Famed hedge fund Tiger Management recently picked up 2 million shares of Facebook (FB). If the smart money is getting in, should you buy too?
In case you're not familiar with Tiger Management, it was founded by legendary investor Jullian Robertson. The fund generated annualized returns of 32% each year between 1980 and 1988.
(Click here to see Julian Robertson on CNBC)
One of ways in which Tiger profits is by identifying the best companies in the world and then investing in them. Therefore, when Tiger makes a buy of this magnitude, traders take note, especially when the stock is as controversial as Facebook.
In a live interview on CNBC, FX Concepts Chairman John Taylor suggests that Tiger may see value. He tells us at current levels Facebook is priced right. And he adds that there's plenty of future potential. With over 900 million users worldwide, it's just a matter of time until the company "figures something out," he says.
In other words, Tiger may be betting on lots of upside with little downside.
Jeremy Levine of Bessemer Venture Partners also sees reason for optimism. "It might be an attractive buy given Facebook's growth rate," he says.
Trader Guy Adami, however remains skeptical. He thinks the trade is watch and wait."Give them 2 quarters to prove themselves," he says. Adami thinks it's more prudent to miss the first leg higher rather than get caught by a downdraft.
And a downdraft may be coming. Early investors and a handful of top executives become eligible on Thursday to sell stock they own in a lock-up expiration.
It marks the beginning of a process that will last for months as other Facebook employees receive the same right to sell their shares.
It's conceivable none of them will sell. But if they do, up to 1.91 billion more shares could flood the stock market, joining the 421 million that have been trading since Facebook's IPO in May. (Read More: Facebook Will Regain IPO Price...In a Year: Underwriters)
For that reason, trader Josh Brown shares Adami's skepticism.
"Facebook is the kind of stock where I'd love to get bullish," he says, "but I just can't right now."More From CNBC