Warren Buffett, CEO of Berkshire Hathaway: J. Countess—Getty Images
On December 30, 2024, Warren Buffett’s Berkshire Hathaway made headlines by investing $74 million in VeriSign, a tech infrastructure company from the dotcom era. Despite a 2% drop in VeriSign’s stock price this year, Buffett seems confident in the company’s long-term potential.
Founded in 1995, VeriSign played a key role during the dotcom boom, becoming the primary registrar for .com and .net domain names. It remains vital to the internet’s backbone, managing DNS queries and two of the internet’s 13 root servers. However, VeriSign’s stock performance hasn’t kept pace with the broader tech sector. While the S&P 500 rose 25% and Nasdaq surged 30% this year, VeriSign’s stock is down by 1.38%.
Berkshire Hathaway, which has been a VeriSign investor for over a decade, recently purchased 377,736 more shares valued at $74 million. This move solidifies Berkshire’s position as the largest shareholder, with over 13 million shares worth approximately $2.6 billion.
One possible reason for Buffett’s interest in VeriSign is its impressive profit margins. VeriSign ranks among the top five S&P 500 companies for profit margins, tied with tech giant Nvidia. Its operating margin is also the third highest among major U.S. companies.
In 2021, VeriSign shares reached a peak of $253.82 due to optimism around tech stocks and an increase in domain registrations. However, its stock has since dropped nearly 19%, currently trading around $205.
This investment comes at a time when Berkshire Hathaway has been cautious with its spending. The conglomerate held $325 billion in cash reserves as of its latest earnings report and has been gradually reducing its stake in Apple, its largest holding.
Warren Buffett’s move indicates a strong belief in VeriSign’s long-term stability and profitability, despite short-term market trends. Investors are now watching closely to see if Buffett’s calculated gamble pays off.
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