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Does Warren Buffett Know Something Wall Street Doesn't? He Recently Added Shares of an Internet Monopoly That 60% of Analysts Say Not to Buy.
VRSNVerisign(VRSN) The Motley Fool·2025-04-06 09:55

Core Insights - Warren Buffett has a history of achieving significant returns for investors, with a compound annual return of over 20% for shareholders over the last 60 years [2] - Buffett's investment strategy often involves going against Wall Street sentiment, as evidenced by his recent investment in VeriSign, which is not favored by many analysts [3][14] Company Overview - VeriSign holds exclusive rights to register .com and .net domains, allowing it to consistently raise prices within regulated limits set by ICANN [7] - The company reported a gross margin of 87.7% and an operating margin of 67.9% last year, indicating strong profitability [8] Recent Developments - Buffett increased his stake in VeriSign, purchasing 94millionworthofshares,bringingBerkshireHathaway′sownershipto1494 million worth of shares, bringing Berkshire Hathaway's ownership to 14% [5] - The shares were acquired at prices between 191 and 206,whicharebelowthepricetargetssetbyanalystsrangingfrom206, which are below the price targets set by analysts ranging from 260 to 275[6]MarketPosition−Despiteadeclineinthetotalnumberofregistereddomains,VeriSignisexperiencingstrongnewnameregistrationratesandexpectsfewerexpiringdomainsin2025[9][10]−Managementisoptimisticaboutfuturegrowth,focusingoncustomeracquisitionandreducingtheimpactofhigh−churnChinese−registereddomains[10]InvestmentConsiderations−VeriSign′sstockhasperformedwellsinceBuffett′spurchase,tradingaround275 [6] Market Position - Despite a decline in the total number of registered domains, VeriSign is experiencing strong new name registration rates and expects fewer expiring domains in 2025 [9][10] - Management is optimistic about future growth, focusing on customer acquisition and reducing the impact of high-churn Chinese-registered domains [10] Investment Considerations - VeriSign's stock has performed well since Buffett's purchase, trading around 255 per share, but carries a forward P/E ratio of approximately 29.6, indicating potential risk [11][12] - The company offers slow and steady growth with predictable free cash flow, which may appeal to investors in a volatile market [13]