Just because a billionaire channels a big chunk of cash into a certain stock does not necessarily mean that retail investors should do so as well. Nonetheless, numerous small-scale investors tend to follow what billionaires and prominent hedge fund managers are buying or selling, and rightly so. It does pay off to know what some of the greatest minds in the finance industry think about certain companies (even though they may be wrong on some occasions), which is why Insider Monkey closely monitors the trading activity of high-profile investors such as Warren Buffett, Carl Icahn, and other hedge fund managers. For that reason, the following article will examine three SEC filings recently submitted by revered investor Warren Buffett and two other successful hedge fund vehicles.
At Insider Monkey, we track around 785 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).
The Oracle of Omaha Sells Shares of Verisign
According to a fresh Form 4 filing, Warren Buffett’s Berkshire Hathaway sold 32,255 shares of Verisign Inc. (NASDAQ:VRSN) on Friday at prices that ranged from $87.13 to $91.81 per share. After the recent sale, Mr. Buffett’s holding company currently owns 12.95 million shares of Verisign, which account for 11.94% of the company’s outstanding shares. Although the sale is not overly significant, the simple fact that the billionaire investor is selling shares seems surprising considering that he is “almost always a buyer of stocks”. The global provider of domain name registry services and Internet security has seen its market value gain 138% over the past five years and 38% in the past year alone.
Verisign Inc. (NASDAQ:VRSN) had nearly 143 million names in the domain name base for .com and .net at the end of March, and the number of domain names registered could continue to grow due to strong growth in online advertising, e-commerce, and the number of Internet users. However, the company’s financial performance may be weighed down by the strong competition from country code top-level domains (ccTLDs), which are two-letter Internet top-level domains designated for particular countries, and new generic top-level domains (gTLDs). The company’s revenue for the first quarter was $281.88 million, an increase from $258.42 million in the first quarter of 2015. The increase in the company’s top-line figure was mainly driven by an increased domain base for .com and .net and an increase in .net domain registration fees.
The shares of Verisign are trading at a forward P/E ratio of 22.9, significantly above the multiple of 16.2 for the Information Technology sector. Ken Fisher’s Fisher Asset Management owns a mere 2,496 shares of Verisign Inc. (NASDAQ:VRSN) as of March 31.
Let’s head to the next two pages of this article, where we will discuss two separate SEC filings.