With the bullish results from Facebook Inc (NASDAQ:FB), will it push GSV Capital Corp (NASDAQ:GSVC) back towards book value? The stock trades considerably below book value due partially to the poor results of that stock in the public markets.
The company is a publicly traded investment fund that specializes in venture-capital backed pre-IPO firms.
Anybody following GSV Capital Corp (NASDAQ:GSVC) knows that the company went public back in 2011 to take advantage of the slowdown in emerging growth stocks such as Facebook Inc (NASDAQ:FB) going public. The company was supposed to benefit from the huge gains in the public markets from social media stocks, but it eventually blew up after Facebook Inc (NASDAQ:FB) didn’t fare well in the public markets.
About more than Facebook
Though the stock slumped back in May 2012 when the Facebook IPO bombed, the GSV Capital Corp (NASDAQ:GSVC) barely counts it as a top 10 holding. In fact, the Twitter, Inc. investment is worth nearly four times that of Facebook Inc (NASDAQ:FB) with a 14.4% position size in the fund. Other fast-growing tech firms such as Palantir Technologies, Dropbox, and Violin Memory have position sizes around double that of the social media giant.
Top 10 Positions
Regardless of whether the company is vastly more than the Facebook Inc (NASDAQ:FB) position valued at only $9 million of a $245 million fund, the stock appears to move based on it. With Facebook reporting Q2 2013 earnings that easily beat estimates and caused the stock to surge, it should bode well for GSV Capital Corp (NASDAQ:GSVC). The stock plunged from $21 to below $7 following the failure of the Facebook IPO and the eventual collapse of smaller investments in Groupon Inc (NASDAQ:GRPN) and Zynga Inc (NASDAQ:ZNGA), which the company exited during Q1 with a combined $3.3 million loss after taking previous write-downs.
Book value discount
With the book value declining in previous quarters, it probably isn’t a big shock that the stock struggles to maintain that level. Clearly the discount provides an incredible opportunity if the company can start growing the valuation. At the end of March, the stock had a book value of $12.69 with net assets of $245 million and nearly 10% of those assets in cash. Unfortunately that book value has been declining with a value of $13.07 back at the end of December.
With the lack of a hot IPO, GSV Capital Corp (NASDAQ:GSVC) has yet to live up to its initial hype of providing investors with diversified positions in private firms that soar in value during the IPO process. Several opportunities exist to prove that potential with IPOs of Twitter and Palantir Technologies in late 2013 or early 2014.