Wheat and chaff. Everyone, and any organization that one cares to study, will have good and ill to be found. The wheat from Warren Buffett can include his understanding of the need for long-term investing in common sense arenas that have an endurable competitive advantage. The chaff could be could include his support for candidates that run left instead of right, and debatably monopolistic tendencies.
Visual Capitalist, in a release to the Daily Business News, spotlighted this insightful infographic by Finder of Warren Buffett’s investment philosophy, and its broad brush origins.
Manufactured Home (MH) Industry professionals know that Clayton Homes, 21st Mortgage, Vanderbilt Mortgage and Finance (VMF), Shaw Industries, and a raft of other companies with interests and ties to manufactured housing are owned by Berkshire.
MH professional veterans that follow the Daily Business News closely also know that Buffett has a sizable stake in Wells Fargo, which makes loans on manufactured home land-lease communities, and on single-family manufactured home land/home mortgage loans. So, the three biggest lender, per HMDA data are owned or have a serious tie to Buffett’s Berkshire.
Berkshire brands in turn has significant influence and/or control over dozens of state associations, and the Manufactured Housing Institute (MHI).
The infographic below does a pretty good job of summarizing key points that Buffett used to make his penetration into manufactured housing. Readers should keep in mind that with some companies, Buffett’s Berkshire buys the entire operation, which is what he did with Clayton Homes. In the section of the infographic below, “Protect yourself from Mr. Market” is a euphemism for the Buffett strategic moat. More on that in the linked articles and videos, which include Buffett, further below.
With Wells Fargo, he keeps a level of stocks that are modestly below the Fed’s 10 percent limit. He holds large stakes in Apple and Coke Cola.
After the infographic, there will be some links to articles about Berkshire and manufactured housing.
Keep in mind, several of these principles can be applied without any arguably problematic monopolistic concepts being applied. The reported move by SoftBank into backing modular Katerra is a reminder that factory built housing could be a magnet for the hundreds of billions pouring into the U.S. since the tax cut bill passed.
So, while Clayton now has a head start due to the application of Buffett’s “moat,” the multi-trillion dollar housing market is so big, that it could tempt even more rivals into the space. With a significant body of third-party research that demonstrates the quality of HUD Code manufactured homes, and with some 8.3 million housing units needed, per the National Association of Realtors, the right approach and long-term investment philosophy could spark serious competition for Berkshire at some point in the future.
Berkshire Hathaway is one of the publicly trade stocks connected to manufactured housing that is tracked by the Daily Business News, with last night’s closing numbers found here. ## (News, analysis and commentary.)
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A) In manufactured housing production, the elephant in the room is Clayton Homes. They are owned by Berkshire Hathaway, which also owns the 2 largest industry lenders, 21st Mortgage and Vanderbilt Mortgage and Finance (VMF). Berkshire also owns a large stake in the industry’s third largest single family manufactured home loan lender, Wells Fargo.
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