Fidelity boosts value of pre-IPO Roku, Nutanix but sours on Delphix

By Tim McLaughlin

BOSTON (Reuters) - Fidelity Investments recently boosted the estimated value of video streaming device maker Roku Inc and storage startup Nutanix Inc by more than 20 percent, underscoring how some pre-IPO companies continue to shine in a sector that has hit a rough patch.

Recent valuation hits endured by Delphix, Snapchat Inc and several other startups have raised concerns among some analysts and investors that Silicon Valley's tech IPO party may be winding down.

Boston-based Fidelity, for example, slashed the value of Delphix Corp by 43 percent in October, according to U.S. regulatory filings. The cut came after Fidelity in July led a $75 million round of funding in Delphix, which provides data as a service.

In an interview with Reuters on Friday, Contrafund portfolio manager Will Danoff said he's grown more cautious about the so-called unicorn phenomenon. Unicorns are start-ups whose valuations have surged past $1 billion.

"We watch the fundamentals (of these companies) every quarter," Danoff said. "We become more concerned when companies miss projections. We like it when they beat them."

The $111 billion fund owns stakes in pre-IPO companies worth about $1.4 billion, fund disclosures show. Contrafund had a small stake in Delphix worth about $19.1 million at the end of October.

Fidelity is the mutual fund industry's largest investor in pre-IPO companies. Its top funds own stakes worth more than $3 billion in private companies expected to have initial public offerings, according to U.S. regulatory filings.

Fidelity is a good barometer of investment in the pre-IPO market because its funds release the value of their holdings on a monthly basis, compared with the quarterly release at most mutual fund companies.

Not all start-ups get rough treatment when big investors such as Fidelity evaluate their prospects.

In October, for example, Fidelity raised its valuation of Roku by 35 percent, according to the company's latest fund holding disclosures. Its valuation of Nutanix rose 23 percent in October.

Investments in ride-sharing company Uber Technologies Inc continue to hold promise for several Fidelity funds. Fidelity's $21 billion Blue Chip Growth Fund, for example, took a $40 million stake in Uber in June 2014 that is now valued at $102.2 million, fund disclosures show.

Uber has become a top 10 holding for the fund, accounting for 1.5 percent of the fund's assets, as of Oct. 31.

(Reporting by Tim McLaughlin; editing by Chizu Nomiyama and Dan Grebler)

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