Facebook IPO great for insiders — but what about investors?

If you were patient enough to wait until the second day of trading for the most-hyped public stock offering ever, you might feel good about getting Facebook Inc. Ticker:(FB) at more than 11% below Friday's IPO price. Even so, you're still stuck with a stock that the smart money already is selling. “The IPO has become little more than a way for insiders to cash out,” said George Feiger, chief executive of Contango Capital Advisors Inc., a trust company and advisory firm that manages $3.3 billion in assets. Mr. Feiger isn't down on Facebook for any reason related to the fundamental value of the social-networking company. He is down on it because it represents the epitome of what's wrong with the present-day IPO. “Twenty years ago, a company went public to raise capital for growth, but today, it's just the opposite,” he said. “You have huge pools of private money that fund private businesses.” With that in mind, Mr. Feiger said the best way to tap into the growth of a new business venture is through private-equity and venture-capital funds. “I have no idea what the valuation on Facebook should be, but I know it is the most-hyped IPO in history and insiders are selling out massive amounts of stock,” he said. “Plus, most IPOs are selling below the issue price after 12 months.” /images/newsletters src="/wp-content/uploads2012/05/twitter-bullet.png" Follow Jeff Benjamin