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Chris Stewart New York, United States Ocelot Financial is a Fee Only financial planner based in New York. We use a conservative goal oriented methodology in our recommendations. We focus exclusively on managed accounts - we feel that maintaining transparency is important and ensures that our... More
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  • If The VCs Thought Facebook Was Going Up, They Wouldn't Be Selling - It's That Simple 0 comments
    Aug 21, 2012 11:22 PM | about stocks: FB

    Fred Wilson of Union Square Ventures has written a lovely blog post

    www.avc.com/a_vc/2012/08/lockups-and-insider-selling.html

    about why the VC should be dumping their Facebook stock as soon as possible and why that doesn't mean you should be dumping it too.

    He does make some good points, however, he's probably dumping his Facebook (NASDAQ:FB) shares right now and would probably appreciate it if you weren't cutting his profits by selling your Facebook shares before him.

    If you own 10% of a firm, you can't simply log into your online brokerage account and sell one million shares. There's not enough people who want to buy the shares - it can take days or weeks for a VC to unload their stake.

    And if retail investors understand that and get out too, it cuts how much he gets when he unloads his shares. If you sell tomorrow morning, you're probably selling in the middle of him dribbling his shares into the market. And I don't think he would like that at all.

    He's absolutely truthful about some things.

    1. His job is to make the most money for his clients.

    2. This generation did not invent sex.

    I won't really spend much time on item #2 (sadly), but I will discuss item #1. If he thought that Facebook stock was going to make the most money for his investors going forward, he wouldn't be selling his shares.

    If he really thought Facebook shares were a good deal, he would state publicly "We think Facebook is a great company with a great future and its investors will be richly rewarded and we are holding all our shares" and then we'd all be able to see how many shares he had when his next public filing came out. If he put his reputation on the line and promised not to sell - and then didn't sell, he'd have a great reputation for the next time he promised not to sell. And his next public venture would do better.

    But no - he used disclaimers and claimed that his post had nothing to do with whatever his partnership might be doing, like selling as quickly as possible.

    I'm just saying. I don't know who has sold stock or what anybody's firm might be thinking. But don't believe that massive selling isn't a negative signal for the stock. It's exactly what it is.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: FB
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