Berkshire Hathaway, led by Warren Buffett, announced new investments in UnitedHealth, Nucor, Lennar, and DR Horton, while reducing its holdings in Apple and Bank of America. UnitedHealth shares rose after Berkshire’s US$1.6 billion purchase, despite the company facing a challenging year with a share price drop of around 50%, a DOJ investigation, and a CEO resignation.
The new position in Nucor led to a nearly 8% increase in their shares, while the increased stake in Lennar and new investment in DR Horton both resulted in a 3% rise in their stock prices. Smaller stakes were also acquired in Lamar Advertising and Allegion. Meanwhile, Berkshire continued to trim its positions in Apple and Bank of America.
Berkshire’s portfolio value stands at around US$300 billion. The SEC previously mentioned undisclosed holdings that turned out to include DR Horton, Nucor, and Lennar. Warren Buffett plans to step down as CEO at the end of 2025, with Greg Abel succeeding him. After the announcements, UnitedHealth, Nucor, Lennar, and DR Horton shares rallied, with UnitedHealth attracting additional interest and trading at a P/E ratio just below 12.
Following the disclosure, we are looking at how to position ourselves for the coming weeks. The new stake in UnitedHealth (UNH) is the most significant signal, representing a bold contrarian move. Given that the stock has already dropped around 50% year-to-date in 2025, we see this as a sign that the worst may be priced in.
For derivatives traders, this suggests selling puts on UNH with strike prices well below the current market level may be a wise strategy. This capitalizes on the elevated implied volatility from the news and aligns with the view that the stock has found a floor. This perspective is bolstered by the latest Centers for Medicare & Medicaid Services report from late July 2025, which showed patient enrollment numbers are finally stabilizing after the turmoil earlier this year.
The new positions in homebuilders like Lennar (LEN) and DR Horton (DHI) signal a bullish outlook on housing. We should consider buying call options with expirations in late 2025 to capture potential upside. This confidence seems well-timed, as the National Association of Realtors’ data for July 2025 showed an unexpected 1.5% rise in new home sales, breaking a six-month downtrend.
Similarly, the new stake in steelmaker Nucor (NUE) points toward a bet on domestic infrastructure and industrial activity. We believe this is a reaction to the latest Industrial Production Index numbers for July 2025, which surpassed forecasts. Buying call spreads on NUE would be a defined-risk way to play this anticipated strength in the sector.
On the other hand, the trimming of Apple (AAPL) and Bank of America (BAC) should be seen as a quiet warning. With Apple trading near its all-time highs from late 2024, this move suggests a belief that the stock’s valuation is getting stretched. We should consider selling call credit spreads to profit if the stock trades sideways or pulls back slightly.
The immediate effect of these filings is a spike in the implied volatility for all the mentioned stocks. In the coming weeks, we anticipate this volatility will gradually decline as the initial excitement fades. This presents an opportunity for premium sellers who can use strategies like short strangles on these names, betting on a return to more normal trading ranges.
