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Fund Times

Fund Makes Facebook Available to the Masses

At least one mutual fund has been able to grab hold of some shares of the social networking company.

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Goldman Sachs' controversial Facebook investment offering in January was out of the reach of most investors, but at least one mutual fund has been able to grab hold of some shares of the social networking company for its shareholders. At the end of 2010, Dennis Lynch and his team of growth managers quietly added small stakes in Facebook Class B common stock to all of their large-cap-oriented funds. For a relatively reasonable initial minimum investment of $1,000, now all investors can get a small slice of Facebook via  Morgan Stanley Focus Growth (AMOAX) or  Morgan Stanley Capital Opportunities (CPOAX). The table at the end of this article summarizes the amount of Facebook stock that each of Lynch's funds held as of Dec. 31, 2010.

What's intriguing is that it appears Lynch was able to buy Facebook shares for his funds before Goldman Sachs' January 2011 $50 million investment that valued the company at $50 billion. Morgan Stanley and Lynch have kept tight-lipped about where they obtained their shares, only telling us that it was through a private transaction. Using The Wall Street Journal's history of Facebook valuation points, the timing of Lynch's purchase and its large size suggest that he might have acquired the funds' $59 million stake from venture capitalist Accel Partners, which sold about 15% of its stock in November 2010 for $517 million. (As a private company, Facebook and its shareholders aren't required to make any SEC filings detailing sales or purchases, even for very large transactions.) The Accel deal valued the company at $35 billion. If that's the case, Lynch's stake may have already appreciated by more than 40%, based on the January Goldman Sachs valuation.

Janet Yang, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.