Ajit Jain buys $20M of Class A shares as they fall below $300,000

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FRI, DEC 21, 2018

WARREN BUFFETT WATCH
 

Potential Buffett successor bets on Berkshire stock

 

Ajit Jain, the man who wins a lot of praise from Warren Buffett for running Berkshire' s insurance operations, bought around $20 million of the company's Class A shares last Tuesday, December 18, at an average price of $296,515, according to an SEC filing.

 

That can be interpreted as a sign of confidence in the company and perhaps that he thinks the stock was undervalued.  It has dropped another 2.9% from that price amid Wall Street's continuing sell-off.

 

Jain is one of two vice chairmen of Berkshire. The other is Greg Abel, who oversees the noninsurance operations. Both men are seen as top candidates to replace Buffett when he no longer runs Berkshire.

 

Buffett leaves with a profit after saying bye to lender he helped rescue

 

Home Capital Group was in trouble in June of 2017 when Berkshire agreed to provide a $1.5 billion line of credit and buy around $114 million of the Toronto-based lender's common stock. 

 

Berkshire was set to buy another $186 million of stock, but Home Capital shareholders said no.

Now Home Capital is back on its feet and the stock is about 50 percent higher than Berkshire's price and the credit line has been repaid. Buffett said this week that since the curtailed stock investment is "now not of a size to justify our ongoing involvement," he will "substantially exit" the investment while continuing to "cheer from the sidelines." 

Crypto Billionaire Joins Buffett's Giving Pledge

 

Coinbase CEO Brian Armstrong doesn't appear to object too much to Buffett's criticism of cryptocurrencies as an investment. He's officially signed on to the Giving Pledge, started by Buffett and Bill Gates in 2010. It encourages wealthy people to "dedicate the majority of their wealth to giving back."

 

In his pledge, Armstrong, who has an estimated net worth around $1 billion, writes, "Whether it's through improving education, creating a more level playing field, or increasing economic freedom, I'm interested in helping more people see their ideas come to fruition in the world." 

BUFFETT AROUND THE INTERNET

 
 
  • Longtime Buffett friend Carol Loomis, a retired Fortune editor, has a short piece in the magazine to show some examples of the billionaire's annual Christmas card, "always planned by him to draw a laugh."  In the 2018 card, he's wearing a t-shirt that says "The Next Charlie Munger." The caption: 
    "Aiming High in 2019."

 

HIGHLIGHTS FROM THE ARCHIVE

 
 

Michael D. emailed buffett@cnbc.com to ask whether Buffett thinks China could bring down the whole U.S. economy if it decided to dump its very large holdings of U.S. Treasury debt all at once or over a small period of time.

 

To try to answer that, we go to CNBC's Warren Buffett Archive.

 

It's not the exact same question, but the general principle applies. At the 1998 annual meeting, Buffett was asked if he was worried Japan might dump its large U.S. Treasury holdings.

 

Buffett replied that if Japan, or any other country, has a large trade surplus with the U.S., "they have to be net investors in this country as long as we're net consumers of the goods. It's a tautology...

 

"If they sell [Treasuries] to U.S. corporations or anything, what do they receive in exchange? They receive U.S. dollars. What do they do with the U.S. dollars? … They can't get out of the system... If they sell them to the French … now the French own the government securities...

 

"And if you follow that through, I don't think you'll be worried about foreign governments selling U.S. bonds. It is not a threat."

 

At the 2018 meeting, when asked about a possible trade war with China, Buffett said the two countries benefit too much from trade to do anything "extremely stupid."

BERKSHIRE STOCK WATCH

 
 

Berkshire Hathaway Class A shares closed at $288,000.06 Friday, down 7.2% over the previous four weeks, and down 9.9% from one year ago.

Berkshire Hathaway Class B shares closed at $192.10, down 7.2% over the previous four weeks, and down 2.9% from one year ago.

The benchmark S&P 500 index closed at 2416.62, down 8.2% over the previous four weeks, and up 4.3% from one year ago.

QUESTIONS OR COMMENTS

 
 

Please send any questions for us or comments about the newsletter to buffett@cnbc.com.

 

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Merry Christmas! 


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