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Huge Facebook IPO, Small Impact on Funds

Plus, Thornburg loses Growth manager and more. 

Morningstar Fund Analysts, 02/06/2012

Facebook's long-awaited and much-hyped public debut is finally here. The social-media giant filed its initial public offering with the SEC on Feb. 1, 2012. While the filing provided for the first time specific details about Facebook's financial health, it did not mention whether the shares would begin trading in a few months or even in 2012 (and at what price). The deal reportedly could raise $5 billion and value the company between $75 billion and $100 billion.

Facebook's IPO will be huge for founder Mark Zuckerberg and a few company insiders and early investors. But it probably won't be as much a boon for mutual fund investors. Morningstar research shows 50 funds have Facebook ownership stakes (in either the company's A and B shares or both). Funds offered by T. Rowe Price TROW, Fidelity, and Morgan Stanley MS are among the firms with the largest aggregate share totals. But most of the shares owned by those firms are spread across diversified funds such as T. Rowe Price Growth PRGFX and Fidelity Contrafund FCNTX and represent a tiny amount of their overall assets. (Click here to read how Contrafund's Will Danoff purchased shares.) Even a wildly successful IPO probably won't move the performance needle at those offerings. Morgan Stanley may see the biggest boost among the three because Facebook shares in its funds constitute the largest percentage of assets among the 50 offerings, around 3% or so. (As reported earlier in Fund Times, Morgan Stanley managers valued their shares at around $25 each, a lower price than others.)

Below is a sampling of funds that own Facebook shares as of their most recent filing. 

Thornburg Loses Seasoned Growth Manager

Alex Motola, a key portfolio manager at Thornburg Investment Management, has decided to leave the firm this year. Thornburg didn't mention a specific date for his departure, adding that he would remain a member of the equity team in the interim.  

During a 12-year stint at the firm, Motola ran both Thornburg Core Growth THCGX and Thornburg International Growth TIGAX using the firm's long-standing strategy of combining growth stocks of varying risk/reward profiles. While Core Growth experienced deep losses in 2008 and had since stumbled in the category rankings, its 10-year record under Motola through Jan. 31, 2012, still elevated it to the top 5% of the large-growth peer group. International Growth, which Motola had helped run since its 2007 launch, also performed poorly in 2008. But its three-year annualized return of 26.9% through Jan. 31, 2012, landed it in the top 5% of its respective peer group, too. Motola, who reportedly wants to spend more time with his family, is handing the day-to-day responsibilities for these funds to Tim Cunningham and Greg Dunn. They've worked closely on both, especially since being named associate portfolio managers in 2009. Cunningham and Dunn will now be named managers.

Thornburg has seen other managers depart the firm in recent years. Brad Kinkelaar and Cliff Remily, who previously helmed Thornburg Investment Income Builder TIBAX just helped PIMCO launch two dividend-focused funds. (Read Morningstar's take here.) Investors, though, shouldn't overreact to these exits. While they were solid managers, the firm still has a deep bench and continues to be a solid steward of shareholders' capital.

Morningstar fund analysts cover more than 1,700 mutual funds and write regular commentary covering fund industry news, fund investing trends, picks, portfolio planning, international investing, and more.
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