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Exclusive: BlackRock's biggest stock-picking fund likes Facebook shares

Reuters  |  NEW YORK 

By Trevor Hunnicutt

(Reuters) - The biggest stock-picking fund at Inc raised its bet on Inc in March, a source familiar with the matter said, making the company a top 10 equity holding and apparently betting that Facebook's privacy scandal will not weigh on the stock for long.

A person familiar with the matter said the - run by Dan Chamby, Russ Koesterich, and - had boosted its share count. The person, who requested anonymity because does not discuss individual stocks, declined to say specifically how many shares the fund had acquired or when during the month they were purchased.

and BlackRock, the world's largest with $6.32 trillion under management, declined to comment.

The increases in holdings were enough to make the company the $36.7 billion fund's sixth largest stock holding at March 30, up 10 spots from where it had been two months earlier, according to the fund's website and data. The March disclosures also do not spell out when shares were acquired or how many were bought.

had not recently been listed in the top 10 holdings, a list updated monthly. As of Jan. 31, the date of its most recent detailed filings, the held 1.38 million shares, making it the No. 16 equity holding valued at about $258 million at that time.

shares are down more than 10 percent after Times and London's Observer newspaper reported in mid-March that Cambridge Analytica, a political consultancy that worked on U.S. Donald Trump's campaign, gained inappropriate access to data on tens of millions of the company's users.

Even with the increased stake, which has not been previously reported, accounts for less than 1 percent of the Global Allocation Fund, which holds hundreds of stocks and also invests in bonds as well as gold and other commodities. is listed as the fund's top stock holding, accounting for 2.24 percent of assets at the end of March.

Yet the buying represents an endorsement of by a major outside shareholder at a time when the company faces questions about whether its targeted business can survive stricter regulation and calls for users to "#DeleteFacebook."

said in testimony to U.S. lawmakers last week that the company's major investments in security "will significantly impact our profitability going forward."

Overall, shares are down more than 6 percent year-to-date. Short-sellers, who warned the market was overvalued and have been raising alarm about privacy issues, made $4 billion on paper profits in the last two weeks of March, betting against the "FANG" group. They comprise four closely watched internet stocks: Facebook, Inc , and Alphabet Inc's .

is the seventh largest U.S. equity short at $5.22 billion with short interest increasing by $447 million in April and $1.11 billion for the year, according to

Still, for other investors, the created an opportunity to buy a company with one of fastest-growing revenue lines in the <.SPX> at a discount.

The stock is still near its cheapest ever, according to a price-to-earnings ratio based on profits Wall Street analysts expect to deliver over the coming 12 months.

For BlackRock, scooping up battered shares of could turn out to be a lucrative bet that could help boost its fund. Relatively low-fee shares of the are down 0.05 percent this year, through Friday, beating most its peers. Overall, the fund is on course the post its fourth straight year of withdrawals, according to Thomson Reuters' research unit.

(Reporting by Trevor Hunnicutt; Additional reporting by in San Francisco; Editing by Jennifer Ablan, and Lisa Shumaker)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, April 17 2018. 03:17 IST
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