Buffett's "right-hand man" fiercely cuts his US stock holdings! Main deputy Ajit Jain reduces Berkshire Hathaway A holdings by more than half
Berkshire Hathaway's Vice Chairman of Insurance Operations, Ajit Jain, sold $139 million worth of Berkshire Hathaway Class A shares, marking his largest sell-off since joining Berkshire in 1986. Ajit's sale comes at a time when Berkshire's recent stock buyback activities have significantly slowed down, as well as large-scale selling of its holdings in Apple and Bank of America
Thursday's news shows that Berkshire Hathaway's Vice Chairman of Insurance Operations, Ajit Jain, sold $139 million worth of Berkshire Class A shares, reducing his holdings by over half.
According to regulatory filings, Ajit Jain sold 200 shares of Berkshire Class A stock at a price of approximately $695,418 per share. This sale means that he still holds a total of 166 shares of Berkshire Class A stock, with 61 shares directly owned by him personally.
Ajit will celebrate his 73rd birthday on September 15th. He is known as Warren Buffett's "right-hand man" and one of his key deputies. Ajit joined Berkshire in 1986 to oversee the group's insurance operations, including the auto insurance company GEICO. In 2018, Ajit was appointed Vice Chairman of the insurance company.
Buffett has long praised Ajit. For example, in 2017, Buffett stated that Ajit may make more money for Berkshire than he does himself. Buffett even said, "If there were another Ajit and you could swap me for him, don't hesitate. Make the trade!"
In 2021, Buffett publicly stated that the board unanimously agreed that if he were to step down, Berkshire's Vice Chairman of non-insurance businesses, Greg Abel, would succeed him as CEO. Greg, who is ten years younger than Ajit, was ultimately chosen as Buffett's successor. Age was a key factor in Berkshire's final decision.
Investors question whether Ajit will stay to help Greg manage once the 94-year-old Buffett leaves the company. Financial blog Zerohedge commented that the answer seems to be negative.
Ajit's recent large-scale sell-off is also his largest since joining Berkshire in 1986. It is not yet clear what motivated Ajit to sell such a large amount of stock, but he did take advantage of Berkshire's recent high stock price:
In late August of this year, Berkshire Hathaway's market value surpassed $1 trillion for the first time, making it the first non-tech U.S. company to join the "trillion-dollar club." Berkshire Class A shares briefly reached $727,000 in early September, not far from the historical high. Ajit's selling price was close to this peak.
Some analysts believe that this indicates Ajit believes Berkshire's valuation has been fully realized. At the very least, it suggests that the stock price is not cheap. Berkshire's current price-to-book ratio is over 1.6, likely around Buffett's conservative estimate of intrinsic value. It is expected that Berkshire will not buy back a lot of stock in the near future, if at all.
When contacted by the media, Ajit declined to comment. Berkshire Hathaway did not immediately respond to requests for commentAjit's recent sell-off comes at a time when Berkshire Hathaway's recent stock buyback activities have slowed significantly, as well as massive sell-offs of its two major holdings, Apple and Bank of America:
In the second quarter of this year, Berkshire Hathaway only repurchased $3.45 billion worth of its own stock, far below the $20 billion repurchase scale in the previous two quarters.
Berkshire Hathaway's second quarter financial report released in early August showed that its Apple holdings dropped from 789 million shares in the first quarter to about 400 million shares, a decrease of nearly 50%. This news once triggered a sharp drop in the U.S. stock market.
Berkshire Hathaway continues to sell its holdings in Bank of America, marking the first reduction of this long-term "favorite stock" since the third quarter of 2020. Bank of America has dropped from Berkshire Hathaway's second largest holding to the third largest.
In the second quarter of this year, Berkshire Hathaway raised its cash level to a record $189 billion.
The market generally believes that Berkshire Hathaway's recent actions seem to be a defensive measure, preparing for a larger-scale pullback in the U.S. stock market. Historically, the S&P 500 index experiences a 20% or more pullback approximately every 18 months. These healthy pullbacks provide an opportunity for market valuations to reset from overvalued levels, which is also the reason for investors to buy stocks again.
On Thursday, the U.S. stock market continued its recent recovery trend, with the S&P 500 index rising for the fourth consecutive trading day, while Berkshire Hathaway's stock price fell against the market this week, lagging behind the overall U.S. market in recent trading days