margins. • A dearth of inventory in the existing home market and an overall housing supply shortage is driving home buyers to “stretch their wallet” due to fears that they could miss the opportunity to buy a home.
We remain optimistic about the long-term potential for the Fund’s investments in Toll Brothers, Lennar, and D.R. Horton for several reasons…” (Click here to read the full text)
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2. Nu Holdings Ltd. (NYSE:NU)
Stock added to the portfolio in: Q4 2022
Percentage of Berkshire Hathaway’s portfolio as of Q2 2023: 0.24%
Nu Holdings Ltd. (NYSE:NU) is a Brazilian neobank. Neobanks or challenger banks are fintech firms operating exclusively online through apps and software. It was founded in 2013 and launched its IPO in December 2021.
In the second quarter of 2023, Nu Holdings Ltd. (NYSE:NU) was owned by 44 hedge funds with a combined stake value of over $2.865 billion. In the previous quarter, it was owned by 38 hedge funds with a stake worth over $1.6 billion. Berkshire Hathaway was the most significant hedge fund holder of Nu Holdings Ltd. (NYSE:NU) in Q2 with over 107 million shares worth $845.167 million. Warren Buffett added the company to his investment portfolio in the fourth quarter of 2022.
In Q2 2023, Nu Holdings Ltd. (NYSE:NU) was highly profitable compared to the same quarter of the previous year. In Q2 2022, the company posted a net loss of $29.9 million, while in the same quarter of 2023, Nu Holdings Ltd. (NYSE:NU) recorded a net income of $224.9 million. The company’s gross profit margin increased to 42% in Q2 2023, compared to 31% in Q2 of the previous year. Additionally, Nu Holdings Ltd. (NYSE:NU) generated a revenue of $1.9 billion to beat the Wall Street forecasts by $120 million.
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1. Capital One Financial Corporation (NYSE:COF)
Stock added to the portfolio in: Q1 2023
Percentage of Berkshire Hathaway’s portfolio as of Q2 2023: 0.39%
Capital One Financial Corporation (NYSE:COF) is an American bank holding company headquartered in Richmond, Virginia, USA. Berkshire Hathaway added the banking firm to its portfolio in the first quarter of 2023 with 9.922 million shares worth $954.099 million. In the second quarter, Warren Buffett’s firm increased its holdings in Capital One Financial Corporation (NYSE:COF) by 26% to 12.471 million shares worth $1.364 billion.
According to the Insider Monkey database, Capital One Financial Corporation (NYSE:COF) was owned by 51 hedge funds in Q2 2023. The company was a part of 12 billionaire-owned or managed hedge funds in the quarter including Steve Cohen’s Point72 Asset Management which increased its stake by 205% in Capital One Financial Corporation (NYSE:COF) in the second quarter to 1.365 million shares, valued at $149.3 million.
ClearBridge Investments made the following comment about Capital One Financial Corporation (NYSE:COF) in its first quarter 2023 investor letter:
“We also added Capital One Financial Corporation (NYSE:COF), a largely domestic diversified financial services company with a focus on credit cards that also operates a leading auto lending business. We believe recent regulatory changes such as the Current Expected Credit Losses (CECL) methodology of the U.S. Treasury and the ability of credit card companies to manage credit risks have improved the risk profile of leading credit card businesses but have been underappreciated by the market. With its substantial financial reserves, we believe that Capital One is well-positioned to navigate future economic uncertainty. Additionally, we believe this current market and credit cycle is fundamentally different than prior ones due to stronger consumer balance sheets, excess savings, strong wage growth and strong employment environment. As a result, we believe Capital One’s current price has already been overly discounted, and we expect it to offer compelling upside despite further risks of drawdown when a recession emerges.”
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Follow Capital One Financial Corp (NYSE:COF)
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