Ajit Jain attends Berkshire Hathaway’s annual meeting on May 1, 2021 in Los Angeles, California.
Gerald Miller | CNBC
Ajit Jain, Warren Buffett’s insurance chief and CEO Berkshire HathawayAccording to a new regulatory filing.
The 73-year-old vice chairman of insurance operations sold 200 Berkshire Class A shares on Monday at an average price of $695,418 apiece, bringing his total to about $139 million. That leaves him with just 61 shares, but a family trust he and his spouse set up for their descendants holds 55 shares, and his nonprofit organization, the Jain Foundation, holds 50 shares. Monday’s sale represents 55% of his total Berkshire holdings.
The move marked Jain’s largest reduction in his holdings since he joined Berkshire in 1986. It’s unclear what motivated him to sell, but he was certainly taking advantage of Berkshire’s recent high prices: The conglomerate’s shares were trading at more than $700,000 at the end of August, giving it a market capitalization of $1 trillion.
“This appears to be a signal that Ajit believes Berkshire is fully valued,” said David Kass, a finance professor at the University of Maryland’s Robert H. Smith School of Business.
Berkshire Hathaway
It also coincides with a significant slowdown in Berkshire’s share-buying activity recently: The Omaha-based company bought back just $345 million worth of its own stock in the second quarter, significantly less than the $2 billion it repurchased in each of the previous two quarters.
“At best, I think this is a sign that the stock isn’t cheap,” said Bill Stone, chief investment officer at Glenview Trust Company and a Berkshire shareholder. “A price of more than 1.6 times book value would be in line with Buffett’s conservative estimate of intrinsic value. I would expect little to no share buybacks by Berkshire at these levels.”
The Indian-born Jain has played a key role in Berkshire’s unparalleled success. He drove Berkshire’s expansion into the reinsurance industry and more recently led the turnaround of Geico, Berkshire’s flagship auto insurance business. In 2018, Jain was appointed vice chairman of the insurance business and a member of Berkshire’s board of directors.
“Ajit has created tens of billions of dollars of value for Berkshire shareholders,” Buffett wrote in his 2017 annual letter. “If another Ajit comes along and you can trade me for him, I would not hesitate to do so!”
Before it was publicly announced that Greg Abel, Berkshire’s vice chairman for non-insurance operations, would succeed the 94-year-old Buffett, there had been rumors that Jain might one day lead the conglomerate. Buffett recently clarified that Jain “never wanted to run Berkshire” and that there was no competition between the two.
