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Broken Stock: U.S. Fund Managers Are Selling Millions of Facebook Shares and Investing in Other Companies — 5 Points

1. According to Reuters, Facebook’s “losses are becoming other companies’ gains.” In response to the social media company’s declining profits and tainted reputation, 93 United States mutual funds have completely sold out their positions in Facebook this year.

2. Specifically, Fidelity Investments, The Hartford, and Putnam Investments have liquidated their 12 million shares in Facebook. Jana Partners and Third Point LLC have “together sold nearly 3.7 million Facebook shares in the third quarter.”

3. U.S. mutual funds are instead putting their money towards payment companies such as Visa, Worldpay and consumer companies like PepsiCo and Chef’s Warehouse. Other investors are are moving their investments towards “growth-focused hedge funds.”

4. Jim Hamel, portfolio manager of the Artisan Global Opportunities Fund, said, “The revelations in the first quarter of 2018 about data privacy issues and the growing global concerns about data security and the potential for increased regulation made it challenging to handicap the required investments to remedy some of these issues.” Essentially, many think Facebook is going to continue to lose profits, so they are moving their investments elsewhere.

5. Facebook’s future, in terms of luring investors, looks murky. According to Todd Rosenbluth, director of mutual fund research at independent research firm CFRA, “Once a company gets put into the penalty box by a growth investor it’s hard to get out. When a stock is perceived as a broken growth stock it loses its appeal.”


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