Warren Buffett’s Berkshire Hathaway Inc. is consolidating its position as the biggest shareholder of internet domain registry company VeriSign Inc. by buying more of its stock. Berkshire Hathaway purchased 143,424 additional shares of VeriSign for $28.55 million in the last three trading sessions that ended on December 24, the company disclosed in a Form 4 filing with the Securities and Exchange Commission late Thursday.
This is part of an even larger spree of buying on which Berkshire Hathaway has so far purchased in aggregate 377,736 shares of VeriSign for some $73.95 million through six sessions so far. Having averaged $195.78, those purchases, assuming current stock prices, swell the company stake to 13.7 percent of outstanding VeriSign, with a face value of nearly $2.67 billion at prevailing market quotations.
Berkshire Hathaway’s investment in VeriSign traces back to the first quarter of 2024, when it started buying shares. As of March 31, 2024, the company had 12.8 million shares, which has remained flat until now.
The renewed interest in VeriSign may be attributed to its robust financials, with high margins. According to MarketWatch, an analysis of VeriSign indicated that it ranks among the top S&P 500 companies in terms of gross, operating, and net income margins. In the third quarter of 2024, VeriSign had a gross margin of 88.02%, ranking 11th in the S&P 500, an operating margin of 71.25% (6th place), and a net income margin of 51.54% (7th place). These figures represent significant year-over-year improvements, underscoring the company’s strong profitability and pricing power.
VeriSign, which became a household name during the late 1990s internet boom, is famous for its domain registration services, especially for the popular.com,.net, and.cc top-level domains. The company went public in 1998 and has seen its stock grow significantly over the years, with notable surges during the dot-com bubble and more recently, surpassing its 2000 pre-bubble peak in 2021.
The shares of VeriSign are 20.9% below the all-time high of $255.93 that the stock hit late in 2021, even after a recent 1.7% decline in the stock price in 2024. Analysts tracking the stock on average are optimistic about the company’s future prospects. Half of the six analysts covering the stock are bullish on the company’s prospects. The average target price for the shares of VeriSign is $230, suggesting an upside of 13.6% from current levels. Earnings for the fiscal year of 2024 will be raised by a tiny bit to $7.99 per share with a further increment to 2025.
Continuous investment by Buffett in VeriSign shows how confident he still is in its sound financial position and dominance of the internet domain registration industry.
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