Verisign: An In-Depth Look at Buffett's Investment and Its Growth Potential

PUBLISHED Jan 5, 2025, 4:28:33 PM        SHARE

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Verisign: An In-Depth Look at Buffett's Investment and Its Growth Potential

https://youtu.be/iL5_zy2PCsA?si=o6hBrkuhbkNziU2-

Buffett's Investment in Verisign

A stock that has captured Warren Buffett's attention is Verisign (ticker symbol VRSN). Buffett recently purchased another 234,000 shares, bringing his total investment in Verisign to over $2.5 billion, which constitutes just under 1% of his portfolio. This is a stock I personally own and highly regard.

Verisign's Role in the Internet Infrastructure

Verisign is the largest internet top-level domain provider globally, managing and securing the infrastructure behind domains such as .net, .edu, and others. These domains are provided to companies for a recurring fee. Despite not being a mainstream topic, Verisign is a robust business with a sticky presence that is unlikely to fade away.

Financial Stability and Growth

Verisign boasts strong financials with consistent mid single-digit growth annually. Although its growth rates aren't exceptionally high, they are reliable enough to keep the stock performing well in the long term. The recent dip of about 20% has left it trading cheaper than its five-year average and the sector median by approximately the same amount on a GAAP PE basis, making it an attractive investment for a proven leader like Verisign.

Valuation and Dividend Considerations

If there's one critique I have about Verisign, it would be that it's somewhat boring as a stock since it doesn't pay any dividends. However, for its stable performance and value, it's a solid long-term investment. Despite the lack of dividends, its valuation and consistent growth make it a worthwhile addition to any portfolio.

Conclusion

In conclusion, Verisign is a significant player in the internet infrastructure space with reliable financials and consistent growth. Buffett's substantial investment in the company highlights its potential and stability. While it may not be the most exciting stock due to its lack of dividends, its proven track record and attractive valuation make it a strong contender for long-term investment.

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