after following buffett for 38 years, the indian vice president suddenly sold nearly 1 billion yuan of stocks! will the "post-buffett era" be good?
2024-09-13
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on the 12th local time, documents released by the u.s. securities and exchange commission revealed a bombshell news: ajit jain, an indian-american who is vice president of berkshire hathaway group under buffett and in charge of the core insurance business, sold 200 class a shares of berkshire.
berkshire class a shares are the most expensive in the world, with a share price of more than $727,000 earlier this month. it is reported that ajit sold a total of 200 shares held by himself and his family trust at a price of $695,417.65 on september 9, cashing in a total of $139 million (about 990 million yuan).
since ajit refused to explain the reason for the operation, berkshire hathaway also adhered to its usual mysterious and low-key style and did not respond, and the outside world speculated about this major equity sale. the two mainstream speculations in the market are "valuation theory" and "personal future theory". but no matter which one is the real situation, considering buffett's 94 years old, the outside world has doubts about whether the berkshire hathaway group can still operate smoothly in the "post-buffett era".
guess 1:
berkshire hathaway is overvalued
ajit chooses to "lock in profits"
after selling 200 shares, ajit currently holds a total of 166 shares through personal accounts, family trusts, and personal charitable foundations. this means that ajit reduced his shareholding position by 55% through this operation on the 9th, which is an astonishing move.
▲ajit
as the traditional "stock king" in the u.s. stock market, the share price of berkshire class a shares has increased by nearly 24% this year, outperforming the s&p 500 index and many technology growth stocks. in august this year, berkshire hathaway group broke the milestone of $1 trillion market value for the first time.
some analysts believe that the rapid increase has caused its stock price to deviate from its intrinsic value. in the past, buffett always repurchased company stocks in a high-profile manner when the stock price was low, but in the second quarter of this year, berkshire only repurchased $345 million worth of its own shares, far lower than the $2 billion repurchase in the first quarter. some financial analysis agencies said that according to buffett's conservative estimation model, the current berkshire stock price may be 1.6 times its true "intrinsic value".
bill stone, chief investment officer of glenview trust and a major berkshire shareholder, said ajit's selling "at best reflects what everyone generally knows, which is that berkshire's stock price has indeed been a little high recently."
as of the close of the u.s. stock market on the 12th, the share price of berkshire class a shares had fallen back to us$675,380, down about 8.4% from its historic high more than half a month ago.
guess 2:
73-year-old ajit is frustrated
want to find other prospects
cathy seifert, a chartered financial analyst who rates berkshire a "buy," said ajit's selling may simply reflect his personal situation rather than his views on berkshire hathaway's future business prospects.
"those of us who have been following berkshire for a long time suspect there may be a changing of the guard in the insurance business. my sense is that he (ajit) may be moving on to another place, and i suspect that's why he's selling his stock," cathy said.
ajit was born in sundargarh, odisha, india in 1951. he has excellent qualifications. he graduated from the indian institute of technology and studied at harvard university. he worked at ibm india and mckinsey before settling in the united states. in 1986, he officially resigned from mckinsey and followed buffett. berkshire hathaway was originally a textile company, and no one had experience in the insurance business. ajit led the team from scratch and built berkshire into an insurance empire.
in 2014, buffett publicly stated in a letter to shareholders that ajit and abel were both excellent heirs, and now both of them have become vice presidents of berkshire hathaway group: ajit is in charge of the insurance business, creating hundreds of billions of dollars in cash flow for the investment business; abel is in charge of all subsidiaries invested by berkshire, responsible for converting the cash generated by the insurance industry into high investment returns.
▲ajit (left) and buffett attended the meeting together
buffett has always praised ajit's ability. he once said at the 2017 shareholders' meeting that ajit's value to the company exceeded his own, "if you have the opportunity to exchange me with ajit, please do not hesitate." he also joked that if the company's three executives fell into the water at the same time, the best way to survive would be to swim behind ajit.
however, "there is no room for two tigers in one mountain", and ajit eventually lost the battle for succession, and abel was regarded as buffett's successor. one of the key factors is age. abel, 62 years old, is 11 years younger than ajit. at last year's shareholders' meeting, buffett publicly stated that there was no competition between abel and ajit, and ajit "never thought about managing berkshire." as one of the uncertainties in the "post-buffett era", investors have also been worried about whether ajit will leave the company after abel officially takes charge of berkshire and find a new way out for his career.
red star news reporter zheng zhi
editor: guo yu, responsible editor: guan li
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