Ajit Jain of Berkshire Hathaway sells nearly 55% holdings in Warren Buffett’s giant

Warren Buffett's insurance chief and top executive, Ajit Jain, sold more than half his stakeholding in Berkshire Hathaway, according to a Nasdaq regulatory filing on Wednesday, September 11.

Ajit Jain, 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 nearly $139 million. Jain now holds 61 shares, while family trusts established by himself and his spouse for the benefit of his descendants hold 50 shares, and Jain Foundation, his non-profit corporation, holds 50 shares, as per the filing.

Monday's 200 share stake sale was 55 per cent of his total stakeholding in Berkshire Hathaway.

This selloff marks the biggest reduction in Jain's holding in Berkshire since he joined in 1986. The motivation behind Jain's stake sale is unclear; he did take advantage of the company's recent high price. The American conglomerate traded above $700,000 to hit a $1 trillion market capitalization at the end of August, as per a CNBC report.

“This appears to be a signal that Ajit views Berkshire as being fully valued,” said David Kass, a finance professor at the University of Maryland’s Robert H. Smith School of Business, cited the report.

It is consistent with the slowdown in Berkshire's share buyback activity as of late. Omaha, Nebraska-based Berkshire bought back $345 million worth of its own stock in the second quarter, lower than $2 billion repurchased in each of the pro quarter, according to the report.

“I think at best it is a sign that the stock is not cheap,” said Bill Stone, chief investment officer (CIO) at Glenview Trust Co. and a Berkshire shareholder. “At over 1.6 times book value, it is probably around Buffett’s conservative estimate of intrinsic value. I don’t expect many, if any, stock repurchases from Berkshire around these levels,” he said, quoted in the agency report.

Jain has played an important role in Berkshire’s success. Jain helped push into the reinsurance industry and more recently led a turnaround at Geico, Berkshire's prime auto insurance business. In 2018, Jain became the vice chairman of insurance operations and was appointed to Berkshire’s board of directors, according to the report.

“Ajit has created tens of billions of value for Berkshire shareholders,” Buffett wrote in his annual letter in 2017. “If there were ever to be another Ajit and you could swap me for him, don’t hesitate. Make the trade!” as per the news portal report.

Before it was officially announced that Greg Abel, Berkshire’s vice chairman of non-insurance operations, would eventually succeed Buffett, there were rumours about Jain one day leading the conglomerate. Buffett recently clarified that Jain “never wanted to run Berkshire,” and as per the report, there wasn’t any competition between them.