By Jonathan Stempel
(Reuters) -VeriSign shares fell on Tuesday after Warren Buffett’s Berkshire Hathaway sold nearly one-third of its stake in the internet infrastructure and domain name registry company for $1.23 billion.
Berkshire had been VeriSign’s largest shareholder before selling 4.3 million shares at $285 each on Monday, a 6.9% discount to Monday’s closing price.
Shares of VeriSign fell more than 7% in early trading on Tuesday.
The sale reduced Berkshire’s ownership stake in the Reston, Virginia-based company to 9.6% from 14.2%.
Another 515,032 shares may be sold to meet demand. Berkshire’s remaining holdings are subject to a 365-day lock-up agreement.
VeriSign said the sale was intended to reduce Berkshire’s stake to below 10%, a threshold that triggers regulatory obligations.
Berkshire did not respond to a request for comment.
Buffett’s company began investing in VeriSign in 2012, and prior to the sale owned nearly 13.3 million shares worth about $4.07 billion.
VeriSign shares had risen more than six-fold since Berkshire began buying. Berkshire’s smaller investments in technology companies have often been spearheaded by Buffett’s portfolio managers, Todd Combs and Ted Weschler.
Baird Equity Research analyst Rob Oliver, who rates VeriSign “outperform,” wrote that the sale “could drive near-term weakness and questions around Berkshire’s ultimate intentions with the stock. We continue to view the story as all about domain growth, which is strong and improving.”
Berkshire ended March with $347.7 billion of cash, and will update that total when it releases second-quarter results on Saturday.
Buffett, 94, has run the Omaha, Nebraska-based conglomerate since 1965. Berkshire also owns close to 200 businesses including the BNSF railroad and Geico car insurance, and stocks such as Apple and American Express.
(Reporting by Jonathan Stempel in New YorkEditing by Marguerita Choy)
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