Recently, the news of Buffett's deputy reducing Berkshire's stocks has triggered heated discussions in the capital markets!

According to the latest regulatory document, one of Buffett's main deputies, Berkshire Vice Chairman and insurance business director Ajit Jain, has sold more than half of his holdings of Berkshire Class A shares, cashing in approximately $0.139 billion (equivalent to 0.99 billion yuan), accounting for 55% of his holdings.

The document did not mention the specific reason for the sale, but market analysts believe that this to some extent reflects the overvaluation of Berkshire's stock. In addition, there is speculation that Ajit Jain, who has followed Buffett for nearly 40 years and contributed to the development of Berkshire, may be preparing for retirement.

Unexpected sale, what signal does it send?

Documents disclosed by the U.S. Securities and Exchange Commission (SEC) show that Ajit Jain, one of Buffett's main deputies and Vice Chairman of Berkshire, divested 200 shares of Berkshire Class A stock on September 9 at a price of approximately $0.6954 million per share, cashing in approximately $0.139 billion. The shares sold in this transaction accounted for 55% of Ajit Jain's total holdings of Berkshire.

After this sale, Jain directly holds 61 shares of Berkshire Class A stock, and the family trust fund he and his spouse set up for their descendants holds 55 shares. In addition, his non-profit organization, Jain Foundation, holds 50 shares.

This is also Jain's largest sale since joining Berkshire in 1986. Currently, it is not clear about the specific reason for his stock sale, but he did take advantage of Berkshire's recent high stock price.

As of the end of August, the group's stock price exceeded $0.7 million, and its market value reached $1 trillion. Jain's sale occurred five days after Berkshire's stock price broke through $0.727 million and less than two weeks after its market value first exceeded $1 trillion.

David Cass, a finance professor at the Robert H. Smith School of Business, University of Maryland, said, "This seems to indicate that Jain believes Berkshire's valuation has reached its highest level."

This is also consistent with Berkshire's significant slowdown in share buyback activity in the near term. In the second quarter, Berkshire only repurchased stocks worth $0.345 billion, far below the $2 billion repurchase volume of the previous two quarters.

Previously disclosed financial reports show that Berkshire sold 49.4% of its Apple Inc. shares in the second quarter, reducing its holdings from approximately 0.789 billion shares at the end of the first quarter to about 0.4 billion shares at the end of the second quarter. At the end of the second quarter, Berkshire's cash reserves reached $276.9 billion, a new high, compared to $189 billion at the end of the first quarter. Some analysts pointed out that Berkshire's huge cash holdings may indicate Buffett's concerns about the overall U.S. economy and market.

It is worth noting that Berkshire's stock selling behavior continues. On September 10th local time, a regulatory filing showed that Berkshire, under Buffett, sold a total of 5.797 million shares of Bank of America's stock on September 6th, 9th, and 10th, with a total value of approximately $0.229 billion. Since mid-July, Berkshire has sold a total of 174.7 million shares of Bank of America's stock, realizing approximately $7.19 billion. At present, Berkshire remains the largest shareholder of Bank of America, holding 0.858 billion shares, accounting for 11.1%.

Buffett's 'disciple'

Ajit Jain, 73, is one of 'stock god' Buffett's main deputies, having followed Buffett for nearly 40 years.

Jain was born in 1951 in India, graduated from the Indian Institute of Technology in 1972 with a bachelor's degree in mechanical engineering; after graduation, he joined IBM's data processing department in India as a salesperson. In 1978, Jain moved to the United States and obtained a Master of Business Administration from Harvard University. He then joined the well-known consulting firm McKinsey.

In 1986, Jain joined Berkshire, responsible for the group's insurance business. Under Jain's leadership, Berkshire successfully entered the reinsurance industry and completed the transformation of the auto insurance company GEICO. In 2018, Jain was appointed Vice Chairman of Berkshire's insurance business and became a member of Berkshire's board of directors.

Warren Buffett speaks highly of Jain. Buffett once said: "Jain has created hundreds of billions of dollars in value for Berkshire's shareholders. If he (Buffett), Jain, and the late Vice Chairman Charlie Munger were on a sinking ship, only one person could be saved, swim towards Jain."

Before officially announcing that 62-year-old Berkshire's non-insurance business vice chairman Greg Abel would eventually succeed the 94-year-old Buffett, there were rumors that Jain might take over leadership of Berkshire. Buffett clarified that Jain never thought about leading Berkshire, and there is no competition between them.

Jain is one of the highest-paid employees at Berkshire, with earnings of 20 million dollars last year. However, his wealth pales in comparison to Buffett's, who mainly holds Berkshire's stock.

Describing Berkshire as a "buy," CFRA research analyst Cathy Seifert said that Jain's sale of Berkshire may reflect his personal situation rather than his outlook on Berkshire's future. Cathy Seifert said: "Those of us who have long been following Berkshire are suspicious that there may be changes in the insurance business. My feeling is that he may continue to move forward, and I doubt that this is the reason behind his stock sales."

Jain has not yet publicly responded to the shareholding reduction. It is speculated that he may be cashing out at a high level or preparing to retire. So far this year, Berkshire's stock price has risen by over 23%, outperforming the S&P 500 index and growth stocks. By the end of August this year, Berkshire's market cap had surpassed 1 trillion dollars. Bill Stone, Chief Investment Officer of Glenview Trust and a major Berkshire shareholder, said that Ajit's selling move "at best only reflects what everyone knows, that Berkshire's stock price has indeed been a bit high recently."

Furthermore, although Jain is younger than the 94-year-old Buffett, Jain is actually 73 years old. Buffett has indicated that Greg Abel can take over at any time, and there is also speculation about what impact it might have if Greg Abel formally takes over and Jain leaves.

On the secondary market, Berkshire's stock price has been declining for multiple days since hitting a high of 0.727 million dollars per share on September 4th. As of the latest closing, $Berkshire Hathaway-A (BRK.A.US)$ The report is $0.6717 million per share. The company's current market cap is $965.1 billion.

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