Buffett encounters "big disciple" betrayal?

Once praised by the stock god Buffett as the most important person at Berkshire Hathaway, even more important than Buffett's right-hand man Ajit Jain, may be gradually "distancing" himself from the company.

The latest announcement on September 9th shows that Jain, as Berkshire's vice chairman and head of insurance operations, sold 200 shares of Berkshire's Class A stock, cashing out $139 million.

After this sale, Jain only has 60 shares of Berkshire Class A stock left, as well as some shares in trusts.

Jain's selling action is very unusual in the Berkshire investment team, known for "loyalty" and "lifetime work", and has made the outside world quite concerned about his next move.

Serving Berkshire for 38 years

Jain was born in 1951 in Sundargarh, Odisha, India. He graduated from the prestigious Indian Institute of Technology in 1972 with a Bachelor's degree in Mechanical Engineering.

Indian Institute of Technology is renowned for its engineering programs and is known worldwide for its admission rate of less than 1%, which speaks to Jain's intellect.

After graduating from college, Jain joined IBM's data processing department in India as a salesperson, and in his first year, he was the region's top rookie. However, he lost his job when IBM withdrew from the Indian market due to policy changes in 1976.

In 1978, Jain moved to the United States and obtained a Master of Business Administration from Harvard University. He then joined McKinsey & Company. Around the same time, Jain married an Indian bride and settled his family in the United States.

In 1986, Jain left McKinsey to manage the insurance business for Buffett. Also involved in this business was his "mentor" Michael Goldberg, who was 40 years old at the time.

However, Jain clearly had Buffett's favor, and he was promoted to vice chairman of Berkshire in 2018, overseeing the insurance business.

Competing as Berkshire's "successor"

Berkshire has always had one star - Warren Buffett, and if there is anyone who can share the limelight, it is Charlie Munger.

However, in reality, there are two people who have made significant contributions to the company.

One is Jain.

The other is Greg Abel.

Both have been hot candidates to succeed Buffett as chairman of Berkshire (after Buffett).

They each oversee key businesses, with Jain overseeing the company's cash cow insurance industry, providing Buffett with a steady stream of "float".

Abel, on the other hand, oversees energy, railroads, retail, and investment businesses.

But it is well known that Berkshire's investments have only one "boss" - Buffett. Therefore, there has always been skepticism about Abel's abilities.

Buffett himself has long kept silent about the future chairman of Berkshire, leading Jain and Abel to be in a competitive state.

However, in the end, Abel prevailed.

Starting three years ago, Berkshire increasingly had Abel in the spotlight. At the 2024 shareholders' meeting, he even replaced the recently deceased Munger and sat with Buffett to answer shareholders' questions For the intelligent and long-serving Jean at Berkshire, reality has become extremely clear.

How wealthy is Jean?

Although not as famous as Microsoft's CEO Nadella, Jean's wealth may far exceed Nadella's.

According to the latest estimates from overseas business magazines, Nadella's wealth is around $320 million.

Jean, on the other hand, has only sold some of his Berkshire shares and already owns $139 million, and this is just part of Jean's income.

According to Berkshire's official documents, Jean can receive a basic salary of $16 million and a bonus of $3 million annually from Berkshire, totaling approximately $190 million.

In addition, Jean still holds 166 shares of Berkshire Class A stock and 124,800 shares of Class B stock.

With Class A stock priced at nearly $700,000 per share and Class B stock at around $450 per share, the total value of both exceeds $170 million.

Possible Future Directions?

A careful analysis reveals that Jean already has many shareholding platforms outside of Berkshire, which serves as both his future legacy distribution mechanism and provides possibilities for his future multiple choices.

For example, there is a trust named "Indrima Jain Trusts" with 17 shares of Class A stock as beneficiaries, established by Jain's spouse, with Jain's descendants as the ultimate beneficiaries after further penetration;

Another 38 shares belong to a trust established by Jain himself, with his descendants as the ultimate beneficiaries.

Another 50 shares benefit a non-profit organization called "Jain Foundation Inc.," aimed at treating patients with muscular dystrophy caused by a certain protein deficiency.

It is worth mentioning that the establishment of this organization is related to Jain's son.

Jain's son suffers from this rare disease, with an incidence rate of approximately 8 to 10 people per million, and there is almost no financial support from traditional channels. In view of this, Jain established this foundation to provide research and cure support.

In addition, Jain also has some "thoughts" on the arrangement of Berkshire Class B shares without voting rights.

As of the latest update, Jain holds 466 shares of Class B stock (highlighted in the red box), and the indirect beneficiary of as many as 124,300 shares of Class B stock is the "Jain Foundation Inc.," the foundation mentioned earlier for treating rare diseases.

Does Berkshire Hathaway have a variable in its succession plan?

Although it seems that Abel has been designated as Buffett's successor by all parties, historical cases show that such successors are not always stable.

In fact, before Abel, there was another "designated successor" at Berkshire Hathaway—Sokol.

Sokol was responsible for Berkshire Hathaway's energy company investments, but eventually resigned from Buffett on his own initiative. However, there have always been rumors in the industry that Sokol had to leave Berkshire Hathaway in disgrace due to insider trading allegations in the stock purchase of Lubrizol.

Perhaps, there are still variables in everything