Citigroup: Facebook stock still under-owned despite big rise in valuation

Facebook Inc. may be trading at all-time highs, but the stock is still one of the most under-owned of the large-cap Internet companies, according to an analysis published Wednesday by Citigroup.

In fact, the social network is the second-least-held stock, ahead of just Google Inc. GOOGL, -1.11% among a group of 10 large-cap Internet stocks that Citi says are used as a benchmark by intuitional investors for industry growth.

The most overweight stocks relative to the S&P 500 are Expedia Inc. EXPE, -0.30% TripAdvisor Inc. TRIP, -1.56% Netflix Inc. NFLX, +0.10% Priceline Group Inc. PCLN, -0.23% eBay Inc. EBAY, -0.50% Amazon.com Inc. AMZN, -0.87% and Yahoo Inc. YHOO, +0.39% according to the report, which was circulated among Citi’s clients Wednesday morning.

Citi came to the findings by analyzing the current holdings of the top 40 institutional investors, excluding index funds, for 10 Internet securities as a percentage of their total equity assets under management. The number was then compared to the weighting of the stock in the S&P 500.

Citi admits there may be some holes in its findings. First, it’s likely that not all funds or portfolios are benchmarked to the S&P 500. That is especially true of stocks like eBay and Expedia that have a high percentage of hedge fund ownership.

Secondly, the calculations only take into account the top 40 institutional investors, which on average represent just 62% of total institutional holdings of the large-cap Internet stocks analyzed.

However, for Facebook, the findings are nevertheless interesting amid the company’s healthy ad and revenue growth in recent quarters.