LinkedIn Unfriends the Facebook IPO

"I am selling a minority of my position [in Facebook] as part of a general diversification strategy, but holding onto the majority of my stock."

So said LinkedIn (NYSE: LNKD  ) Chairman Reid Hoffman, pooh-poohing speculation on Thursday as to why he has decided to unload a chunk of Facebook shares just weeks ahead of the presumed Facebook IPO date.

While Hoffman insists there's nothing to see here (move along, folks), potential investors in the Facebook IPO can't help but wonder if there's more to this than Hoffman suggests.

After all, as an early investor in the company, Hoffman is believed to own a good 0.5% of Facebook's equity. Even a "minority" sale of such a stake could be worth up to $250 million if the company IPOs at its rumored $100 billion valuation. That's hardly small potatoes.

Similarly, Hoffman's suggestion that he's only selling shares for purposes of "diversification" doesn't hold water. The LinkedIn chairman owns $1.9 billion worth of LinkedIn stock -- four times the presumed value of his Facebook stake. If diversification were the goal, one would think his first move would be to lighten up on his own company's stock a bit. (According to Form4Oracle.com, Hoffman sold only $14 million worth of LinkedIn stock over the past three months -- less than 1% of his holdings.)

Even taking Hoffman at his word, though, what's the rush to sell now? Word has it that Facebook intends to IPO in mid- to late May. If the stock performs as well as, say, LinkedIn's own stock did on day one of trading (it more than doubled), then "diversifying" out of Facebook today would seem to leave an awful lot of money on the table.

Little word, big implications
Of course, the operative word here is "if." If Facebook doubles, then selling shares now would be the height of folly. But what if Facebook tanks on IPO day? What if investors decide that 100 times earnings (or more) is simply too high a price to pay to own a piece of Mark Zuckerberg's masterpiece?

In that case, Hoffman will have succeeded in two ways. First, he'll have saved himself some serious money. And second, he'll -- ahem -- have "diversified" just like he said he wanted to.

Motley Fool contributor Rich Smith holds no position in any company mentioned. Click hereto see his holdings and a short bio. The Motley Fool owns shares of LinkedIn. Motley Fool newsletter services have recommended buying shares of LinkedIn.