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3 Ways to Own Facebook Besides the IPO

How to get exposure before FB goes public


Facebook’s IPO will soon be upon us, and even though the company reported a lackluster first quarter yesterday, the deal is still likely to be huge. The buzz is that Facebook will raise $10 billion at a $100 billion valuation.

So how can you get shares?

Investors have been loading up on Facebook stock for the past few years through secondary markets such as SharesPost and SecondMarket. But Facebook has suspended trading in these markets.

Yet there are still creative ways to get some exposure:

T. Rowe Price Media and Telecommunications Fund

About 1.2% of the T. Rowe Price Media and Telecommunication Fund‘s (MUTF:PRMTX)  assets are in Facebook stock. The fund also has investments in other social companies, including Pandora (NYSE:P), LinkedIn (NYSE:LNKD) and Groupon (NASDAQ:GRPN).

Portfolio manager Daniel Martino has a strong track record. Over the last three years, the average annual return was nearly 30%.

GSV Capital Corp.

GSV Capital Corp. (NASDAQ:GSVC) is a closed-end fund that focuses on pre-IPO shares. According to its latest filing, GSVC’s holdings of Facebook are about $10.4 million. That’s 14% of the fund’s overall portfolio.

Here are some of its other notable holdings:

company percent of GSVC’s portfolio
Dropbox 7%
Chegg 14%
Gilt Groupe 8%
Twitter 17%
ZocDoc 5%

Two of its investments — Zynga (NASDAQ:ZNGA) and Groupon — have already gone public. But keep in mind that pre-IPO shares are subject to lockups. This means that the investor must hold on to the shares for at least six months after the IPO.

Also remember that a fund such as GSVC is super-risky. It’s no sure thing that a company such as Chegg or even Twitter will go public. If history is any guide, some of these companies will crater.

And yes, GSVC shares have been extremely volatile. Over the past year, the stock has seen a range of $9.75 to $20.89.

Interpublic Group

In June 2006, Interpublic Group (NYSE:IPG) — a global advertising and marketing conglomerate — made a $5 million investment in Facebook. In the deal, IPG promised to get clients to spend at least $10 million in advertising on the social network.

Last year, IPG sold half its position when Facebook’s valuation was $65.5 billion. But it still has a 0.2% equity stake. Assuming a $100 billion valuation for Facebook, IPG’s holding would be worth $200 million.

Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “The Complete M&A Handbook”“All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli or reach him via email. As of this writing, he did not own a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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