Both Downtown Josh Brown (@ReformedBroker) and I have been Berkshire Hathaway bulls for quite some time. Recently, the two clever old foxes at Berkshire, Buffett and Munger, are seeing their beloved shares start to move with some authority. Josh has a can’t-miss post up today on the firm and its stock’s prospects going forward, over at his The Reformed Broker blog titled:

Why Berkshire is Killing It Right Now

 took a boatload of criticism for my position in Berkshire Hathaway last fall.  We looked at it as a stealth housing play and a backdoor investment in the beaten-down banks we simply couldn’t bring ourselves to buy directly.  And people really hated it.  “It’s too expensive and Buffett is too old and the company is too big” and on and on and on.  Even my pal Doug Kass gave me a public pillory or two for the position, his reasoning for being a seller of Berkshire here.

But now the stock (we own the Berkshire B Shares) is making a new 52-week high above 85.  It is threatening it’s post-crisis highs at the 86-87 level and I dare say I believe it can crash through.  The reason why the stock has gotten this burst of momentum is very simple – Berkshire is the single greatest play on the housing market resurgence extant.  It’s got the safety of a well-diversified business and it hits the housing market from virtually every angle – remodeling, re-mortgaging, recovering prices etc.

We got yet another fantastic housing data point today as housing starts increased at the fastest pace in nearly four years.  This comes on the heels of yesterday’s soaring Builder Confidence number and a foreclosure stat showing an inventory drop of almost 20%.  We’re not talking about housing nirvana or a return to 2006, but this is solid progress.

And it’s more than enough to push Berkshire to a 52-week high.  Here’s why:

First of all, there are Berkshire’s holdings in publicly-traded stocks that are levered to housing, these include:

Wells Fargo
Bank of New York
M&T Bank
US Bank
Westco-Financials
Wal-Mart
Costco-Wholesale
General Electric
Ingersoll-Rand
USG Corp

As far as the Wells Fargo investment, it is massive – Berkshire has 21.4% of its total stock portfolio invested in $WFC with plans to keep buying.  They own 7.32% of all $WFC common stock. Wells Fargo has the largest exposure to the housing market of any major bank, financing 33.9% of all mortgages. Buffett has been encouraging WFC to keep the percentage correlation as the mortgage market expands saying “Wells Fargo should aim for 1 trillion in mortgages if the mortgage market returns to it’s $3 trillion peak.”

In addition, 45.1% of Berkshire’s total stock portfolio is made up of banking or financial names so the company’s housing stake goes beyond just $WFC.