This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

eBay: The Sweetheart of the Fund Managers

eBay (EBAY - Get Report) shareholders' proxy proposal votes will be announced later this week. But institutional investors have already been voting with their pocket books.

In the first quarter, more than 200 institutional investors -- mutual, index and pension funds -- either bought into eBay or increased their stakes in the online auctioneer, according to FactSet Research Systems' LionShares site. The net holdings in eBay of such investors increased in the first quarter by about 11.8 million shares, a stake that is now worth about $1.2 billion.

Much of the buying appears to have come from index funds that bought up eBay stock as it soared compared with the rest of the Nasdaq 100. But some also seems to have come from portfolio managers eager to pick up an Internet winner.

Forget about the company's sky-high valuation or its profligate use of stock options, analysts say. Investors are ignoring anything negative about eBay right now, they say.

"Given that you are running a large mutual fund and you want to keep your foot in the door of the Internet business, eBay is one of the few companies that has been successful in that arena," said Paul McEntire, portfolio manager of Skye Investment Advisors' Marketocracy Technology Plus Fund (TPFQX). "People aren't given a lot of great choices in that area." (McEntire's fund does not have a position in eBay.)

The company's proposal to increase the number of options it can grant by more than 50% has drawn criticism from proxy advisor Glass Lewis and the California Public Employees Retirement System , which plans to vote against it. Other big shareholders such as Fidelity and Vanguard could also vote against the plan, if they follow their proxy voting guidelines.

Do I Hear $103?
Institutional investors that bought the most eBay shares in the first quarter
Institutional Holder Shares held, end Q1 Shares bought since Q4 '02 Percentage Stake in eBay Portion bought in Q1
Marsico Capital Management LLC 4,487,342 4,487,342 1.4% 100.0%
TCW Asset Management Co. 8,156,898 3,559,292 2.6 43.6
Fidelity Management & Research Co. 8,883,653 3,243,811 2.8 36.5
Barclays Global Investors, N.A. 8,522,531 2,007,112 2.7 23.6
Northern Trust Global Investments 2,906,788 1,395,365 0.9 48.0
Morgan Stanley Investment Management (NY) 4,927,179 1,095,799 1.6 22.2
Merrill Lynch Asset Management, Inc. 1,428,768 903,717 0.5 63.3
ING Investments, Inc. 935,913 744,743 0.3 79.6
Jennison Associates LLC 840,200 742,700 0.3 88.4
ING Aeltus Investment Management, Inc. 861,046 710,041 0.3 82.5
Source: FactSet Research Systems' LionShares.

Sticking With a Winner

But other institutional investors could be reluctant to rock the boat. eBay's stock climbed nearly 26% in the first quarter alone and has jumped more than 50% year to date. Meanwhile, the company has continuously reported soaring revenue and record earnings, albeit not including the cost of stock options.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,678.70 +6.10 0.03%
S&P 500 2,057.09 +5.27 0.26%
NASDAQ 4,771.7630 +13.8840 0.29%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs