OMAHA, Neb. (Reuters) - Warren Buffett’s manufactured housing unit Clayton Homes is borrowing the playbook of Berkshire Hathaway Inc’s longtime chairman as it boosts its bet on a growing market for traditional site-built homes.
Clayton entered the field in 2015, and has grown in larger markets such as Atlanta, Charlotte, Denver and Nashville, and smaller markets including Salt Lake City and Birmingham, Alabama, marketing vice president Carl Hill said on Thursday.
“We’ve looked for businesses that have really similar cultural values that happen to be in strong and growing housing markets,” he said, ahead of Berkshire’s annual meeting on Saturday.
“Business owners, when they come on board, have a very strong interest in remaining part of the businesses and continuing to run operations, really very similar to the way Berkshire Hathaway has grown through its subsidiaries.”
Site-built homes are still a small part of Clayton’s business, with much of its $765 million pretax profit last year coming from its $13.7 billion mortgage portfolio.
Clayton also dominates the manufactured home market, where profit margins are greater, and where it commands a 49 percent share, Buffett said in February.
Such homes are often bought by people with low credit scores, low incomes, and financial profiles that can come undone by divorce or death.
Clayton is trying to move past reports three years ago in the Seattle Times claiming it exploited black, Latino and Native American borrowers into unaffordable subprime loans.
The Maryville, Tennessee-based company has denied those allegations and Buffett has defended Clayton repeatedly, lauding what he called its “best-in-class” management group and culture.
Clayton stands to benefit from a bill in