While Investors Were on the Sidelines at the End of 2024, Warren Buffett Piled Into a Classic Internet Stock That's Up More Than 3,000% Since Its IPO

Core Insights - The market experienced strong selling in December 2024, deviating from the typical Santa Claus rally [1] - Berkshire Hathaway, led by Warren Buffett, made significant investments in Verisign, a classic internet stock that has appreciated over 3,000% since its IPO in 1998 [2] Company Strategy - Berkshire Hathaway has maintained a disciplined investment approach, focusing on value rather than high-multiple AI stocks, and has accumulated over $300 billion in cash, indicating a view of the market as overvalued [3] - Despite a quiet year for acquisitions, Berkshire outperformed the S&P 500 slightly and increased its stake in Verisign during market declines [4] Investment Details - Between December 17 and December 30, Berkshire purchased over 454,000 shares of Verisign at an average price of $198.88, totaling over $90 million, resulting in a 13.8% stake in the company [5] - Verisign's stock has increased approximately 3,150% since its public offering, yet it remains under the radar with only two analysts covering it [6] Company Attributes - Verisign is the largest domain operator globally, managing nearly 170 million dot-com and dot-net domains, which provides a competitive advantage [7] - The company has a profit margin exceeding 55%, indicating strong pricing power [7] Market Concerns - Verisign's stock rose only about 3% in 2024, underperforming the broader market, with concerns about a decline in active and registered domain names, which fell by approximately 2.5% year-over-year in Q3 [8] - Regulatory concerns regarding Verisign's contract to run the dot-com registry were alleviated with the contract renewal, although pricing tactics remain under scrutiny [9][10]