Institutional holdings were just made public on Thursday afternoon. The results always vary by company, but it is very clear that the Big Money had already jumped into Facebook (FB) ahead of the rest of the crowd. New and increased positions at the end of Q2 totaled 321,477,643 shares versus decreased and sold out positions of 137,215,443 shares.
Facebook Institutional Ownership Summary:
|Ownership Analysis||# of Holders||Shares|
|Total Shares Held:||748||916,988,205|
|Holders With Activity:||660||324,557,864|
|Sold Out Positions:||74||38,231,511|
Top 15 Facebook Institutional Owners:
|Owner Name||Date||Shares Held||Chg Shares||Chg%||Value 1,000s|
|VANGUARD GROUP INC||06/30||46,160,109||4,531,884||10.89||1,687,614|
|SANDS CAPITAL MANAGEMENT, LLC||06/30||35,724,981||690,411||1.97||1,306,105|
|PRICE T ROWE ASSOCIATES INC /MD/||06/30||30,798,011||(13,277,813)||(30.13)||1,125,975|
|STATE STREET CORP||06/30||26,715,485||11,827,272||79.44||976,718|
|JENNISON ASSOCIATES LLC||06/30||24,583,587||3,699,872||17.72||898,776|
|BAILLIE GIFFORD & CO||06/30||23,690,777||288,482||1.23||866,135|
|BARCLAYS GLOBAL INVESTORS UK HOLDINGS LTD||06/30||23,550,491||9,715,722||70.23||861,006|
|PARAMETRIC RISK ADVISORS LLC||06/30||20,475,434||20,475,434||New||748,582|
|AMERIPRISE FINANCIAL INC||06/30||17,385,711||(166,501)||(0.95)||635,622|
|ELEVATION MANAGEMENT, LLC||12/31||16,989,027||16,989,027||New||621,119|
|UBS GLOBAL ASSET MANAGEMENT AMERICAS INC||06/30||15,321,204||(1,861,083)||(10.83)||560,143|
|MAIL.RU GROUP LTD||06/30||14,210,507||14,210,507||New||519,536|
In early June, it became apparent that a lot of analysts were suddenly getting "bullish" on Facebook. At that time the shares were trading for as low as $22.67, and many investors were still leery of the company. The end of the quarter, on June 30, was when the above institutional funds owned what they are reporting now. The stock sold for $24.97 at that time. Record earnings were then reported on July 24, and caused the shares to jump 30% the next day. Facebook eventually hit a new 52 week high of $39.32 on August 5:
Prices of Facebook Stock Reported Weekly:
|Date||Open||High||Low||Close||Avg Vol||Adj Close*|
|* Close price adjusted for dividends and splits.|
In the meantime there has been a lot of negative chatter on financial sites, blogs and articles about the insider stock sales at Facebook this summer. According to Yahoo Finance, 4.7% of the insider shares have been sold in the last 6 months. This number is skewed due to Zuckerberg's shares. But all of the sales were "automatic sales" sold under a 10b5-1 plan. These sales (to me) are meaningless because they do not offer any investing information whatsoever:
|Net Share Purchase Activity|
|Insider Purchases - Last 6 Months|
|Net Shares Purchased |
|Total Insider Shares Held||194.78M||N/A|
|% Net Shares Purchased |
Insiders create a 10b5-1 trading plan to either buy or sell in advance of the actual trade which usually will take place on a specific date or dates. The plan must be set up before the insider has any non-public inside trading information:
For example, executives may want to purchase shares throughout the calendar year. To do so, they (under the plan) purchase a fixed number of shares at specified dates, such as the first trading day of the month. The transaction is automatic. The insider will be safe even if he or she has insider information at the time of the sale, as long as the plan was set up when no material non-public information was known. Conversely, if an insider wants to diversify his or her holdings but doesn't want to sell a large portion of stock at any one time for fear that it might send the wrong message to the investment community, the individual may set up a plan that liquidates 1,000 shares per month over the next year. Again, the trades are automatic and take place at a set point in time.
So I think this is just a lot of FB insiders diversifying their portfolios. The money has probably been burning a hole in their pockets since the IPO over a year ago. If not, and they were betting against the company, they all bet wrong.
The big question now, is where is the stock headed from here? The jump in share price last month was due to Facebook's ability to produce mobile ads and the new reports that video ads will generate a tremendous amount of revenue for the company in the near future. According to Mashable:
A report released by Morgan Stanley on Wednesday predicts that Facebook's video advertisements will generate more than $1 billion in 2014 - a lofty total considering they don't exist yet. This total would constitute 1% of all television ad spending in the United States. Morgan Stanley predicts Facebook's video ads could generate as much as $6.5 billion by 2020.
Analysts are already estimating Facebook's revenue for 2013 to be $7.31 billion, up 44% and 2014 sales to be up an additional 30% at $9.5 billion. Another billion dollars will just be icing on the cake in 2014. They also had predicted EPS of 14 cents for Q3, but that number has just jumped to 18 cents in the last 7 days. Ironically Morgan Stanley reduced its FB shares by 8.59% in Q2 (see the chart above).
Many investors continue to think that the stock is overpriced, but it would take a major event to drop the shares much lower based on these new numbers. I think that it will bust through its current high target of $46 in 6 to 8 months. If there is a correction this fall, I plan to buy the dip.