Ajit Jain, a top executive at Berkshire Hathaway, recently sold over half of his stake in the company for $139 million. This marked the biggest sale of Berkshire stock by the 73-year-old vice chairman of insurance operations since he was hired by Warren Buffett in 1986. The sale came as Berkshire Class A stock closed above $700,000 for the first time and the company topped a $1 trillion market capitalization.
This has led some to believe that Jain was signaling Berkshire shares are no longer cheap. Steve Check, founder of Check Capital Management, which has Berkshire as its biggest holding, said, “I think Ajit sold because the stock was fully pricing the business.”
Buffett himself might hold the same view, judging from Berkshire’s lack of buyback activity.
Ajit Jain’s significant stock sale
The company bought back just $345 million worth of its own stock last quarter, far below the $2 billion repurchased in each of the prior two quarters. The legendary investor also tempered expectations earlier this year, saying his sprawling empire might only slightly outperform the average American company due to its size and the lack of buying opportunities that could make an impact. Buffett has been dumping shares of some of his favorite stocks, including Bank of America and Apple.
Berkshire has been a seller of stocks for seven straight quarters, with the selling accelerating in the second quarter. The magnitude of the sales could suggest a bearish attitude toward the market and stock valuations. However, it remains to be seen how these moves will impact Berkshire Hathaway in the long run.
