Andreessen Horowitz holds on to Facebook shares in long-term gamble

The venture-capital firm has distributed some Facebook shares that it obtained in Facebook's Instragram acquisition to limited partners.

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CNET contributor Don Reisinger is a technology columnist who has covered everything from HDTVs to computers to Flowbee Haircut Systems. Besides his work with CNET, Don's work has been featured in a variety of other publications including PC World and a host of Ziff-Davis publications.
Don Reisinger
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Marc Andreessen of Andreessen Horowitz.
Marc Andreessen Andreessen Horowitz

Andreessen Horowitz, the famed venture-capital firm run by Marc Andreessen and Ben Horowitz, is not selling the Facebook shares it acquired through direct investment.

Reports surfaced yesterday saying that Andreessen Horowitz, one of the earliest and biggest investors in Facebook, was offloading some shares it directly acquired through investment in the social network following a mandatory lockup period. However, a Securities and Exchange Commission filing has revealed that only Marc Andreessen himself has personally offloaded some shares. According to TechCrunch, which was first to report on the news, a spokesperson from Andreessen's firm said that the sales will only be used to cover his tax liability.

In addition, Andreessen Horowitz has decided to distribute some shares to limited partners. However, the vast majority of those shares relate only to the Facebook shares the firm obtained as part of the social network's Instagram acquisition -- another firm Andreessen Horowitz has invested in.

About 800 million Facebook shares were unlocked for trading yesterday after a mandatory waiting period. Although many had expected Facebook's stock to take a hit as investors sold off shares, the company actually saw gains yesterday. Speaking to CNET in an interview, Sterne Agee analyst Arvind Bhatia said the shares jumped because those who could have sold "are feeling better about fundamentals and the shift the company is apparently successfully making to mobile."

Andreessen Horowitz has a similar take on Facebook. Speaking to TechCrunch, one of the company's partners, Margit Wennmachers, said that her firm is "holding on to [the Facebook direct investment] because we believe in the long-term value of the company."

Facebook went public in May for $38 a share. Before long, the company's shares plummeted and eventually hit a low of $17.55. Facebook is currently trading at $21.85.