Fidelity Funds Sold 1.7 Million Facebook Shares After IPO

Fidelity Investments, an early investor in Facebook Inc. (FB), disclosed that 19 of its stock funds sold 1.7 million shares in June, the month that followed the social-networking company’s botched initial public offering.

The biggest sellers included the Fidelity Puritan Fund (FPURX), which sold 623,800 shares, cutting its total stake to 1.85 million, according to Fidelity data compiled by Chicago-based Morningstar Inc. (MORN) Fidelity Disciplined Equity, managed by Keith Quinton, sold 444,800 shares, leaving the fund with a total of 493,371 Facebook shares at the end of June.

Facebook and some existing stockholders raised $16 billion through the IPO, a record for a technology company, after increasing the number of shares offered by 25 percent and boosting the price to $38 each. The IPO was plagued by trading errors and the stock has since lost almost half its value, closing today at $20.04 in New York.

Stephen Austin, a spokesman for Boston-based Fidelity, said that the firm’s portfolio managers make investment decisions every day for what they believe are the best long-term interests of each fund’s shareholders. Fidelity doesn’t comment on individual holdings, Austin added.

Fidelity’s website discloses the holdings of its individual mutual funds at the end of each month. The most recent data available is for June. The Wall Street Journal reported Fidelity’s sales of Facebook shares earlier today.

A pedestrian passes a Fidelity Investments branch in New York. Photograph: Victor J. Blue/Bloomberg Close

A pedestrian passes a Fidelity Investments branch in New York. Photograph: Victor J. Blue/Bloomberg

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A pedestrian passes a Fidelity Investments branch in New York. Photograph: Victor J. Blue/Bloomberg

Danoff’s Fund

Last year, Fidelity said in regulatory filings that its funds were buying stock in Facebook, whose shares traded at the time on private markets such as SecondMarket Inc.

The $82 billion Fidelity Contrafund (FCNTX), run by William Danoff, invested $74 million in Facebook Class B common stock during the first quarter of 2011, according to a filing that May with the Securities and Exchange Commission. The fund acquired 2.97 million Facebook shares for about $25 each, the filing showed.

Contrafund, Fidelity’s largest stock fund, held about 3.46 million Facebook shares as of March 31. By the end of May, Contrafund’s stake had jumped to 13.44 million shares, according to Morningstar. Danoff bought another 264,000 Facebook shares in June, raising Contrafund’s total stake to 13.7 million shares. By June 30, Contrafund held more Facebook shares than any other single mutual fund included in Morningstar’s data.

Fidelity Independence, run by Robert Bertelson, added 200,000 shares to its holdings during June, while a pair of Fidelity Index funds bought 1.33 million shares the same month.

According to Morningstar, 42 Fidelity stock funds held a total of 31.4 million Facebook shares as of June 30. The research firm also reported that two of Fidelity’s high yield funds had acquired a total of 564,359 Facebook shares as of April 30.

To contact the reporter on this story: Miles Weiss in Washington at mweiss@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

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