Tags: Invest | hot | Uber | Pinterest

You Too May Invest in Hot Private Companies Like Uber, Pinterest

By    |   Thursday, 14 May 2015 09:02 AM

Have you been reading stories about high-flying privately-held companies like Uber, Airbnb and Pinterest and felt pangs of envy that you can't get in on the fun until they go public?

Well you may already have stakes in these companies, as major money managers such as Fidelity, T. Rowe Price, BlackRock and Janus have bought shares for their mutual funds.

Star New York Times columnist Andrew Ross Sorkin sums up the ramifications of this situation perfectly.

"The good news is that investors across a broad range are able to invest in these pseudo-private companies, democratizing, to some degree, the investment process," he writes.

"The bad news is that should the bubble pop, these investors have already bought shares in the companies at sky-high valuations. And these people may not even realize it."

To be sure, the holdings in these private companies make up a tiny fraction of the mutual funds' total assets. So you may not feel much effect either way.

Still, billionaire entrepreneur Mark Cuban sees a bubble worse than that of 2000 brewing in the privately-held start-ups.

"Back then the companies the general public was investing in were public companies. They may have been horrible companies, but being public meant that investors had liquidity to sell their stocks," he writes on his blog.

Obviously that liquidity doesn't exist in private markets. "The bubble today comes from private investors who are investing in apps and small tech companies," Cuban notes.

Not surprisingly for a co-founder of once-dominant Internet portal AOL, Steve Case disagrees with Cuban.

"There's a lot of capital, maybe a little froth in places like San Francisco or New York City or Boston, the tech hubs," Case tells CNBC.

"But most of the country is desperately in need of capital. Most entrepreneurs need those angel [investors] in their communities to support them, and I'm hopeful that there will be more people who are supportive of these young startups."

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Have you been reading stories about high-flying privately-held companies like Uber, Airbnb and Pinterest and felt pangs of envy that you can't get in on the fun until they go public?
Invest, hot, Uber, Pinterest
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2015-02-14
Thursday, 14 May 2015 09:02 AM
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