Warren Buffett's top executive Ajit Jain sold Berkshire Hathaway shares because 'the stock overvalued the business,' expert says

Berkshire Hathaway Inc. BRK BRK Executives have recently made significant sales of the company's stock, raising questions about the market's valuation. The sale, which comes within a historic market cap milestone, could signal a change in the company's outlook.

what happened: This was known on Monday Ajit JainBerkshire Hathaway's insurance chief for nearly four decades, sold more than half of his Berkshire shares, amounting to $139 million. This marks Jain's biggest stock sale since he joined the company in 1986.

The sales came as Berkshire's Class A stock closed above $700,000 for the first time and the company reached a $1 trillion market cap, leading some to speculate that Jain may be signaling that Berkshire's shares are no longer undervalued.

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According to Steve checks“I think Ajit sold because the stock overvalued the business,” reported CNBC, the founder of Check Capital Management.

This view is further supported by Berkshire's minimal buyback activity, which indicates that even Warren Buffett Can share Jain's perspective on assessment. Earlier this year, the legendary investor also urged caution, noting that his vast empire may dwarf the average American company because of its size and limited leveraged investment opportunities. “With our current business mix, Berkshire should do slightly better than the average American corporation and, more importantly, operate with a materially lower risk of permanent loss of capital,” Buffett said in his annual letter.

Buffett also reduced his holdings in some of his favorite stocks, including Bank of America and Apple. This trend, along with the overall selloff in Berkshire's stocks, could indicate a bearish sentiment in the market and valuation.

Why does it matter?: The developments come in the wake of Buffett's $13 billion bet on Occidental Petroleum, whose shares have fallen 29% since mid-April. This has led to speculation that Buffett may buy more shares, although he is unlikely to take over the company.

Buffett also reduced his stake Bank of AmericaIt has sold about $7 billion worth of shares since mid-July. It raised questions about its investment strategy with the CEO of Bank of America Brian Moynihan Said, “I don't know exactly what he's doing because frankly we can't ask.”

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