Henry Blodget, former cheerleader for the dot-com bubble and now editor-in-chief of The Business Insider website, names the big fund managers that got taken to the cleaners with the Facebook IPO in an article published yesterday.
"The lure of Facebook seduced everyone, even the smartest of the smart money," Blodget says in the article. "Actually, the smart money gets it wrong quite often--about 50% of the time, in fact."
That's why, he confides, he invests in index funds rather than actively managed funds. "Because after 20 years in and around Wall Street, I've realized that even the most brilliant money managers aren't brilliant enough to consistently beat index funds after deducting their huge fees. So I'd rather pay less and be guaranteed to beat 75ø0% of these managers, the way I do with Vanguard."
Among the fund managers that loaded up on Facebook are:
Baillie Gifford: "Baillie bet ~$700 million on 19.4 million Facebook shares in and around the IPO. Those shares are now worth about $350 million," says Blodget.
Fidelity: "Fidelity bought 18.8 million shares of Facebook for ~$700 million in and around the IPO. If you own a Fidelity 'growth fund' or 'tech fund' or 'balanced large cap' fund, they probably bought some Facebook for you. Oops," Blodget says.
Morgan Stanley Investment Management: "MSIM owns 16.4 million shares of Facebook, which used to be worth $623 million."
UBS Global Asset Management: "The firm also bought 11.9 million shares of Facebook for its clients--a ~$450 million bet of which about $225 million remains."
Sands Capital Management: "Sands bought 11.6 million shares of Facebook for ~$440 million..the value of Sands' stake is..down to about $220 million now."
BlackRock: "10 million shares"
Jennison: "9.7 million shares"
Vanguard: "9.6 million shares.. Alas, Vanguard's low-cost index funds appear to have loaded up on Facebook, because Facebook is an important stock in the market benchmarks. So I probably own Facebook," Blodget laments.
Janus Capital Management: "6.7 million shares"
State Street: "6 million shares"
T. Rowe Price: "6 million shares"
Mary Schroeder writes for Securities Technology Monitor.
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