You May Own A Piece Of Facebook

By Scott Austin, Wall Street Journal

While venture firms, wealthy individuals and Wall Street all clamor for shares in Facebook Inc. ahead of an initial public offering, the little guy is left wondering, “How do we get in, too?”

It turns out you may already indirectly own a microscopic stake in Facebook and other private companies, and don’t even know it–if you don’t read all of your mutual fund’s materials.

That’s because mutual fund companies, which usually buy shares in publicly traded companies, also occasionally invest in private ones, too, through the secondary markets or via direct investments. And several of them have been gobbling up shares in Facebook and other hot private companies.

T. Rowe Price Group disclosed many of its funds have recently invested in Facebook, holding stock worth about $190 million in total. The firm, through these funds, also has smaller holdings in other hot Internet companies, such as Groupon, Zynga and Twitter, and even the lesser-known reviews site Angie’s List. T. Rowe invested in Twitter in 2009, but the others weren’t publicized.

While these investments are minuscule relative to the funds’ overall portfolio, they do give average people a chance to take part in the Web investment boom in a small way. T. Rowe’s Global Technology Fund, for instance, requires a $2,500 minimum investment, and it owns $1.7 million each of Facebook and Groupon stock (as of March 31), $1.1 million of Zynga and $2.5 million worth of Angie’s List.

We dug through the regulatory filings and found a bunch of other individual investor-friendly mutual funds with stakes in not only Facebook, Zynga and Groupon Inc., but also lesser-known upstarts like Better Place Inc., a maker of electric-vehicle charging stations, and Trion World Network Inc., a gaming company.

Morgan Stanley’s Focus Growth fund, which owns big technology stocks like Amazon.com and Google and requires a $1,000 minimum investment, reported in a recent filing that it owns 1.6 million shares of Facebook at a value of $31 million as of Dec. 31, or about $20 a share–that’s about a $50 billion valuation, the price Goldman Sachs paid for its much publicized $1.5 billion investment earlier this year. Morgan Stanley is not a previously reported investor in Facebook. According to filings, five Morgan Stanley funds own a total of at least $55 million of Facebook stock.

Another fund, Morgan Stanley Capital Opportunities Trust, also with a $1,000 minimum, owns a paltry $1.9 million of Facebook stock as of Dec. 31, and $1.7 million of Better Place. A third Morgan Stanley fund, the Mid Cap Growth Fund, which seeks long-term capital growth, owns $2.9 million worth of Groupon shares as of Dec. 31, and $1.5 million of Better Place.

Fidelity’s Advisor New Insights Fund, with a $2,500 minimum bet, owns $17 million worth of Groupon, $3.2 million of Ning Inc., which helps people create their own social-networking site, $316,000 in social bookmarking site Digg Inc., and $2.8 million in Trion World.

Because these investments are so small relative to the mutual funds’ portfolios, they don’t have a major effect on the returns. But they have the potential to deliver explosive results.