Peter Thiel, one of Facebook's earliest investors, has gotten the authority to sell more of his shares in the social networking site, according to this article.
Thiel's stake is worth more then $550 million, according to the story, and he's converted more than 9 million shares to the more easily traded Class A shares, than Class B, which give holders greater voting power. That means he's effectively ceding some of his control of the Facebook.
We're one day away from the expiry of the lockup on investor share sales so it'll be interesting to see who ends up selling - and how much more the stock will drop. Shares are now down 46 percent since the website's May IPO.
3 comments:
Despite the fact that the Facebook IPO has been a basic flop, Thiel will still be selling his shares at a nice premium. His average share price is below where the market is currently.
I'm still a bit confused as to why he would be looking to sell at these levels (of course, just because he agreed to convert his holdings doesn't mean he's going to sell them all). He doesn't need immediate liquidity, and it may do him justice to wait for a recovery in the share price before reducing his position.
Thanks, Ms. Weed. I knew that his fund was down, but I was not aware of how dismal the performance really was. If, in fact, it hasn't recovered, then his Facebook conversion makes perfect sense. He can get out while he can, show a positive, albeit somewhat suboptimal return to offset the really bad losses that he's been having. As I mentioned above, his average entry cost is below the current market, despite the flameout on the IPO.
(reposting for typos)
He might be signalling that there won't be a recovery in the share price. His own fund has not been a huge hit. As of late 2010, Thiel's fund Clarium Capital Management, had lost 90 percent of assets from its peak.
I'm not sure how the hedge fund has performed since then but that's a huge hit. In the middle of 2008, Clarium maanged $7 billion. He made some losing bets on oil prices, currencies and stocks -- and his technology hits aside from Facebook are PayPal, zynga and LinkedIn. Those bets made him a billionaire.
So one could make the case that he's cutting lossses/taking profits off the table, to hedge Facebook's fall.
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