Verisk stayed under the radar for years as a kind of proprietary "lab" supporting Buffett's insurance businesses as well as those of the other group members. But when restrictions between insurance and banking were lifted (Congress repealed the Glass Steagall Act in 1999), Verisk's business grew. And when the financial crisis hit years later, Verisk's robust operation seemed ripe for the public picking, so the group decided to spin it off in an effort to bolster ailing balance sheets.
Buffett's deep pockets, however, allowed him to hang on to his stake in post-IPO Verisk (Berkshire owns 2.1 percent of the company), which has earned a hefty 207 percent return since October 2009, as of the close of business Sept. 30. While Berkshire's $128 million stake in Verisk is extremely modest compared to Buffett's entire stock portfolio and the size of Berkshire Hathaway, since going public, Verisk has significantly outperformed Berkshire, the S&P 500 and the core holdings in Berkshire's portfolio, such as American Express, Wells Fargo, Coca-Cola and IBM.
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In the case of Verisk, not only was necessity the mother of invention, it also led to robust profits for Buffett. In co-creating a company to support his insurance businesses, Buffett laid the foundation for a fundamentally strong and, eventually, extremely profitable investment.
Verisk (whose name combines the Latin word for truth "veritas" with "risk") has a business model that allows it to "build it once and sell it many times," just the type of company the Oracle of Omaha would warm up to. It's a steady, solid business with a durable competitive advantage, low capital-investment needs and good economies of scale.