T. Rowe Price invests millions in Facebook, Twitter, other social media companies

Investments are a small fraction of company's total investments

April 18, 2011|By Andrea K. Walker, The Baltimore Sun

Investment company T. Rowe Price has invested $461.3 million across several mutual funds in Facebook, Twitter and other social media companies, according to regulatory filings.

The investments make up only a small fraction — less than 1 percent — of each fund's portfolio, but show the growing interest by investors to buy a stake in social media companies poised to eventually initiate a public offering.

Price had $482 billion in assets under management at the end of last year.

A Price spokesman said that the social media investments follow the company's history of investing in emerging growth companies.

"What we are seeing today is the emergence of social media companies, which is an evolution of that," said the spokesman, Edward Giltenan. "What we try to do is invest in innovation. It drives change across the economy."

The company has taken a conservative approach investing small amounts to reduce some of the risk that comes with these companies.

Price has invested $190.5 million across 19 funds in Facebook as of March 31 — its largest investment in a social media company. It also has invested $66.6 million across three funds in Twitter, $86.8 million across five funds in Groupon, $71.8 million across five funds in Zynga, $10.3 million across three funds in Ning and $35.3 million across three funds in Angie's List.

Social media companies are hard to put value on because they are not public entities required to report their finances, some analysts say. The long-term success of the companies is also harder to gauge because factors such as technology trends and consumer interest that can quickly change.

"We think there is tremendous opportunity, but in this business, tremendous opportunity comes sometimes with significant risk," Giltenan said. "We manage risk very carefully by managing our position sizes in these companies."

andrea.walker@baltsun.com

twitter.com/ankwalker

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