Berkshire Hathaway Slightly Trims Verisign Position

Warren Buffett's Berkshire Hathaway has filed a Form 4 with the SEC regarding its position in Verisign (VRSN).

Per the filing, Berkshire slightly trimmed their stake in VRSN on April 29th.  They only sold 32,255 shares at weighted average prices ranging from $88.21 to $91.81.  After these sales, they still own a sizable 12.95 million shares.

This stock was largely thought to be one of Berkshire's younger portfolio managers' holdings (either Ted Weschler or Todd Combs).  These gentlemen now manage $9 billion each for Berkshire.

Per Google Finance, Verisign is "a provider of domain name registry services and Internet security, enabling Internet navigation for domain names and providing protection for Websites and enterprises around the world (Registry Services). The Company operates in Registry Services and Security Services segment. Its product suite also includes Security Services consisting of Distributed Denial of Service (DDoS) Protection Services, Verisign iDefense Security Intelligence Services (iDefense) and Managed Domain Name System (Managed DNS) Services. The Company's Registry Services provides the security and resiliency of Internet infrastructure and services, including the .com and .net domains, approximately two of the Internet's root servers, and operation of the root-zone maintainer functions for the core of the Internet's Domain Name System (DNS). The Company has operations inside, as well as outside the United States. Its operations infrastructure consists of approximately three secure data centers.."

Berkshire Hathaway Increases Verisign Position

Warren Buffett's Berkshire Hathaway has filed an amended 13G with the SEC.  Per the filing, Berkshire Hathaway no owns 10.4% of the company with 12,985,000 shares.

This marks an increase of over 1.29 million shares since the end of the first quarter.  The filing was made due to activity on July 31st.

This investment was likely originally made by Buffett's newest portfolio managers: Todd Combs and Ted Weschler.  Since they've joined, Berkshire has accumulated shares.  Thus far this year, VRSN has slipped from $62.95 down to a low of $46.45 before rebounding slightly to current levels of $54.84.

Verisign has been hit with a bit of uncertainty as news came out earlier in the year that the US Department of Commerce will relinquish control of ICANN.

Per Google Finance, Verisign "is a provider of Internet infrastructure services. The Company provides network confidence and availability for mission-critical Internet services, such as domain name registry services and infrastructure assurance services. Its service capabilities enable real-time name resolution for a number of global top level domains (TLDs), enable domain name registration through registrars, and provide security intelligence and cloud-based network availability services to enterprise customers. It has one reportable segment is Naming Services, which consists of Registry Services and Network Intelligence and Availability (NIA) Services. It has operations inside as well as outside the United States (U.S.). Registry Services operates the authoritative directory of all .com, .net, .cc, .tv, and .name domain names and the back-end systems for all .gov, .jobs and .edu domain names."

For more, check out notes from Berkshire Hathaway's annual meeting as well as Warren Buffett's annual letter.

PointState Capital Increases Verisign Position ~ 13G Filing

Sean Cullinan's hedge fund firm PointState Capital filed a 13G with the SEC regarding shares of Verisign (VRSN).  Per the filing, PointState has disclosed a 3% ownership stake in the company with 4,666,670 shares.

The filing was made due to trading activity on November 29th and marks an increase of 158% in the number of shares they own since the end of the third quarter.

The November 29th date is relevant here, mainly because the day after that, shares dropped from $40 to $34 on news that Verisign won the .com domain renewal, but wasn't going to be allowed to raise prices by the government.  Since then, shares have slightly rebounded back to around $37.

Hedge fund Lone Pine Capital has also been long Versign and we've highlighted Steve Mandel's pitch on VRSN from the Invest For Kids Chicago event last month.  Mandel argued that even if no price increases are allowed by the government, the downside is low.

The company recently announced it would double its stock repurchase plan to $1 billion.


About PointState Capital

This is the first time we've highlighted this fund, so here's some background: Point State was founded with around $5 billion a few years ago by former colleagues of Stan Druckenmiller's at Duquesne Capital.  Druckenmiller himself invested in the fund but does not have an ownership stake. 

Sean Cullinan is the CEO of Point State while other former Duquesne portfolio managers are there as well.  Point State is named after a park in Pittsburgh by the location of the old Fort Duquesne.


About Verisign

Per Google Finance, Verisign is "a provider of Internet infrastructure services. The Company provides domain name registry services and infrastructure assurance services. VeriSign segment includes Naming Services, which consists of Registry Services and Network Intelligence and Availability (NIA) Services. The Company has operations inside, as well as outside the United States. Registry Services operates the directory of all .com, .net, .cc, .tv, and .name domain names and the back-end systems for all .gov, .jobs and .edu domain names."

Steve Mandel's Pitch on VeriSign: Invest For Kids Chicago

Next up in our notes from Invest For Kids Chicago is Steve Mandel of Lone Pine Capital.  His presentation focused on how "technological change creates winners and losers" and how there is "no bigger disruptive market force than the Internet."


Mandel's Pitch on VeriSign (VRSN)

•    Lone Pine owns 9% of the company.  We revealed Lone Pine's initial stake in VRSN that they took in August (back then they owned 5.5% of the company)
•    VeriSign is the registry operator for .com and .net & handles the queries of each day
•    Thesis is combo of 5% to 7% growth in domains and 5% increases in price
•    This should lead to 25x EPS growth over next few years
•    This business should not be trading at 13x
•    CEO built RSA before founding VeriSign.  The board brought founder back in 2008 to focus on the business after a handful of non-core acquisitions
•    Management has been divesting non-core operations and now the company has operating margins of 50%
•    15 years of strong operating performance
•    Defense community views VeriSign as important to national security
•    If no price increases are allowed by the government the downside is low even in draconian case

His last point is noteworthy mainly because recently shares of VRSN sold off when it was announced that the Commerce Department and Department of Justice have been reviewing VRSN's .com Registry Agreement pricing terms.  The government may not complete its review in time before the current agreement expires on November 30th.

The fear is that the contract might not allow for price increases or they'll have to re-negotiate.  However, Mandel still thinks this stock is appealing even if price increases aren't allowed.

VeriSign (VRSN) was analyzed in the most recent issue of our premium newsletter: Hedge Fund Wisdom. A new issue is only two weeks away so be sure to sign-up.


For the rest of the hedge fund presentations from the event, head to notes from Invest For Kids Chicago.

Lone Pine Capital Starts VeriSign Stake, Adds to BE Aerospace Position

Steve Mandel's hedge fund firm Lone Pine Capital just filed two 13G's with the SEC:

VeriSign (VRSN)

First, Lone Pine has started a brand new position in VeriSign (VRSN).  The hedge fund now owns 5.5% of the company with just over 8.6 million shares.  They did not own any VRSN at the close of the second quarter and the SEC filing was made due to portfolio activity on August 17th.

VeriSign (VRSN), a provider of internet infrastructure services, was purchased by numerous hedge funds in the second quarter and the company is analyzed in the brand new issue of our premium newsletter that was just released.  So definitely check it out to see the bull and bear case on the name.


BE Aerospace (BEAV)

Second, Mandel's firm has boosted its stake in BE Aerospace (BEAV).  Per the 13G filing, Lone Pine now owns 5.7% of the company with 5,955,262 shares.  This marks an increase of 31% in their position size since the end of June.

Back in July, the company reaffirmed EPS guidance for FY 2012 and raised revenue guidance for FY 2012.  Lone Pine filed the disclosure due to portfolio activity on August 17th.

Per Google Finance, BE Aerospace is "a manufacturer of cabin interior products for commercial aircraft and business jets and distributor of aerospace fasteners and consumables. The Company sells its products directly to the airlines and aerospace manufacturers. It also designs, engineers and manufactures customized fully integrated thermal and power management solutions for participants in the defense industry, aerospace original equipment manufacturers (OEMs) and the airlines."


To see the rest of Lone Pine's US stock portfolio, their portfolio changes are broken down in our Hedge Fund Wisdom newsletter.

New Hedge Fund Wisdom Newsletter Now Available! Featuring Analysis Of AIG, VeriSign & Textron

The brand new Q2 2012 issue of our premium Hedge Fund Wisdom newsletter is now available!  Subscribers please head to www.hedgefundwisdom.com to login and download it.

The new 82-page Q2 issue features:

- Investment thesis summaries written by hedge fund analysts on: American International Group (AIG), VeriSign (VRSN), and Textron (TXT)

- Consensus buy & sell list of stocks hedge funds were active in

- Updated portfolios of 25 top hedge funds (see the full list of funds here)

- Expert commentary on each fund's moves


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