Ajit Jain at the Berkshire Hathaway annual meeting in Los Angeles, California. May 1, 2021.
Gerard Miller |
Ajit Jain, Warren Buffett’s insurance chief and top manager, sold more than half of his shares in Berkshire-Hathawayas shown in a new official registration.
The 73-year-old vice chairman of insurance operations sold 200 Berkshire Class A shares on Monday at an average price of $695,418 per share for about $139 million. That left him with just 61 shares, while family foundations he and his wife set up for the benefit of his descendants hold 55 shares and his charitable company, the Jain Foundation, owns 50 shares. Monday's sale represented 55 percent of his total stake in Berkshire.
The move was the biggest drop in Jain's shares since he joined Berkshire in 1986. It is unclear what Jain's reason for the sales was, but he took advantage of Berkshire's recent high price. The conglomerate traded for over $700,000 and reached a market capitalization of $1 trillion at the end of August.
“This appears to be a sign that Ajit views Berkshire as fully valued,” said David Kass, a finance professor at the University of Maryland's Robert H. Smith School of Business.
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Berkshire-Hathaway
This is also consistent with a significant slowdown in Berkshire's share repurchase activity of late. Omaha, Nebraska-based Berkshire only repurchased $345 million worth of shares in the second quarter, significantly less than the $2 billion it bought back in each of the previous two quarters.
“I think it's a sign, at best, that the stock is not cheap,” said Bill Stone, CIO at Glenview Trust Co. and a Berkshire shareholder. “At over 1.6 times book value, it's probably somewhere near Buffett's conservative estimate of intrinsic value. I don't expect many, if any, share buybacks from Berkshire at these levels.”
Born in India, Jain has played a key role in Berkshire's unprecedented success, facilitating its foray into the reinsurance industry and most recently leading a turnaround at Geico, Berkshire's crown jewel in auto insurance. In 2018, Jain was named vice chairman of insurance operations and joined Berkshire's board of directors.
“Ajit has created tens of billions of dollars in value for Berkshire shareholders,” Buffett wrote in his 2017 annual letter. “If there is ever another Ajit and you could trade me for him, don't hesitate. Make the trade!”
Before it was officially announced that Greg Abel, Berkshire's vice chairman of non-insurance operations, would succeed the 94-year-old Buffett, there were rumors that Jain would one day run the conglomerate. Buffett recently clarified that Jain “never wanted to run Berkshire” and that there was no competition between the two.