As reported by Benzinga, Ajit Jain, a prominent figure at Berkshire Hathaway since 1986, has divested more than half of his shares in the company. On September 9th, Jain offloaded 200 Berkshire Class A shares for approximately $139 million. This transaction represents about 55% of Jain’s total stake in the conglomerate. Currently, he retains 61 Berkshire shares personally, 55 shares in a family trust, and 50 in the Jain Foundation. The shares were reportedly sold at an average price of $695,417.65 each, as per Fortune.
The rationale behind Jain’s decision to sell remains ambiguous. However, Steve Check, president and CIO of Check Capital Management, speculated that it might be due to the stock being fully priced. Berkshire Hathaway’s stock has witnessed a nearly 23% surge year to date, surpassing a $1 trillion market cap for the first time.
“The only reason I can come up with for why he is selling is he thinks the stock is fully priced,” Check stated.
Tax considerations may also play a role. Check suggested that Jain might be making the most of current capital gains tax rates, which could increase if Vice President Kamala Harris’s proposed policies are implemented.
Jain has played a pivotal role in building Berkshire’s insurance businesses, which significantly contribute to the conglomerate’s revenue and earnings.
Jain’s share sale coincides with significant market moves by Warren Buffett. Buffett's $13 billion investment in Occidental Petroleum has faced challenges, with shares plummeting 29% since mid-April. This has led to speculation that Buffett might buy more shares, although a takeover is unlikely.
Moreover, Buffett has been shaving his holding in Bank of America, selling nearly $7 billion worth of shares since mid-July. This has raised questions about his investment strategy, with Bank of America CEO Brian Moynihan stating, “I don’t know what exactly he is doing because frankly we can’t ask.”
Jain’s sale also comes on the heels of his recent wariness on the profitability of cyber insurance. At the Berkshire Hathaway annual shareholder meeting in May, Jain warned that cyber insurance, despite being a $10 billion market, poses significant risks and potential losses.
Buffett has previously lauded Jain’s contributions to Berkshire Hathaway, emphasizing in his annual letter to shareholders that the company may not be in the seat that it is today without Jain, who joined the team in 1986. Buffett underscored Jain’s significant contribution in building the company’s insurance business, which has been a cornerstone of Berkshire’s success.
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