Group 1 - The core viewpoint discusses Lennar's strategy to become more asset-light, which could potentially disrupt the housing industry [1] - The discussion highlights how this shift may create investment opportunities for Meritage Homes as it adapts to the changing landscape [1]

Core Insights - Quarterra Multifamily, a subsidiary of Lennar Corporation, has announced the start of leasing at Cordelia, a luxury high-rise community in Downtown Sarasota, Florida, located on Sarasota Bay [1][2] Group 1: Project Overview - Cordelia is part of a 14-acre master development featuring 240 luxury homes and 13,811 square feet of retail space [2] - The community is designed to offer a blend of urban energy and natural beauty, providing residents with upscale living experiences [2][3] - Cordelia includes various apartment types ranging from studio to three-bedroom units, with sizes between 558 and 1,480 square feet [6] Group 2: Amenities and Features - The community boasts large balconies with waterfront views, a rooftop pool, sky terrace, and a variety of amenities such as a fitness studio, pet spa, and co-working spaces [7] - High-end kitchen features include stainless steel appliances, quartz countertops, and wine fridges, while bathrooms are equipped with oversized tubs and walk-in showers [6][7] Group 3: Location and Accessibility - Cordelia is strategically located along Tamiami Trail and near Fruitville Road, providing easy access to downtown dining, shopping, and entertainment venues [4][5] - The property is well-connected to regional employers and public transport options, including SCAT bus service and Bay Runner trolley [5] Group 4: Company Background - Quarterra Group, Inc. is a real estate-focused alternative asset management company with a strong presence in multifamily development, having been recognized on the National MultiHousing Council's Top 50 list for nine consecutive years [8]

Group 1: Core Investment Thesis - The potential election of Vice President Kamala Harris and a Democratic-controlled Congress could significantly benefit certain stocks in Warren Buffett's Berkshire Hathaway portfolio, particularly Lennar and NVR [2][3][7]. Group 2: Company Profiles - Lennar is a leading homebuilder in the U.S. with a market capitalization exceeding $45 billion, operating in 22 states and providing mortgage loans, title insurance, and closing services [4]. - NVR, another prominent homebuilder, has a market cap of around $28 billion and operates in 16 states, also offering mortgage and settlement services [5]. Group 3: Investment Rationale - The Biden administration's housing initiatives, including the construction of 3 million new homes and tax incentives for homebuilders, are expected to drive demand for Lennar and NVR [7][8][9]. - Economists predict that Harris' policies could lead to lower inflation compared to previous administrations, resulting in lower interest rates, which would make homebuilding more affordable [10]. Group 4: Market Position and Valuation - Berkshire Hathaway's investments in Lennar and NVR are relatively small, with stakes valued at approximately $24 million and $100 million, respectively, which do not significantly impact the conglomerate's overall portfolio [6]. - Lennar is considered a more attractive investment compared to NVR due to its lower share price and more favorable valuation metrics, trading at 10.7 times forward earnings versus NVR's 17.6 [13].

Unfortunately for home buyers, mortgage rates are sharply higher in October, with the 30-year rate averaging 6.92% as of Oct. 23 -- marking a fourth-straight weekly rise. Though it's too late to tell, new home sales will likely take a hit after surging last month thanks to lower rates. More specifically, sales of newly built homes jumped 4.1% to a higher-than-expected annual rate of 738,000 in September -- the fastest pace since May 2023. With this backdrop in mind, we're checking in on two homebuilding sto ...

Core Viewpoint - The article suggests that now is an ideal time to invest in Lennar, a major U.S. homebuilder, particularly due to favorable economic conditions and ongoing housing shortages [1]. Group 1: Investment Opportunities - Berkshire Hathaway's quarterly 13-F filing provides insights into Warren Buffett's stock preferences, which can guide investors [1]. - Apple remains a strong investment due to its business model and potential growth from generative AI initiatives, despite Buffett reducing his stake [2]. - Amazon is highlighted as a strong investment due to its technology investments and growth potential in its AWS unit [2]. - Occidental Petroleum is viewed positively because of its leadership and focus on carbon capture technology, with geopolitical tensions potentially benefiting the stock [3]. Group 2: Lennar's Position - Lennar is identified as the top investment choice, benefiting from the Federal Reserve's interest rate cuts, which are expected to enhance affordability and demand for homes [4]. - The ongoing housing shortage in the U.S. is a significant factor, with Lennar positioned to address this issue through increased production [5]. - Lennar's current valuation is attractive, with a price-to-earnings ratio of 12.4, significantly lower than the 18.3 earnings multiple of the SPDR S&P Homebuilders ETF [5]. Group 3: Potential Catalysts - Political discussions around housing indicate a potential for new federal policies that could support homebuilding, which may benefit Lennar [6]. - Both major political parties are acknowledging the need for more housing, with proposals for financial assistance to first-time homebuyers and tax credits for builders [6].

Part I Financial Information [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Lennar Corporation as of August 31, 2024, and for the three and nine-month periods then ended. It includes the balance sheets, statements of operations, statements of cash flows, and detailed notes explaining the basis of presentation, segment information, equity changes, debt, and other key accounting policies and financial details Condensed Consolidated Balance Sheets As of August 31, 2024, total assets increased slightly to $39.7 billion from $39.2 billion at November 30, 2023, driven by higher inventories. Total liabilities decreased to $12.2 billion from $12.5 billion, primarily due to a reduction in senior notes and other debt. Total stockholders' equity grew to $27.4 billion from $26.6 billion, reflecting retained earnings growth partially offset by treasury stock purchases Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | August 31, 2024 | November 30, 2023 | | :--- | :--- | :--- | | **Total Assets** | **$39,740,982** | **$39,234,303** | | Cash and cash equivalents | $4,037,405 | $6,273,724 | | Total Inventories (owned) | $16,245,947 | $15,360,207 | | **Total Liabilities** | **$12,183,274** | **$12,532,337** | | Senior notes and other debt payable, net (Homebuilding) | $2,263,256 | $2,816,482 | | **Total Stockholders' Equity** | **$27,412,520** | **$26,580,664** | Condensed Consolidated Statements of Operations and Comprehensive Income For the third quarter ended August 31, 2024, total revenues increased to $9.4 billion from $8.7 billion year-over-year, driven by higher homebuilding revenues. Net earnings attributable to Lennar rose to $1.16 billion from $1.11 billion. Diluted EPS for the quarter was $4.26, up from $3.87 in the prior-year period. For the nine-month period, net earnings grew to $2.84 billion from $2.58 billion year-over-year, with diluted EPS increasing to $10.26 from $8.94 Key Performance Indicators (in thousands, except per share data) | Metric | Three Months Ended Aug 31, 2024 | Three Months Ended Aug 31, 2023 | Nine Months Ended Aug 31, 2024 | Nine Months Ended Aug 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$9,416,042** | **$8,729,603** | **$25,494,564** | **$23,265,183** | | Homebuilding Revenues | $9,045,692 | $8,318,615 | $24,357,742 | $22,144,937 | | **Net Earnings Attributable to Lennar** | **$1,162,674** | **$1,108,996** | **$2,836,319** | **$2,577,224** | | **Diluted EPS** | **$4.26** | **$3.87** | **$10.26** | **$8.94** | Condensed Consolidated Statements of Cash Flows For the nine months ended August 31, 2024, net cash provided by operating activities was $1.4 billion, a decrease from $2.6 billion in the prior-year period, mainly due to increased investment in inventories and deposits. Net cash used in investing activities was $177 million. Net cash used in financing activities increased to $3.5 billion from $3.2 billion, driven by higher stock repurchases ($1.7 billion) and debt repayments Cash Flow Summary for Nine Months Ended August 31 (in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | **$1,428,874** | **$2,590,541** | | Net cash used in investing activities | ($176,824) | ($114,965) | | **Net cash used in financing activities** | **($3,511,844)** | **($3,167,314)** | | Net decrease in cash | ($2,259,794) | ($691,738) | | Cash at end of period | $4,311,144 | $4,124,032 | - Significant cash outflows in financing activities for the nine months ended August 31, 2024, included **$1.73 billion** in common stock repurchases and **$554 million** in redemption/repurchases of senior notes[19](index=19&type=chunk) Notes to Condensed Consolidated Financial Statements The notes provide detailed explanations of the company's accounting policies and financial data. Key areas include segment performance, investments in unconsolidated entities, stockholders' equity activities like share repurchases and dividends, debt structure, fair value measurements of financial instruments, variable interest entities, and commitments such as warranty reserves and leases Segment Earnings (Loss) Before Income Taxes (in thousands) | Segment | Three Months Ended Aug 31, 2024 | Three Months Ended Aug 31, 2023 | Nine Months Ended Aug 31, 2024 | Nine Months Ended Aug 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | Homebuilding | $1,477,918 | $1,493,820 | $3,846,869 | $3,615,068 | | Financial Services | $144,400 | $148,995 | $422,708 | $340,331 | | Multifamily | $78,908 | ($8,733) | $42,795 | ($38,496) | | Lennar Other | $20,095 | ($26,218) | ($48,417) | ($84,374) | - The Multifamily segment recognized a net gain of **$179.0 million** on the sale of 27 rental operation projects from its LMV I fund during the third quarter of 2024 as the fund nears the end of its contractual life[54](index=54&type=chunk) Stock Repurchases (Nine Months Ended Aug 31) | Class | Shares Repurchased (2024) | Total Purchase Price (2024) | Shares Repurchased (2023) | Total Purchase Price (2023) | | :--- | :--- | :--- | :--- | :--- | | Class A | 9,311,923 | $1,445,909,000 | 5,021,186 | $568,892,000 | | Class B | 1,243,303 | $182,641,000 | 1,978,814 | $193,970,000 | - In January 2024, the Board of Directors increased the stock repurchase authorization by an additional **$5 billion**. As of August 31, 2024, **$3.9 billion** remains available for repurchase[63](index=63&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's performance, strategic outlook, and financial condition. Key themes include strong housing demand despite affordability challenges, a focus on a 'land-light' strategy, and a planned spin-off of land assets into a new entity, Millrose Properties Inc. The analysis details the drivers of revenue and margin changes across all business segments, provides operational metrics for homebuilding, and reviews liquidity, capital resources, and debt management [Outlook](index=28&type=page&id=Outlook) Management maintains a constructive outlook on the housing market, citing strong underlying demand and constrained supply. They anticipate that stabilizing interest rates will activate pent-up demand. The company is focused on its 'land-light' strategy, culminating in a planned spin-off of land assets into a new REIT called Millrose Properties Inc. This move is intended to create an asset-light operating model and a permanent source of land capital - The company plans to spin off a new REIT, Millrose Properties Inc., by contributing land and cash with an expected book value between **$6.0 billion** and **$8.0 billion** to accelerate its land-light strategy[106](index=106&type=chunk) Company Guidance and Targets | Metric | Guidance/Target | | :--- | :--- | | Q4 2024 Closings | 22,500 to 23,000 homes | | Full Year 2024 Deliveries | 80,500 to 81,000 homes (>10% increase over 2023) | | Year-End 2024 Community Count | Exceed 1,400 | | Full Year 2024 Stock Repurchases | In excess of $2 billion | [Results of Operations](index=29&type=page&id=Results%20of%20Operations) This section provides a detailed comparison of operating results for the three and nine-month periods ended August 31, 2024, versus the same periods in 2023. For Q3 2024, home sales revenue rose 9% to $9.0 billion, driven by a 16% increase in deliveries, though partially offset by a 6% decrease in average sales price. Gross margin on home sales declined to 22.5% from 24.4% due to pricing adjustments and higher land costs. The analysis also breaks down performance by segment, noting a significant one-time gain in the Multifamily segment and mark-to-market gains in the Lennar Other segment Homebuilding Deliveries and Average Sales Price (Q3) | Metric | Q3 2024 | Q3 2023 | % Change | | :--- | :--- | :--- | :--- | | New Home Deliveries | 21,516 | 18,559 | +16% | | Average Sales Price | $422,000 | $448,000 | -6% | | Home Sales Revenue | $9.0B | $8.3B | +9% | - Gross margin on home sales decreased to **22.5%** in Q3 2024 from **24.4%** in Q3 2023, primarily due to lower revenue per square foot and higher land costs, partially offset by lower material costs[115](index=115&type=chunk) Homebuilding New Orders (Q3) | Metric | Q3 2024 | Q3 2023 | % Change | | :--- | :--- | :--- | :--- | | New Orders (Homes) | 20,587 | 19,666 | +5% | | New Orders (Dollar Value) | $8.56B | $8.64B | -1% | | Cancellation Rate | 14% | 13% | +1 ppt | - The backlog of homes at August 31, 2024, was 16,944 homes with a dollar value of **$7.7 billion**, down from 21,321 homes valued at **$9.9 billion** a year prior[131](index=131&type=chunk) [Financial Condition and Capital Resources](index=38&type=page&id=Financial%20Condition%20and%20Capital%20Resources) As of August 31, 2024, the company maintained a strong liquidity position with $4.0 billion in homebuilding cash and no borrowings on its $2.2 billion credit facility. The homebuilding debt to total capital ratio improved to 7.6% from 9.6% at year-end 2023, reflecting debt paydowns and earnings growth. The company continues to execute its capital allocation strategy, including debt reduction, dividend payments, and significant share repurchases. The company is also advancing its land-light strategy by increasing its use of option contracts, with controlled homesites representing 81% of the total, up from 73% a year ago - The company had approximately **$6.2 billion** of available liquidity as of August 31, 2024, consisting of **$4.0 billion** in homebuilding cash and no outstanding borrowings under its **$2.2 billion** revolving credit facility[143](index=143&type=chunk) Homebuilding Debt to Capital Ratios | Ratio | August 31, 2024 | November 30, 2023 | | :--- | :--- | :--- | | Homebuilding debt to total capital | 7.6% | 9.6% | | Net Homebuilding debt to total capital (Non-GAAP) | (6.9)% | (15.0)% | - The company is increasing its reliance on a land-light model, with controlled (optioned) homesites making up **81%** of its total homesite portfolio as of August 31, 2024, compared to **73%** in the prior year[167](index=167&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from interest rate fluctuations affecting its investments, debt, and loans. There have been no material changes in these risk exposures since November 30, 2023. As of August 31, 2024, borrowings under Financial Services' warehouse facilities totaled approximately $1.4 billion. The majority of homebuilding debt is fixed-rate - As of August 31, 2024, the company had no outstanding borrowings under its main Credit Facility. Borrowings under Financial Services' warehouse repurchase facilities totaled **$1.3 billion** (residential) and **$83.9 million** (commercial)[173](index=173&type=chunk) [Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the Co-CEOs and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of August 31, 2024. No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls - The Co-CEOs and CFO concluded that the company's disclosure controls and procedures were effective as of August 31, 2024[175](index=175&type=chunk) Part II Other Information [Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) The company is party to various claims and lawsuits arising in the ordinary course of business, primarily related to construction defects, contract issues, and real property transactions. Management does not believe the ultimate resolution of these matters will have a material adverse effect on the company's business or financial position - Lennar is involved in ordinary course legal proceedings, common in the homebuilding industry, and does not expect them to have a material adverse financial impact[177](index=177&type=chunk) [Risk Factors](index=46&type=page&id=Item%201A.%20Risk%20Factors) There have been no material changes to the company's risk factors from those disclosed in its Annual Report on Form 10-K for the fiscal year ended November 30, 2023, other than the ongoing impact of inflation and increased interest rates, which are discussed in the MD&A section - No material changes to risk factors were reported, aside from the continued impact of inflation and interest rates[178](index=178&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's common stock repurchases during the third quarter of 2024. A total of 3,355,628 shares were repurchased at an average price of approximately $154.73 per share. These repurchases were made under the board-authorized program, which was increased by $5 billion in January 2024 Share Repurchases (Q3 2024) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | June 2024 | 1,031,441 | $149.98 | | July 2024 | 1,213,476 | $147.35 | | August 2024 | 1,110,711 | $167.31 |

On September 25, 2024, Micron's Board of Directors declared a quarterly dividend of $0.115 per share, payable in cash on October 23, 2024, to shareholders of record as of the close of business on October 7, 2024.Lennar, one of the nation's leading homebuilders, announced that its Board of Directors has declared a quarterly cash dividend of $0.50 per share for both Class A and Class B common stock payable on October 24, 2024 to holders of record at the close of business on October 9, 2024.Today, McDonald's B ...

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This stock was already hot before the Fed announced its rate cut. Now it should become even hotter.The wait is over. Investors anticipated an interest rate cut by the Federal Reserve for months. Last week, the Fed ended the speculation with an exclamation point. It lowered the federal funds rate (the interest rates that banks charge each other) by 0.5% -- twice the level many economists predicted.That's not the end of the story. The Fed expects more rate cuts this year and into 2025, with the federal funds ...

Financial Data and Key Metrics Changes - The company reported a year-over-year increase in starts by 8% to almost 20,250 homes, new orders increased by 5% to nearly 20,600, and deliveries rose by 16% to just over 21,500 homes [20][21] - The gross margin was reported at 22.5%, lower than expected, while the net margin was higher than expected at 15.8%, driven by operating efficiencies [21][22] - Earnings per share, excluding one-time items, were $3.90, with guidance for Q4 EPS expected to be in the range of $4.10 to $4.25 [21][51] Business Line Data and Key Metrics Changes - The Financial Services segment had operating earnings of $144 million, consistent with the prior year, despite lower lock volume in the mortgage business [43] - The Multifamily segment reported operating earnings of $79 million, primarily driven by a gain on the sale of assets, with a net gain of $179 million recorded [44] Market Data and Key Metrics Changes - The company noted a chronic housing shortage exacerbated by underproduction and higher construction costs, with housing starts reported at 1.36 million [11][12] - The company expects to deliver between 80,500 and 81,000 homes in 2024, representing a more than 10% increase over 2023 [20][35] Company Strategy and Development Direction - The company is transitioning to an asset-light model, focusing on volume and operational efficiencies while reducing owned land supply from three years to an expected 1.1 years by year-end [16][30] - The planned spin-off of Millrose Properties Inc. as a Real Estate Investment Trust (REIT) aims to enhance capital efficiency and provide a permanent source of land acquisition and development capital [27][30] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the housing market, citing strong demand driven by lower interest rates and controlled inflation, which are expected to enhance affordability [8][10] - The company anticipates a steady state growth rate of around 10% in the long term, supported by a focus on asset-light operations and addressing the housing supply constraints [64][65] Other Important Information - The company has paid down approximately $4.9 billion of debt and repurchased about 50 million shares for approximately $5.7 billion since 2020, resulting in a debt to total capital ratio of 7.6% [17][48] - The company ended the quarter with $4 billion in cash and no borrowings on its revolving credit facility, providing total liquidity of $6.2 billion [45][48] Q&A Session Summary Question: Insights on Millrose and its impact on margins - Management indicated that Millrose will operate with a permanent capital structure, which is expected to have a relatively small impact on margins compared to current land banking structures [54][56] Question: Expectations on gross margin for Q4 - Management noted that the stickiness of interest rates and consumer confidence issues contributed to a revised outlook for flat gross margins in Q4, despite a decrease in rates later in the quarter [58][60] Question: Long-term volume growth expectations - Management is targeting a steady state growth rate of around 10%, emphasizing the need for additional housing supply as interest rates decline [64][65] Question: Operating margins compared to peers - Management acknowledged that the focus has been on operational efficiencies and volume growth, with expectations for operating margins to improve as the asset-light model is fully implemented [66][68]