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GSV Capital Presents Opportunity


From the Buzz & Banter: This investment fund looks attractive.

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I just went long publicly-traded investment fund GSV Capital (NASDAQ:GSVC) again here at $12.49, an idea I had been considering,

Facebook (FB) has been steadily heading higher, and GSV's number-one holding Twitter (TWTR) looks like it may be stabilizing.

Additionally, I'm confident that the valuations on some of GSV's private holdings, namely Dropbox and Spotify, are going to skyrocket, courtesy of some of the bubbly deals in the sector (like Facebook's purchase of WhatsApp).

There's also a big divergence between GSV and its closest equivalent, the Global X Social Media ETF (SOCL). Using eSignal, I created a chart showing SOCL (multi-colored bars) vs. GSV's relative performance against SOCL (blue line, calculated as GSVC/SOCL).

Click to enlarge

While the performance differential isn't as big as it was in December, it could still provide something of a cushion, and in fact, shorting SOCL vs. a long position in GSVC could make for a nice pairs trade.

If social stocks simply hold steady, I think the gap can close.

And if Twitter regains its footing, I expect GSV to reach the $13.25-$13.50 range in short order, at which point I'd look to exit.

On the flip side, I'd look to cut my losses on a decline to the $12 range.

Twitter: @MichaelComeau

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No positions in stocks mentioned.
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