Visiting a Website with .com at the End of It? This Company Made Money Because of That.
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To find out if it might rain all week, you can visit Weather.com.
And to find tech gadgets to put under the tree this Christmas, you can visit BestBuy.com.
To get to those websites, all you have to do is type the web address into a search bar and hit “enter.”
It’s simple on our end, but not many people think about the work that goes on behind the scenes to make sure you end up where you want to go.
When you dig into how that works, you’ll find an investable opportunity… in a company that Warren Buffett’s Berkshire Hathaway Inc. (BRK.A) has invested $2.5 billion in as of Sept. 30, 2022.
I’ll let the team share their research from here.
Enjoy your Monday — Keith Kaplan, CEO, TradeSmith
The Online-Traffic Toll Collector
Verisign Inc. (VRSN) acts a directory for the internet, sending people where they are trying to go on websites that end in .com or .net.Verisign Quick Facts
CEO: James BidzosMarket Cap: $21.17 billion
Dividend: No
2021 Revenue: $1.3 billion
TradeSmith Risk Level: Medium
Each time a new .com or .net domain is registered or renewed, Verisign Inc. (VRSN) makes money, acting as a type of “toll collector.” If companies or individual website owners want people to reach a .com or .net site, they have to initially pay or renew that toll to let people through.
Like most tech stocks, Verisign has experienced a sell-off in 2022, dropping more than 50% for the year as of this writing, but it has been able to provide steady revenue growth.
| Quarterly Revenue | Increase or Decrease % From 2021 Quarters |
|---|---|
| Q1: $347 million | 7.2% |
| Q2: $352 million | 6.8% |
| Q3: $357 million | 6.8% |
As you look ahead for new investment ideas and companies to add to your watchlist, there are a few reasons why we want to put VRSN on your radar.
The first reason is that Verisign is repurchasing its stock.
A 2017 Harvard Business Review report found that firms that buy back their shares beat their peers by 12.1% over the next four years. That should be good news for Verisign shareholders, as the company bought back $275 million worth of stock in Q3 2022.
It also has additional authorization to repurchase $803 million worth of stock, which brings the total amount authorized to $1 billion.
The second reason we want to put VRSN on your radar is that billionaires love this company.
In addition to Buffett’s Berkshire Hathaway, there are three other billionaires we track in our Billionaires Club who own the stock:
- Lee Ainslie
- William von Mueffling
- Arnold Van Den Berg
Von Mueffling rose to fame with Lazard Asset Management by posting 30% annualized returns from 1998 to 2003. He then went on to launch Cantillon Capital Management in 2003.
And Van Den Berg considers himself a student of Benjamin Graham, the famed author of “The Intelligent Investor.” Van Den Berg founded Century Management in 1974, operating under a value investing approach. He was featured in the book “The World’s 99 Greatest Investors: The Secret of Success.”
Billionaire investors’ fortunes are proof of their investing acumen, so it’s always worthwhile to track their moves because you can piggyback right off of their success.
The third and final reason we think VSRN is worth monitoring is that the stock entered our Green Zone on Dec. 5, which is considered a “buy signal.” This means that our algorithms working behind the scenes have determined that the stock is in a healthy state.
This is a stock that could fit into anyone’s portfolio, but it may be most attractive to conservative and moderate investor personalities. (You can find out more about the different types of investing personalities and the corresponding moves for each type to make with this free resource.) This is because of its status in the Green Zone and the fact that it has a lower Volatility Quotient (VQ) of 22.30%, classifying it as a medium-risk investment.
Over the next few weeks, we’re going to have plenty more to help you get ready for investing in 2023, so stay tuned.