Buffett’s Berkshire Trims VeriSign Stake: Strategic Portfolio Realignment in Motion

Introduction Warren Buffett’s Berkshire Hathaway has made a surprising move by reducing its holdings in VeriSign, selling approximately one-third of its stake. The sale, valued at around $1.23 billion, reflects more than just a portfolio adjustment—it signals a broader strategic realignment as the conglomerate manages exposure to regulatory thresholds and high-performing tech assets. Despite the cut, Berkshire still maintains a sizable position in VeriSign, reaffirming confidence in the company’s long-term fundamentals.

Key Takeaways

• Berkshire Hathaway sold around 4.3 million shares of VeriSign in a $1.23 billion deal.

• The sale reduces Berkshire's stake from 14.2% to 9.6%.

• Remaining shares (approximately 9 million) are now locked for 12 months.

• The deal was structured through an underwritten transaction to avoid market disruption.

• VeriSign shares fell roughly 6% in after-hours trading following the news.
  

Berkshire’s Tactical Decision: Below the 10% Threshold

The primary rationale behind the move appears to be regulatory. U.S. securities law mandates that investors holding more than 10% of a company must disclose trades within two business days. By trimming its stake to 9.6%, Berkshire sidesteps these heightened reporting obligations, allowing for greater flexibility in managing its position in the future.

Rather than selling shares directly into the open market, which could have triggered volatility, Berkshire chose an underwritten transaction—typically a move reserved for large-scale institutional repositioning. J.P. Morgan managed the deal, which ensures a controlled share distribution and reduces price disruption.

In addition, Berkshire agreed to a one-year lock-up on the remaining shares. This not only shows regulatory consideration but also sends a message to markets: the conglomerate still believes in VeriSign’s core business.

VeriSign: A Quiet Giant in the Tech Sector

VeriSign may not make daily headlines, but it’s a cornerstone of the internet. As the exclusive operator of the .com and .net domain name registries, VeriSign collects fees on a massive number of annual domain renewals. Its business is stable, predictable, and extremely profitable.

The company posts gross margins near 90%, operating margins well above 70%, and net margins exceeding 50%. Few public companies come close to such high profitability. It’s this financial resilience that likely attracted Berkshire in the first place. Since initiating its position, the investment has delivered strong returns.

Yet, these very same strengths have inflated VeriSign’s valuation, with shares climbing nearly 50% year-to-date. With valuations at a peak, Berkshire’s partial exit could reflect a decision to lock in gains while maintaining a core position.

Market Reaction: Short-Term Drop, Long-Term Outlook Stable

Following the disclosure, VeriSign’s stock slid approximately 6% in after-hours trading. While some investors may have interpreted the move as a loss of faith from Buffett, most analysts see it as a tactical maneuver rather than a negative outlook.

The sale was not driven by deteriorating fundamentals. Rather, it was structured to reduce administrative friction and give Berkshire more discretion. It’s also worth noting that even after the sale, Berkshire remains one of VeriSign’s largest shareholders, holding about 9 million shares—worth more than $2.6 billion at current prices.

The market’s knee-jerk reaction reflects concern about perceived insider knowledge, but the long-term business model for VeriSign remains intact. With recurring revenue, limited competition, and pricing power, the company still fits well within Berkshire’s value-investing philosophy.

Conclusion

Berkshire Hathaway’s decision to trim its VeriSign stake is less about weakness in the company and more about strategic positioning. By falling just below the 10% threshold, the investment giant gains regulatory breathing room while still holding a multi-billion-dollar position. As Warren Buffett continues to hand more decision-making power to lieutenants Todd Combs and Ted Weschler, such moves may become more common—focused on flexibility, liquidity, and optimizing long-term returns. VeriSign, with its unmatched profitability and dominance in domain infrastructure, remains a quiet powerhouse—and clearly, still a core holding in the Berkshire playbook.