Regulatory moats are incredibly powerful. One of my favorite examples is Verisign $VRSN. I used follow the company much more closely, but EVERY single .com or .net domain is registered through Verisign.
Through an agreement with ICANN, Verisign has the exclusive contract to power the backbone of the internet (the domain name system, DNS). They are capped at charging $8 per domain (with 10% price increases every couple of years) but the lever they pull is increasing the number registrations. VRSN is a master class in the economics of fixed cost leveraging. The company is an absolute cannibal: it buys back somewhere like 5-10% of its stock every year!
And I just checked my notes, last updated late 2021. None other than Berkshire Hathaway owns 12.8m shares, or 11.7%, which makes up 0.78% of their portfolio. This isn't a Buffett investment though. This was bought after Todd joined in the early 2000 teens. And I'm pretty sure Todd has talked publicly about how good of a business VRSN is as well.
Regulatory moats are incredibly powerful. One of my favorite examples is Verisign $VRSN. I used follow the company much more closely, but EVERY single .com or .net domain is registered through Verisign.
Through an agreement with ICANN, Verisign has the exclusive contract to power the backbone of the internet (the domain name system, DNS). They are capped at charging $8 per domain (with 10% price increases every couple of years) but the lever they pull is increasing the number registrations. VRSN is a master class in the economics of fixed cost leveraging. The company is an absolute cannibal: it buys back somewhere like 5-10% of its stock every year!
And I just checked my notes, last updated late 2021. None other than Berkshire Hathaway owns 12.8m shares, or 11.7%, which makes up 0.78% of their portfolio. This isn't a Buffett investment though. This was bought after Todd joined in the early 2000 teens. And I'm pretty sure Todd has talked publicly about how good of a business VRSN is as well.