> Warren Buffett Blog: Clayton Homes acquiring home builders

Tuesday, August 1, 2017

Clayton Homes acquiring home builders

Berkshire Hathaway’s Clayton Homes division, known for its factory-built houses, is expanding into the site-built, $250,000-and-under housing market.

Since October 2015 Clayton has acquired homebuilders in Atlanta; Nashville, Tennessee; Kansas City; Denver; and, earlier this month, Birmingham, Alabama, and is building homes on-site at a rate of 2,500 to 3,000 a year.

Clayton isn’t choosing cities and then looking for homebuilders to buy, said Mike Rutherford, president of Clayton’s properties group, and Tom Walsh, vice president of Clayton’s properties group.

Rather, they said in an interview, the idea is to identify builders with the right management and culture, and then check out their growth potential. The acquired builders keep their managements and names.

Walsh said Berkshire’s financial strength and Clayton’s buying power — imagine the lumber needed for 45,000 factory-built homes each year — are advantages that can give the acquired companies an edge over the competition.