Short Lennar

Lennar was my highest conviction short position ever. I entered around $145, using it as my primary vehicle to express a bearish view on the housing market. I chose Lennar specifically because of what I saw in their financials — declining margins — and because my research pointed to the Sun Belt as the area under the most stress, with prices falling the fastest.

After I started posting about the position and speaking bearish on the homebuilders, a journalist reached out to interview me for an article. They told me I was the only retail investor they could find with an opposing view. In the article, several institutions were interviewed — every single one was bullish on housing. I was the only bear. Shortly after I placed the short, Warren Buffett’s Berkshire Hathaway initiated a position in Lennar and two other homebuilders. People told me I was crazy.

Lennar has since fallen from $145 to $90. The institutions were wrong. Buffett was wrong. I was right. I profited through puts that consistently represented 10–15% of my portfolio, taking profits on the way down and adding to the position on rallies because my conviction never wavered. I put myself out there publicly with a contrarian view when it mattered — and it played out. What was contrarian then is now becoming consensus.