Buffett's Bet: Does He See Something Wall Street Misses?

Warren Buffett, the Oracle of Omaha, has long been known for his contrarian investments and his ability to spot value where others see only risk. His recent move to increase Berkshire Hathaway's stake in VeriSign, a company that 60% of analysts say to avoid, has raised eyebrows and sparked questions about what Buffett sees that others do not.

VeriSign, a 90s era internet domain registry company, has had a tumultuous history. After skyrocketing during the dot-com bubble and subsequently foundering, the company has slowly climbed its way back to relevance. As of March 2025, Berkshire Hathaway owns nearly 14% of VeriSign, a significant stake that suggests Buffett sees potential in the company's future.

One of the key characteristics that make VeriSign an attractive investment for Buffett is its share repurchase program. VeriSign has been an active repurchaser of its own shares, buying back a whopping 60% of its shares over the past 18 years. This aggressive share repurchase program has significantly boosted the earnings per share for existing shareholders, making it a hallmark of a Buffett investment. As the company continues to repurchase shares, it is likely to see further increases in EPS, which can drive future performance and make the stock more attractive to investors.

Another huge attraction for Buffett is no doubt the company’s near-monopoly position in its primary business. VeriSign generates tremendous cash flow on a consistent basis, making it a predictable earner with a “moat” of protection that Buffett often cites as one of his prerequisites for owning a stock. VeriSign operates the authoritative registry for the .com and .net domain names worldwide, and also operates two of the 13 global root servers for the internet. Essentially a toll taker on the growth of the internet, VeriSign has been operating the .com top-level domains without issue for over 27 years, so it's unlikely that it would ever lose that job.



VeriSign's recent contract renewal with ICANN and NTIA for another six years, which includes the ability to raise prices by 7% in each of the last four years of the six-year contract, adds to its attractiveness. This contract renewal provides reassurance and a predictable revenue growth path, which is appealing to Buffett. The price increase capability ensures that VeriSign can keep pace with inflation, making it a resilient investment.

Furthermore, VeriSign's potential turnaround in domain registrations, as indicated by management's comments on the fourth-quarter conference call, suggests a promising future. The company's efforts to increase marketing programs to reignite customer acquisition and the positive response to these programs are encouraging signs. This potential turnaround in domain registrations adds to the investment appeal of VeriSign.

In summary, VeriSign's share repurchase strategy, near-monopoly position, contract renewal with price increase capabilities, and potential turnaround in domain registrations make it an attractive investment for Warren Buffett, despite his historical aversion to technology stocks. Buffett's investment in VeriSign raises questions about what he sees that others do not, and whether this is a sign of things to come for the company. Only time will tell, but one thing is clear: Buffett's bet on VeriSign is a bold move that could pay off handsomely in the long run.