Funds Exit Early from Facebook

 Story first reported from WSJ.com

It wasn't supposed to end like this.

Fidelity Investments was an early buyer of Facebook Inc. shares. In the spring of 2011, two dozen of its funds bought more than $200 million worth of the company's private stock. Then, when Facebook went public in May, many of those funds and other Fidelity funds loaded up on publicly traded shares.

Now, many of the giant Boston-based company's fund managers are shrinking their stakes.

Twenty-one Fidelity funds sold more than 1.9 million public Facebook shares combined in June, with 16 of them selling more than a quarter of their stakes in the company, according to investment-research firm Morningstar Inc. Private shares can't be traded until later this year.

It is unclear whether the Fidelity funds made or lost money on the Facebook shares, but the stock has languished below its $38 offering price on May 18. In June, it traded between $25.52 and $33.45; shares hit an all-time low of $20.84 before closing at $20.88 on Wednesday.

The moves represent an about-face for Fidelity, one of the first institutional investors to take a significant stake in Facebook and the country's third-largest mutual-fund company by assets. Fidelity's funds owned the shares for at most six weeks—much shorter than the median holding period of about 22 months for U.S. stock funds, according to Morningstar.

To be sure, the sales represent a very small portion of the funds' holdings. Also, 13 Fidelity funds bought 2.2 million shares of Facebook in June, though more than 1.3 million of those went to index funds, which passively track established stock indexes.

Mutual-fund analysts say it is uncommon for mutual funds to flip shares so quickly.

Nearly two dozen Fidelity funds are dumping Facebook funds at a hurried clip, and they sold nearly two million shares in June alone.

A Fidelity spokeswoman said, "Our managers are not tied to a minimum holding period and need to be able to respond to changes in market conditions."

Facebook Chief Executive Mark Zuckerberg met with Fidelity executives, along with other large asset managers, during Facebook's IPO roadshow in May. Morgan Stanley and other underwriters of Facebook stock also called top institutional clients, including Fidelity, before the IPO to tell them their analysts had lowered Facebook's earnings and revenue estimates.

Fidelity wasn't the only company with funds that flipped Facebook shares. Turner Investment Partners' Large Growth fund, which has a typical holding period of about seven months, sold 28% of its shares within weeks of buying them. OppenheimerFunds Inc.'s Global Allocation fund in June sold more than 10,000 shares, or 10% of its holdings.

A fraction of mutual-fund companies, including Fidelity, report holdings on a monthly basis, while the majority report only quarterly. That means investors in most funds that sold shares in May and June won't ever know how much Facebook stock their funds once owned.

The biggest reported seller of shares in June was the Fidelity Puritan fund, a "balanced fund" that invests in both stocks and bonds. It sold more than 623,000 shares, or a quarter of its overall stake. Other big sellers included Fidelity Disciplined Equity, which invests in both growth and value stocks and sold more than 444,000 shares, or 47% of its stake, and Fidelity Dividend Growth, which sold more than 167,000 shares, or 25% of its stake. Fidelity Magellan, one of the best-known actively managed funds in the country, sold more than 155,000 shares, or 17% of its stake.

Fidelity Puritan has an average holding period of about eight months, according to Morningstar, and Fidelity Dividend Growth has an average holding period of a year and a half.

It is unusual for an IPO like Facebook to be sold so quickly by long-term fundamental investors. Typically, IPOs see growing ownership by such investors and shrinking ownership by trade-oriented hedge funds, according to a study completed last year by Ipreo, a capital-markets data and advisory firm.

In a study of 270 IPOs of U.S. companies between 2009 and 2011, institutions such as mutual funds and pension funds represented 45% of the IPOs' initial allocation. But one quarter later, they represented 67% of the shareholders in those same stocks.

This doesn't mean many mutual-fund managers won't try to cash in on a post-IPO pop, said University of Florida finance professor Jay Ritter, who studies IPOs. Such managers, many of whose companies pay millions in commissions to underwriters, expect to get shares of an IPO and try to flip the shares for a profit once they are widely traded, he said.

For more national and worldwide Business News, visit the Peak News Room blog.

For more local and state of Michigan Business News, visit the Michigan Business News  blog.

For more Health News, visit the Healthcare and Medical News blog.

For more Electronics News, visit the Electronics America blog.

For more Real Estate News, visit the Commercial and Residential Real Estate blog.

For more Law News, visit the Nation of Law blog.

For more Advertising News, visit the Advertising, Marketing and Media blog.

For more Environmental News, visit the Environmental Responsibility News blog.

For information on website optimization or for the latest SEO News, visit the SEO Done Right blog.

Biggest Chapter Yet for a Poison Pen

Story first reported from WSJ.com

Daniel Loeb isn't one given to half-measures. The hedge-fund manager competes in triathlons, never, ever drinks from a plastic water bottle and is unsparing at times in his criticism of corporate executives.

That is exactly how his investors like him.

Hugh F. Culverhouse, a Miami investor whose family once owned the Tampa Bay Buccaneers football team, said he didn't give Dan Loeb his money because he is mellow.

Mr. Loeb, 50 years old, whose Third Point LLC oversees $8.7 billion, is coming off his biggest victory as an activist investor. His three-month drive against Yahoo Inc. YHOO -0.06% culminated in the May resignations of the Web-search company's chief executive and a director—and three board seats for Third Point, including one for Mr. Loeb.

Earlier this month, Mr. Loeb and his fellow directors poached Marissa Mayer from Google Inc. to serve as Yahoo's new CEO. On Monday, Ross Levinsohn, who was passed over for the job, said he is leaving the company. But while Ms. Mayer's arrival was hailed as a coup in Silicon Valley, the stock remains in a rut.

Yahoo shares have risen 17% since September, when Third Point disclosed it had amassed a more than 5% stake. But since the start of this year, the stock is down 1%, closing Monday at $15.98, and it is off 32% over five years. The company has struggled to extract more money from advertisers, and faces growing competition from Google, Facebook Inc. FB and other sites.

Because of those challenges and others, it is going to be very difficult for Ms. Mayer to turn Yahoo around, said Mark Mahaney, a managing director and analyst with Citigroup Inc. who covers Internet stocks.

Third Point bought some $39.4 million in additional stock the week after Ms. Mayer was hired. With a 6% stake valued at $1.2 billion, it is Yahoo's largest shareholder, according to securities filings. Based on information available in public filings about Third Point's stock purchases, Mr. Loeb has made around $150 million in paper profits on Yahoo so far.

The Yahoo campaign signals a new phase in Mr. Loeb's career. Until now, he was perhaps best-known for his poison-pen letters, in which he has scolded executives for everything from keeping relatives on the payroll to socializing at the U.S. Open tennis tournament. Armed with a much bigger war chest—Third Point managed just $1.7 billion as of April 2009—Mr. Loeb can now aim for bigger targets.

Other big investors have pulled back from Yahoo. David Einhorn dumped his sizable Yahoo stake last year, while Carl Icahn stepped down from the board in 2009.

A spokesman for Mr. Einhorn declined to comment. Mr. Icahn said he believed his Yahoo effort was successful.

Mr. Loeb, who grew up skateboarding and surfing in California, caught an early glimpse of the boardroom. His father, Ronald, who died earlier this year, served as general counsel at retailer Williams-Sonoma Inc. and co-wrote a textbook on corporate governance.

His great-aunt and uncle founded toy maker Mattel Inc. When Mattel Chief Executive Jill Barad resigned in 2000, Ronald Loeb stepped in as interim CEO.

Daniel Loeb graduated from Columbia University in 1983, and was a classmate of Barack Obama. Mr. Loeb worked on Wall Street as an analyst at Lafer Equity Investors and later at Jefferies & Co. and Citicorp. Borrowing space in the weight room at Mr. Tepper's Appaloosa Management LP, Mr. Loeb started Third Point in 1995 with $3 million.

Third Point's largest fund has produced an annualized return of 17%, net of fees, since December 1996. Like many fund managers, Mr. Loeb endured a brutal 2008. His largest fund, Third Point Offshore Fund, fell 33%. So far this year, the fund is up almost 5% through July 25 after being flat in 2011, according to a person close to the firm.

Mr. Loeb regularly travels to India for yoga retreats and eschews carbohydrates and sugary beverages, friends said. He is married with three children and last year completed the New York City Marathon.

Friends and investors said his decisions are unequivocal. He doesn't drink out of plastic water bottles for environmental and health reasons, and has been active in education reform and the effort to legalize gay marriage in New York.

Even his reversals can be striking: Mr. Loeb was one of then-Senator Obama's biggest fundraisers in 2008, but in July co-hosted a $25,000-a-plate fundraiser for Mitt Romney, Mr. Obama's presumed Republican opponent this fall.

He began buying Yahoo stock at about $11 a share. He believes the shares are worth somewhere in the mid-$20s based on the value he assigns assets such as Yahoo's media and advertising businesses, and its stake in Chinese e-commerce giant Alibaba Group Holding Ltd., said people close to the firm.

For more national and worldwide Business News, visit the Peak News Room blog.

For more local and state of Michigan Business News, visit the Michigan Business News  blog.

For more Health News, visit the Healthcare and Medical News blog.

For more Electronics News, visit the Electronics America blog.

For more Real Estate News, visit the Commercial and Residential Real Estate blog.

For more Law News, visit the Nation of Law blog.

For more Advertising News, visit the Advertising, Marketing and Media blog.

For more Environmental News, visit the Environmental Responsibility News blog.

For information on website optimization or for the latest SEO News, visit the SEO Done Right blog.

LinkedIn Stocks Seem Immune to Danger

Story first appeared on CNBC.

After a day of rumors and investigations, LinkedIn has formally acknowledged that some of its users passwords have been compromised.

This is the worst privacy and security news to slam the business networking service yet.

The company apologized and encouraged “best practices” to update passwords.

This is no small deal: by some reports it impacted over six million passwords, about 4 percent of LinkedIn’s users. But still, LinkedIn’s stock has been remarkably robust. At one point today it sank about 1.2 percent, but it closed the day up 9 cents, and it’s up nearly 50 percent year-to-date. Today not a single analyst issued a note in response to the news or changed a rating or stock target.

So why is the stock immune to a hack attack?

LinkedIn’s built a strong reputation on these matters. The great efforts LinkedIn has made to stay out of the spotlight on security and privacy concerns seems to have paid off. The company hasn’t drawn the outrage and concerns that Facebook has when it comes to privacy issues. This is partly due to LinkedIn’s focus on business, rather than the personal photos and details people share on Facebook. By its very nature of enabling people to share their professional profiles, there is simply less risk.

A number of Wall Street analysts say that they do not expect this news to at all impact LinkedIn usage. Why? These hack attacks and the need to change passwords are perceived as a cost of doing business in today’s digital world. As long as no one gets hurt, as one analyst put it, it’s not a big deal.

Perhaps most interesting, today’s hacking news follows media storm over LinkedIn’s mobile app violating personal privacy by improperly downloading and sharing personal details from users calendars, including conference call dial-ins and private notes. Users complained about the mobile app, and LinkedIn responded by changing its policy—it no longer downloads or shares the notes section of appointment reminders. When this news came out, the stock barely moved—ending the day less than a percentage point.

The company plans to update its privacy policy to give users more control sometime in the next few days.  We’ll hear when LinkedIn does its next quarterly report if there’s been any impact on LinkedIn traffic. But Wall Street certainly thinks that users will take today’s news in stride; they’ll change their password and perhaps click on through to connect with the service.

For information on website optimization or for the latest SEO News, visit the SEO Done Right blog.

For more national and worldwide Business News, visit the Peak News Room blog.

For more local and state of Michigan Business News, visit the Michigan Business News blog.

For more Health News, visit the Healthcare and Medical News blog.

For more Electronics News, visit the Electronics America blog.

For more Real Estate News, visit the Commercial and Residential Real Estate blog.

For more Law News, visit the Nation of Law blog.

For more Advertising News, visit the Advertising, Marketing and Media blog.

For more Environmental News, visit the Environmental Responsibility News blog.

Facebook Looks Bad As Stocks Fall Below IPO Offering

Story first appeared in USA Today.

Facebook lost a little more face Monday, as its stock fell below its IPO price and forced traders to start focusing on problems not possibilities.

Shares of the world's No. 1 social-networking site dropped below the $38-a-share offering price, a financial fat lip more typical of marginal companies or ones with unsteady financial performance.

At its depth, Facebook's shares fell to $33 a share, marking a 13% decline for even privileged investors who bought at the IPO price. Shares finished the day down $4.20, or 11%, to $34.03.

Seeing its IPO "break," as it's called on Wall Street, is embarrassing since the broad stock market jumped, with the Dow Jones industrial average adding 135 points to 12,504. Even more Facebook shares might be sold into the market in as soon as three months when select employees and other investors may sell their stock.

Facebook's disappointing debut is especially troubling as it:

•Showcases technology issues at the Nasdaq. Traders griped Friday they were not getting confirmations from the Nasdaq exchange indicating the status of orders, Ahmed says. Trading was reported as going smoothly on Monday.

•Underscores a sharp reversal for the IPO market. Just as the IPO market seemed on the upswing, Facebook punctuated a big reversal. Of 124 companies that went public the past 12 months, 50 are trading below their IPO prices, says a USA TODAY analysis of data from IPOScoop.com.

•Serves up another confidence killer for investors. Investors who bought Facebook stock got a big lesson on volatility. Facebook's botched debut comes as IPOs and the broad market have been weak. The FTSE Renaissance U.S. IPO index is up just 1.5% this year, and the Dow has fallen nearly 6% this month.

Facebook's stock woes don't directly hurt the company. Facebook must prove it can achieve the huge profitability bullish investors predicted.

For more information on website optimization or for the latest SEO News, visit the SEO Done Right blog.

For more national and worldwide Business News, visit the Peak News Room blog.

For more local and state of Michigan Business News, visit the Michigan Business News blog.

For more Health News, visit the Healthcare and Medical News blog.

For more Electronics News, visit the Electronics America blog.

For more Real Estate News, visit the Commercial and Residential Real Estate blog.

For more Law News, visit the Nation of Law blog.

For more Advertising News, visit the Advertising, Marketing and Media blog.

For more Environmental News, visit the Environmental Responsibility News blog.

Facebook Stocks Didn't Jump As High As Expected

Story first appeared in USA Today.
Facebook didn't make too many friends Friday.

After jumping 18% in early trading upon its much-hyped initial public offering, its gains quickly evaporated.
By day's end, shares of the world's largest social networking company finished at $38.23, barely above its $38 offering price. (In aftermarkets trading, shares were trending higher).

Facebook raised about $16 billion through the sale, which gave the company a maket value of about $104 billion. But its lackluster public debut deflated the pre-IPO hype that had floated in the business press and on Wall Street for weeks. Many market prognosticators had expected Facebook shares to surge Friday. But after an early pop to $45, it was mostly downhill.

Traders and market observers blame the lackluster performance on heavy trading demand that delayed Nasdaq processing market orders and over-optimism by Facebook's investment bankers, who boosted the IPO's size and share price from a range of $28 to $35 a share. Wall Street's continued slump also hurt. Stocks fell for the 12th time in 13 sessions Friday on fears over the slowing global economy and mounting financial woes in Europe.

Big IPOs and big deals often mark the top of major market moves. This is a very big IPO that was well-followed and well-hyped. When you see big investors exit or start to take profits there is a reason to believe that there is substantial downside ahead. Markets are very, very weak and very vulnerable.

That the stock didn't fall below its $38 IPO price suggests that underwriters who brought the deal to market swooped in to buy shares to prop it up, for fear of a public relations disaster. The investment bankers came in; they had to jump in and buy the stock. They couldn't have such a hyped IPO come down below the offering price.

The drop in price doesn't mean there was a lack of trading. By day's end, nearly 480 million shares traded, a record for a first-day offering.

Before the stock opened, there were so many last-minute orders at the Nasdaq exchange that trading, expected to start at 11 a.m. ET, was delayed 30 minutes. Marketplaces and other broker/dealers experienced severe slowness, and unfortunately, those issues impacted customers.

Given the size and complexity of the offering, the number of investors involved, the early glitch and trading delays were not surprising.

When you have an IPO with this kind of huge spotlight shining on it, you want it to come off clean. It might just be frustration in the short run but doesn't do long-term impact to investor sentiment.

Born in a Harvard University dorm room in 2004, Facebook has become part of the social fabric of more than 900 million worldwide users.
Despite the barely-above-the-IPO close, Facebook enriched scores of employees, including the hoodie-wearing founder and CEO, who sold 30 million shares worth more than $1.1 billion. He will remain Facebook's largest stakeholder.

Before trading started, people huddled outside the windows of the Nasdaq site in New York's Times Square, waiting for the stock to open. Some held up cellphones and cameras pointed at the Nasdaq board, waiting to get a picture of the first price change.

Facebook's rich valuation comes as it tries to cement its role in the Internet. While Facebook had about $1 billion in earnings last year on revenue of $3.7 billion, the company still has to prove it can find ways to boost profits.

Going into the IPO, there has been a lot of skepticism from investors, in particular institutional investors, questioning anything from whether the price of the stock is fair, to whether Facebook can successfully monetize and sell ads. It's nice to have the stock up for one day, but it's only one day. It's hard to extrapolate much as to the future of the company."

In coming days, investors expects plenty of ups and downs for the stock, as investors assess a company whose prospects are hard to pin down because of its evolving business model. You're going to see obviously an extreme amount of volatility over the next week as people evaluate the stock.

For more information on website optimization or for the latest SEO News, visit the SEO Done Right blog.

For more national and worldwide Business News, visit the Peak News Room blog.

For more local and state of Michigan Business News, visit the Michigan Business News blog.

For more Health News, visit the Healthcare and Medical News blog.

For more Electronics News, visit the Electronics America blog.

For more Real Estate News, visit the Commercial and Residential Real Estate blog.

For more Law News, visit the Nation of Law blog.

For more Advertising News, visit the Advertising, Marketing and Media blog.

For more Environmental News, visit the Environmental Responsibility News blog.