Meaning: if you own it, you get to know about Facebook's financials, even though it is a private company.
This type of stock is the kind of stock that the biggest Facebook investor you've never heard of likes to acquire for his hedge fund.
His name is Chase Coleman, and he runs a hedge fund called Tiger Global – best known for its huge returns and long positions in companies like Apple, Google, and LinkedIn.
Chase is 33 or 34, married to a pretty blonde named Stephanie, and very, very rich. The most recent estimate we've seen of his income was $350 million to $400 million per year. He's been running Tiger Global since 2001, so he's likely a paper billionaire. He's got an ornate apartment on Manhattan's Upper East Side.
Hedge funds don't have to disclose their positions in private companies – and Tiger Global is particularly press shy – so we had a hard time nailing down exactly how Coleman came up with his stake in Facebook, how he landed information rights, and how large his stake is.
The gossip is that Colemen bought in back in late 2009. Conveniently, that is also when, according to the Facebook Effect author David Kirkpatrick, Facebook's first outside investor, Peter Thiel, began to sell half of his 6% stake in the company. Thiel owned preferred shares with the kind of info rights Coleman is after, so maybe that's where Tiger got some of its stake. Kirkpatrick suspects Thiel sold most of his stake to Russian holding firm DST.
If Tiger did get its Facebook stake back then – and really, we're just speculating here – Coleman has done well.
Back then, preferred shares valued Facebook around $20 billion (at the very most). Today, Goldman Sachs is selling its clients common shares of Facebook at a $50 billion valuation. If Tiger bought half of Thiel's stake, it's made $900 million for its clients in the past year.
Anyway, the idea that some Facebook shareholders have more information on their hands then other shareholders has some tricky implications.
For one, it suggests that if Chase Coleman is trying to sell you his stake, he might know something bad about the company that you don't. (Then again, Thiel knew Facebook's financials and he sold his stake.)
For another, investors looking for exposure to Facebook could do worse than putting their money with Tiger – where the guy running things at least knows how well Facebook's business is actually doing.
Finally, we think the SEC will eventually do something about the fact that a "public" market for Facebook shares is obviously developing and that some investors know more about the company than others. We think the SEC will require Facebook to register as a public company and disclose its financials to everyone.
Whether that means Facebook will IPO depends on whether the company thinks it can use the cash. Since the company would only have to sell second-class, non-voting shares, we think it will go for it. Why not?
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