Buffett increases stake in VeriSign, signaling renewed interest

Warren Buffett's company, Berkshire Hathaway, has recently increased its investment in VeriSign, a technology firm that manages internet domain name registrations. This move is interesting because Berkshire has been selling off many other stocks lately. In December 2024, Berkshire bought around 474,000 additional shares of VeriSign, raising its stake by about 3.7%. This decision comes after years of not purchasing any VeriSign shares, making it significant in the context of Buffett's current selling trends. VeriSign runs the official registry for .com and .net domain names and plays a critical role in internet operations. The company recently renewed important contracts with key organizations for another six years. This renewal includes a provision that allows VeriSign to increase its prices by 7% during the latter part of the contract. Such price rises could help it outpace inflation. While VeriSign’s revenue grew by 4.3% in 2024, this increase was solely due to previous price hikes. The actual number of domain registrations fell by 2.1%. However, management believes that this trend will change. They pointed to potential growth from renewed demand in China, as the country’s economy stabilizes, and optimism for the U.S. market to bounce back in 2025. Despite current challenges, there are promising signs that VeriSign could see a return to growth in the future. If domain registrations increase again, along with allowed price hikes, VeriSign's profits may rise significantly. The company's strong market position and cash flow make it a reliable choice for investors in the long run. Overall, even though the stock has already risen 20% since Berkshire's latest investment, many believe it could still perform well in the years ahead.