Berkshire Hathaway, the conglomerate led by revered investor Warren Buffett, has sold roughly one-third of its stake in Verisign, a U.S.-based provider of domain name registry services and internet infrastructure.
On Monday, Verisign made the announcement that Berkshire will be selling 4.3 million shares on Monday. In a subsequent release, the company said that these would be priced at $285 per share, meaning the transaction will generate over $1.2 billion for Berkshire while reducing its stake from 14.2 to under 10 percent.
Why It Matters
Berkshire began investing in Verisign in 2012, according to a prospectus submitted by the company with the Securities and Exchange Commission (SEC). Since that time, the company’s stock has risen nearly 700 percent, and Berkshire’s sale is being touted as yet another example of its CEO’s prescient investment skills.
What To Know
Verisign is a Virginia-based company best known for operating registries for top-level domains like .com and .net. In its most recent earnings results, the firm reported a 5.9-percent increase in revenue to $410 million in the second quarter.
Verisign said that Berkshire may sell a further 515,032 shares—worth roughly $150 million at the $285 price point—and that it will receive no proceeds from the sale. The company added that the transaction is intended to reduce Berkshire’s stake to under 10 percent, given this threshold “triggers additional regulatory obligations.”
Buffett’s company held nearly 13.3 million shares in Verisign as of late March, according to a filing in May with the SEC. Affiliates of Berkshire have been invested in the company since 2012, a year when the stock averaged around $41 and peaked at more than $49.
Verisign, which now boasts a market capitalization of $28.6 billion, has since seen its share price rise to close at $305.98 on Monday, meaning the offer price represented a discount of around 7 percent.
According to regulatory filings, Berkshire’s portfolio comprises a blend including technology companies—primarily Apple—as well as those in the financial services, energy, automotive and food and drink sectors.
What People Are Saying
Adam Patti, CEO of VistaShares described Berkshire’s portfolio as “really well-balanced portfolio chosen” to CNBC in April, and Buffett as “the most successful investor the world has ever seen.”
What Happens Next?
Verisign shares fell sharply in overnight trading following the announcement, but are up nearly 50 percent in the year-to-date.
Buffett is set to step down from his role as Berkshire’s CEO at the end of the year, and announced that he would be handing over the reins to Greg Abel, vice-chair of non-insurance operations.
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