Will Warren Buffett's Succession Change? Jain Sells $190 Billion Berkshire Stake

"To Make a Profit"... Some Analyze It as a "Retirement Signal"

Ajit Jain, the insurance expert regarded as the right-hand man of Warren Buffett, the 'investment master' and chairman of Berkshire Hathaway, sold 200 shares of Berkshire Class A stock for $139.1 million (approximately 185.5 billion KRW) on the 9th (local time), according to US economic magazine Fortune on the 12th.

This amount corresponds to about 55% of the Berkshire shares Jain holds. Jain currently owns 61 Berkshire shares personally, 55 shares through a family trust, and 50 shares through a nonprofit organization.

[Image source=Reuters Yonhap News]

Opinions are divided regarding the background of Jain's large-scale sale of his shares.

Since the sale occurred less than two weeks after Berkshire's market capitalization first surpassed $1 trillion, some believe it was simply a timely sale from an investment perspective. Steve Check, president and chief investment officer (CIO) of Check Capital Management, which holds 24.4% of Berkshire shares, said, "It's a bit surprising," but added, "The reason Jain is selling is probably because he thinks the stock is fully priced."

There is also analysis suggesting tax issues. After the US presidential debate on the 10th, Vice President Kamala Harris gained strength. Harris has stated that if elected, she would raise the capital gains tax from the current 20% to 28%, so it is believed that Jain sold early to pay less tax.

However, CFAR Research analyst Kathy Seifert views Jain's sale as reflecting personal circumstances rather than a view on the company's outlook. She rates Berkshire stock as a 'buy.' Seifert said, "Those who have watched Berkshire for a long time have suspected there might be a generational change in the insurance division," adding, "In my opinion, Jain seems to be planning to leave, and I think this is related to his stock sale."

However, Fortune stated that Check's view does not worry about the analysis that Jain's sale signals the stock is overvalued or implies Jain's retirement.

Jain, 73, joined Berkshire in 1986 after working at consulting firm McKinsey. He has been a member of Berkshire's board since 2018.

Jain is known to be close enough to Buffett to speak daily for years. In his 2017 shareholder letter, Buffett said, "Ajit has created tens of billions of dollars in value," and "If another Ajit appears and can trade places with me and him, do not hesitate to make the deal."

Buffett, 94, named Vice Chairman Greg Abel (62), who leads the non-insurance sector, as his successor in 2021. However, Berkshire shareholders and industry insiders regard Jain as the second most important figure after Buffett, considering his career and the importance of the insurance business.

Bloomberg News reported, "Investors have questioned whether Jain will stay to assist Abel's management after Buffett leaves the company."