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Warren Buffett Just Upped His Stake in This Monopolistic Tech Stock. Should You?

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Warren Buffett has been a huge net seller of stocks over the past year. But the fact that he is selling a lot of stock doesn’t mean he and his investing team aren’t buying any stocks. In fact, given his large sells in 2024 and increased cash pile, that just makes the recent Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) buys all the more intriguing.

Towards the end of last year, Berkshire notably added to an existing stake, but one it had not added to since 2014. So what might Buffett and his team be seeing in this monopoly -ike technology stock?

In mid-to-late December 2024, Berkshire increased its stake in VeriSign (NASDAQ: VRSN) by about 474,000 shares, a 3.7% increase to the position.

While the modest increase might not be that notable, the fact that Berkshire has been a net seller of stocks recently, and the fact that Berkshire hadn’t purchased VeriSign stock since 2014, is interesting. For reference, the most recent trade Berkshire made in VeriSign was a 1.1% trimming of the position in March 2020.

Interestingly, the recent buys were at roughly the same price at which Berkshire sold shares in 2020. That being said, the company’s share count is now about 20% lower, thanks to regular share repurchases. So, the recent buy was actually at a lower market cap.

Here’s what Berkshire may be seeing in VeriSign shares at this moment, and why the stock may break out of the trading range it’s occupied over the past few years.

VRSN Chart
VRSN data by YCharts

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. But in late November, VeriSign renewed its contracts with both the Internet Corporation for Assigned Names and Numbers (ICANN) and the National Telecommunications and Information Administration (NTIA) for another six years.

That reassurance may have spurred Berkshire to add a bit more to its position. In addition, one of the important stipulations of the new contract was that it provided VeriSign the ability to raise its prices by 7% in each of the last four years of the six-year contract. This was similar to the terms of the expiring contract, which allowed VeriSign to raise prices in 2021, 2022, 2023, and 2024.

So while pricing for VeriSign will stagnate over the next two years, investors can likely pencil in a 30%-ish total price increase over the next six years. That’s likely to be a bit ahead of the pace of inflation, as long as global inflation continues to either remain at these levels or decline toward the Federal Reserve’s target.

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