Buffett's Recent Shopping Spree

Dear Investor,

Zee here. Last Saturday’s piece on Warren Buffett’s investment into UNH went viral.. thanks for all the love! My team and I are super encouraged by the response.

But here’s the thing: Buffett didn’t just buy into UNH. He’s been quietly picking up a few other companies too.

And in this week’s issue, we’re going to break those down for you.

Stay tuned, you’ll enjoy this one.

Why Warren Buffett's newest stock picks reveal his playbook for the next decade

Warren Buffett just dropped his Q2 13F filing, and it's like getting a masterclass in contrarian investing delivered straight to your inbox.

While most investors have been obsessing over AI stocks and chasing the latest tech darlings, the Oracle of Omaha has been quietly building positions in some of the most unloved and potentially undervalued sectors in the market.

Berkshire Hathaway recently took stakes in Nucor, Lamar Advertising, Allegion, Lennar, and DR Horton, and each move tells a fascinating story about where Buffett sees opportunity in 2025.

This isn't random stock picking. This is strategic positioning across multiple themes that most investors are completely ignoring. Let me walk you through what the world's most successful investor is really buying and more importantly, why.

The Housing Bet Everyone Missed

Let's start with the moves that raised the most eyebrows: Berkshire added stakes in homebuilders Lennar and DR Horton.

Wait, what? Buffett is buying homebuilders in 2025? With mortgage rates still elevated and housing affordability at decade lows?

This is exactly the kind of move that separates legendary investors from the rest of us. While everyone else sees problems, Buffett sees opportunity.

Here's what he likely sees that we're missing:

The Demographic Tsunami: The largest generation in American history (Millennials) is entering their prime home-buying years. Yes, affordability is challenging now, but demographic demand doesn't disappear, it just gets delayed and concentrated.

The Supply Shortage: America has been under-building homes for over a decade. We need roughly 1.5 million new housing units annually just to keep up with household formation. We've been building closer to 1 million. That's a massive structural deficit that homebuilders like Lennar and DR Horton are perfectly positioned to fill.

The Rate Cycle: Buffett doesn't time interest rates, but he understands cycles. Today's high rates won't last forever, and when they normalize, the pent-up demand will create a surge in homebuilding activity.

The Market Share Play: During tough times, strong players with good balance sheets (like Lennar and DR Horton) gain market share as weaker competitors struggle or exit. Buffett loves buying dominant players during temporary industry downturns.

Think about it: If you believed housing demand would explode in the next 3-5 years, when would be the best time to buy homebuilder stocks? When everyone loves them and they're trading at peak valuations, or when everyone hates them and they're priced for failure?

Buffett chose option B.

The Industrial Recovery Play: Nucor

Nucor is perhaps the most interesting addition to Berkshire's portfolio, and it signals something important about Buffett's macro outlook.

Nucor is America's largest steel producer, and steel is one of those boring, cyclical businesses that most growth investors wouldn't touch with a 10-foot pole. But it's exactly the kind of business Buffett has made billions from over the decades.

Why Nucor makes perfect sense:

The Infrastructure Wave: America's infrastructure is crumbling, and we're finally doing something about it. The Infrastructure Investment and Jobs Act allocated $550 billion for roads, bridges, airports, and broadband. All of that requires steel.

The Reshoring Trend: Companies are bringing manufacturing back to America, which means building new factories, warehouses, and distribution centers. Again, lots of steel demand.

The EV Transition: Electric vehicles use roughly 25% more steel than traditional cars due to battery pack reinforcement and structural requirements. As EV adoption accelerates, steel demand grows.

The Competitive Moat: Nucor isn't just any steel company, they're the low-cost producer with the most efficient technology (electric arc furnaces). In commodity businesses, being the low-cost producer is everything.

Buffett has always said he likes businesses that benefit from America's growth. Nucor is a pure play on American industrial activity, and Buffett apparently thinks that activity is about to accelerate.

The "Boring" Infrastructure Plays

The other positions: Lamar Advertising and Allegion, might seem random, but they fit perfectly into Buffett's value playbook.

Lamar Advertising: This is the billboard business, which sounds hilariously old-school in our digital age. But that's exactly why it's interesting.

Billboards are one of the few advertising mediums that you literally can't block, skip, or ignore. As digital advertising becomes increasingly cluttered and expensive, outdoor advertising offers something rare: guaranteed eyeballs.

Plus, Lamar owns the real estate where their billboards sit. In many cases, these are prime highway locations with limited competition due to zoning restrictions. It's a quasi-monopolistic business model with physical assets that appreciate over time.

Allegion: This is the security systems and door hardware business. Think locks, access control systems, and building security solutions.

It's not sexy, but it's incredibly steady. Every building needs doors. Every door needs hardware. And in an increasingly security-conscious world, the demand for access control systems is growing steadily.

Allegion also benefits from the same construction trends that help the homebuilders. More buildings being built means more demand for their products.

The Pattern Behind the Picks

Step back and look at these positions together, and a clear pattern emerges. Buffett isn't buying growth stocks or tech disruptors. He's buying businesses that will benefit from America's physical infrastructure needs over the next decade:

• Housing construction (Lennar, DR Horton)

• Industrial materials (Nucor)

• Building infrastructure (Allegion)

• Physical advertising (Lamar)

This is classic Buffett: buying unglamorous, asset-heavy businesses that generate cash flows tied to fundamental American economic activity.

It's also classic contrarian Buffett. While everyone else is betting on the metaverse and artificial intelligence, he's betting on steel and concrete.

Why This Strategy Makes Sense Now

Buffett's latest moves reflect a simple but powerful insight: After years of focusing on digital and virtual experiences, America needs to rebuild its physical foundation.

The Infrastructure Reality: Our roads, bridges, buildings, and housing stock are aging and inadequate. At some point, you have to stop building apps and start building things.

The Demographic Shift: Millennials are entering their prime earning and spending years. They need houses, offices to work in, and infrastructure to support their lifestyle. This creates sustained demand for physical assets.

The Valuation Opportunity: While tech stocks trade at premium valuations based on future growth projections, these infrastructure-related businesses trade at reasonable multiples based on current earnings. For a value investor, the choice is obvious.

The Competitive Dynamics: Many of these businesses have oligopolistic characteristics. There are only so many major homebuilders, steel producers, and outdoor advertising companies. When demand increases, these players benefit without facing new competition.

What This Means for Individual Investors

Buffett's latest moves offer several lessons for the rest of us:

Don't Ignore the Boring: The most profitable investments are often in unglamorous businesses that everyone else overlooks. While retail investors chase the latest AI stock, professionals are buying steel companies.

Think in Themes, Not Individual Stocks: Notice how Buffett's picks all relate to American infrastructure and construction? He's not just buying random value stocks—he's positioning for a specific economic trend.

Buy What Others Are Selling: Homebuilders, steel companies, and billboard operators aren't exactly popular right now. That's precisely why they might offer the best risk-adjusted returns.

Focus on Necessity, Not Innovation: Buffett's picks are all businesses that provide essential services or materials. Innovation is exciting, but necessity is profitable.

The Contrarian's Dilemma

Here's what's fascinating about these moves: They go against almost everything the investment community is currently excited about.

While venture capital pours into AI startups and growth investors chase software companies, Buffett is buying businesses that depend on physical materials, real estate, and human labor.

Is he behind the times, or is everyone else getting ahead of themselves?

Based on his track record, I'd bet on the latter. Buffett has spent 60 years making money by buying what others are selling and selling what others are buying. These latest picks suggest he sees opportunity where others see obsolescence.

The Long-Term View

Remember, Buffett doesn't buy stocks for quarters or even years, he buys businesses for decades. These positions reflect his view of where America will be in 2035 or 2045, not 2025.

His bet seems to be that after a decade of digital innovation, America's next growth phase will be physical: building houses, upgrading infrastructure, and strengthening industrial capacity.

If he's right, today's "boring" investments could be tomorrow's biggest winners. And if anyone has earned the right to make that call, it's the guy who's been doing this successfully since the 1960s.

The Bottom Line

Warren Buffett's latest stock picks aren't flashy, and they're not going to generate headlines about revolutionary technology or disruptive business models.

But they represent something potentially more valuable: a systematic bet on America's fundamental economic needs over the next decade.

While everyone else is looking up at the clouds (computing), Buffett is looking down at the foundation. And historically, that's where the best long-term value has been found.

The question isn't whether these picks will work in the next quarter or year. The question is whether Buffett's vision of America's infrastructure needs will prove correct over the next decade.

Given his track record, it might be worth paying attention to what the Oracle of Omaha is buying while everyone else is looking the other way.

Disclaimer:
All information here is for educational purposes only. This is not financial advice. Please do your own research and speak with a licensed advisor before making any investment decisions. Past performance is not indicative of future returns.