Following up on the topic of the “private offerings” of Facebook et. al., explored deeper in my newsletter.

GigaOm’s Structure Big Data 2011 #bigdataconf, New York, NY, 2011.

Paul Kedrosky, Dear Warren, Here are the Overvalued Social Networking Companies:

[Figuring out which social networking companies are overvalued] starts by recognizing that most of these companies have already gone public.

1. You can buy and sell shares on exchanges
2. Many employees are newly wealthy from selling shares
3. Analysts are covering some of the companies
4. VCs and institutional investors are selling their holdings to non-pros

You see? These companies — LinkedIn, Zynga, Facebook, Groupon, Twitter, etc. — are already public, just not public on traditional stock exchanges. So, when they go re-public, that is, when they go public on more traditional exchanges, like Nasdaq or the NYSE, that will be the moment at which insiders exit en masse in an unprecedented way. Any professional investor who wanted a taste of this stuff has it, and they will be idiots not to exit when the liquidity improves on more traditional exchanges.

Not dissimilar to how IPOs in the early 2000′s tech bubble allocated returns between professional investors (i.e. connections and bigger trading accounts) and the masses of public investors. But the game is a bit different this time around. For a deeper explanation, read the newsletter.