Jamie Spencer
Berkshire Hathaway, led by Warren Buffett, has significantly increased its position in VeriSign (VRSN), an internet infrastructure company, solidifying its status as the company’s largest shareholder.
Details of the Recent Purchase
According to a Form 4 filing with the Securities and Exchange Commission (SEC), Berkshire Hathaway acquired 143,424 shares of VeriSign during the three trading sessions ending on December 24, 2024. In total, the company purchased 377,736 shares over six sessions, spending approximately $74 million.
With these acquisitions, Berkshire Hathaway now owns 13.2 million shares of VeriSign, valued at around $2.7 billion.
VeriSign’s Position in Berkshire Hathaway’s Portfolio
Berkshire Hathaway first invested in VeriSign in the fourth quarter of 2012. Over a decade later, the company remains a cornerstone of the investment giant’s portfolio, highlighting its long-term confidence in VeriSign’s business model and profitability.
Why VeriSign?
High-Profit Margins
One compelling reason for Berkshire Hathaway’s increased investment is VeriSign’s exceptional profitability:
- Profit Margin: Ranked fifth in the S&P 500, tied with Nvidia, at approximately 56%.
- Operating Margin: Ranked third in the index.
- Gross Margin: Ranked 13th in the index.
Such strong financial metrics make VeriSign a standout in the tech sector, attracting value-oriented investors like Berkshire Hathaway.
Stock Performance
While VeriSign boasts impressive financial health, its stock performance has been less stellar this year:
- Year-to-Date Decline: Down about 2%, bucking the broader market rally, with the S&P 500 up 25%.
- From All-Time High: Down approximately 21% since its record high in December 2021.
On Friday, VeriSign’s shares initially rose nearly 2%, reaching their highest level since January, before retreating to trade flat amid a broader market downturn.
Berkshire Hathaway’s Strategic Investment
Berkshire Hathaway’s decision to increase its stake in VeriSign aligns with its hallmark investment philosophy: targeting companies with robust financials, a dominant market position, and long-term growth potential. VeriSign, founded in 1995, fits this mold as a leader in internet infrastructure services.
Despite the stock’s underperformance relative to the broader market, its high-profit margins and steady business model continue to make it an attractive investment.
