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Mutual Funds Double Down on Snap—Will They Hold On?

Alfred Lee

and

Mike Sullivan

May. 16, 2017 7:00 AM PT

Source: SEC Filings, mutual fund reports

Fidelity Investments and T. Rowe Price more than doubled their stakes in Snap in the month after the company went public, buying around $500 million of stock between them, an analysis of SEC filings and online portfolio reports show. As a result, the two funds appear to have maintained their pre-IPO status as the biggest mutual fund investors in Snap.

That confirms what the funds have said about their reason for investing in private tech firms: to build a big position with the intention of holding for a long period of time. Having a relationship with the company before it goes public can also help them get a larger allocation of stock in the IPO.

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Both Fidelity and T. Rowe said the decisions are made by individual fund managers. “Factors that enter into decisions may include the desired relative weight of a position in a portfolio, the perceived long-term investment potential, and the opportunity cost of holding those shares versus other possibilities, among many others,” a T. Rowe spokesman said in an email.