T. Rowe Owning Facebook Shares Bets This Will Be Different

As Facebook Inc. prepares what may become the biggest IPOever by an Internet company, the Baltimore-based asset manageris betting this time is different. T. Rowe holds the biggeststake of any mutual-fund company in Facebook, the world'slargest social-networking service. It is as well among the mainholders of Zynga Inc., Angie's List Inc. and LinkedIn Corp., allpublic companies, and has put money into Twitter Inc. andLivingSocial.com, which are closely held.

T. Rowe, which manages $490 billion, taking everything into consideration in equities, istelling investors that Internet companies are more mature nowthan while the 1990s, when companies with no revenues prospectswent public. The current Web companies have greater potentialand are furthermore along in their development, T. Rowe Price saidin a report to shareholders last year titled "A New Era ofInternet Investing."

The hype of the dot-comworld

"They didn't get caught up in the hype of the dot-comworld, however they seem to be saying they see value in some ofthese new companies," Geoff Bobroff, a mutual-fund consultantin East Greenwich, Rhode Island, said in a telephone interview.

Facebook filed to raise $5 billion in what would be thelargest Internet IPO on record. The amount is a placeholder usedto calculate fees and may change.

Heather McDonold, a spokeswoman for T. Rowe, declined tocomment on Facebook and the firm's other Internet investments.The company, she said, is managing risk by keeping theinvestments small as a percentage of its funds.

Internet and social media stocks rose today afterwards Facebookfiled its IPO. As of 1:30 p.m. in New York trading, Zynga shareshad gained 23 percent since the company's own IPO; Angie's Listwas up 11 percent; LinkedIn had climbed 70 percent; and Grouponhad risen 15 percent.

Fidelity Investments, whose funds can invest in a limitedamount of illiquid assets, typically acquires non-traded sharesdirectly from the issuer because it can negotiate certain rightswith the purchase, said Kristina Salen, global sector leader formedia, Internet and telecommunications at the Boston-based firm.

Lot of time with private companies

"We spend a lot of time with private companies," she saidin a telephone interview. "It doesn't necessarily mean we willinvest in them."

The research-heavy Nasdaq Composite Index lost 66 percentof its value between June 30, 2000 and Dec. 31, 2002, accordingto data compiled by Bloomberg. T. Rowe Price's shares fell 33percent over the same stretch, including reinvested dividends.Denver-based Janus Capital Group Inc., which had a reputationfor more aggressive investing, dropped 70 percent.

"T. Rowe came out of that bear market in pretty good shapebecause of their conservative nature," Russel Kinnel, directorof mutual-fund technology at Morningstar, said in a telephoneinterview.

T. Rowe Price is the third-largest holder of Mountain View,California-based Google Inc., the fourth-largest holder ofSeattle-based Amazon.com Inc. and one of the biggest inCupertino, California-based Apple Inc. The three technologystocks represented the firm's largest positions as of Sept. 30,data compiled by Bloomberg show.