WSJ Gates Foundation Buying Home-Builder Stocks For months, investors have been circling U.S. home builders' badly bruised stocks, wondering whether they are ripe to buy. Now, one closely watched investor seems to think the time is right. The Bill & Melinda Gates Foundation has snapped up stakes in seven home-building companies, according to a recent filing with the Securities and Exchange Commission. Michael Larson, who heads the investment team that manages the foundation's portfolio, bought shares in some of the largest home builders, including Beazer Homes USA Inc., Centex Corp., KB Home, Lennar Corp., Pulte Homes Inc. and Ryland Group Inc. He also bought shares of WCI Communities Inc., a smaller builder focused heavily on the weak Florida condominium market.A foundation spokeswoman referred questions to Mr. Larson, who couldn't be reached for comment. "This is just the start of it," says UBS analyst Margaret Whelan. "The value investors tend to come in early, take a little pain and then get huge returns down the road." Since the beginning of the year, the Dow Jones Wilshire U.S. Home Construction Index, which includes many home builders, is down about 25%. The Gates Foundation was the third-largest net buyer of home-builder shares in the third quarter after Fidelity Management & Research and TCW Asset Management Co., according to Banc of America Securities analyst Daniel Oppenheim. He notes that the stakes of the 10 largest institutional holders of home-builder stocks increased to 37% of the industry's overall market value in the third quarter, up from 32% at the end of the previous quarter. Mr. Oppenheim says he doesn't believe these investors are betting that a wave of merger activity will hit the industry, but rather they are buying the stocks in anticipation of a recovery in home sales. "There is light at the end of the tunnel. We just don't know how long the tunnel is," he says. "These investors can tolerate a longer tunnel."