Hedge Funds Gobbling Up Facebook After Dreadful Q2 Earnings Report

November 15, 2012 James Heinsman Hedge Fund News

Andreas Halvorsen of Viking Global Management

Facebook, the exceedingly popular social media platform, is being bought up by a few top hedge fund stock pickers after shares of the company lost 32 percent of their value in just one week. Although Facebook has not had trouble enlarging its user base steadily over the years, translating that popularity into a solid source of revenue for stockholders has been elusive since the company went public earlier this year.

The opening price for Facebook when it went public this past May was an apparently too high $38 a share, which soon dropped to about $30 just after a few months of trading. But the most severe loss for Facebook shares came on July 26, when the company reported an extreme slowdown in revenue growth. The problem was compounded by the fact that Facebook did not offer financial forecasts which could have assuaged the fears investors had about their ability to increase advertising growth.

Within a week of that report the share price dropped 32 percent, reaching an all-time low price of $17.73 on September 4. Since that date Facebook has been slowly recovering, and some of the biggest names in hedge fund management have been purchasing shares in large numbers.

Andreas Halvorsen of Viking Global Management got interested and bought 4.1 million shares during the third quarter. Phillippe Laffont’s Coatue Management purchased 1.4 million shares. Tiger Global also took the plunge, increasing their position from only 2 million shares three months ago to a cool 11.7 million shares. Tiger Consumer Management is now in control of 1.8 million shares.

The interest in Facebook seems to be helping. On Wednesday the stock leapt up by 13 percent to close at $22.36. Traders were relieved to see that expiring trade restrictions on a giant block of shares did not trigger an instant explosion of insider selling.
 

Andreas Halvorsen, Coatue Management, Facebook, Phillippe Laffont, Tiger Consumer Management,

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