Buffett’s company, Berkshire Hathaway Inc., has been busy buying stock in an internet domain-name registry company over the past week in order to become the biggest shareholder in that business.
There was a Form 4 report with the SEC late Thursday night that Buffett and Berkshire made. It said that Berkshire had bought 143,424 shares of VeriSign Inc. VRSN +0.60% for $28.55 million over the three sessions that ended Dec. 24.
Berkshire bought 377,736 VeriSign shares for a total of $73.95 million over the six sessions leading up to December 24. This means that the average price paid for the shares was $195.78.
That made Berkshire’s share of VeriSign 13,193,349, which is 13.7% of all the shares that are out there. That stake was worth $2.67 billion at the end of the trading day on Thursday.
Berkshire began buying VeriSign stock in the first quarter of 2024, as shown by its 13F filings about its stock ownership. As of March 31, it had 12,815,613 shares in total. The holding stayed the same until the latest purchases.
VeriSign’s stock fell 0.2% in the morning trading on Friday, reversing gains of up to 1.7% during the day. Five straight wins were in danger of ending.
MarketWatch’s Phil van Doorn did a study that shows VeriSign ranks very high among S&P 500 companies on a number of margin measures. This could be one reason why Buffett is interested.
Gross margin is a way to figure out how much a company can charge for its goods. It is calculated by dividing net sales by sales and subtracting the cost of goods sold. To sum up operating profit, divide earnings (before interest and taxes) by sales. When you reduce net income by sales, you get net income margin.
VeriSign had a sales margin of 88.02% in the third quarter, an operation margin of 71.25%, and a net income margin of 51.54%. These rankings put the company in eleventh place. All three of the margin measures were better than they were a year ago.
During the late 1990s internet boom, VeriSign became famous as the best place to register a website’s domain. Its domain names end in.com,.net,.cc, or.“name.”
The stock went public on January 30, 1998, and at the end of its first day, it was worth $6.38 after the split. The price went up 131.7% the rest of that year, then a record 1,191.8% in 1999, and finally reached a high point of $253 on February 29, 2000, before the internet bubble burst.
That record was broken by the stock in 2021, when it closed at $255.93, setting a new high.
The stock price was 20.9% lower than that record price not long ago, and it has dropped 1.7% so far in 2024.
Of the six analysts surveyed by FactSet who cover VeriSign’s stock, half are bullish and half are neutral. The average stock-price target is $230, which implies 13.6% upside from recent prices.
The FactSet consensus for 2024 earnings per share calls for a rise to $7.99 from $7.90 in 2023, and the consensus for 2025 is for per-share earnings of $8.55. Sales are expected to rise 4.2% to $1.56 billion in 2024 and then increase 3.2% in 2025 to $1.61 billion.
