The social media craze has taken flight in the past several years, and the only thing more popular than the social media sites themselves has been their shares. Although not every newly public social media company has managed to stay at its lofty levels in the months after its IPO, most of them have come out to enormous fanfare. Perhaps more than any investment before it, social media company stock has driven growth in alternative markets for privately held shares, as investors seek ways in before companies go public.

One plain-vanilla fund, however, won't make you prove you're a multimillionaire or that you earn enough to be part of the 1% in order to invest in social media companies. With a portfolio that includes Facebook, Yelp (NYSE: YELP), and now Twitter, this fund is clearly trying to jump onto the social media bandwagon. But is it a good buy?

The inside scoop?
 The name of the fund is Firsthand Technology Value Fund (Nasdaq: SVVC), and until last year, it was a regular open-ended mutual fund that had sizable investments in well-known publicly traded tech giants as well as certain privately held companies. But the fund chose to change to closed-end status in 2011, meaning that its shares now trade directly on the Nasdaq exchange.

Firsthand Technology Value attracted some attention back when Facebook decided to go public. Before then, demand for Facebook shares was so high that it seemed like everyone was trying to cash in on the craze. An exclusive investment vehicle from Goldman Sachs (NYSE: GS) granting access to Facebook went wrong when the investment firm had to pull its offering to U.S. investors in order for Facebook to avoid running afoul of a rule limiting the number of shareholders it could have.

Earlier this week, the fund reported a purchase of 100,000 shares of Twitter for $1.8 million. That's not a huge investment for the fund, which had almost $84 million in assets and almost $64 million in available cash as of the end of 2011. But in adding to its social media reputation, the fund's investment makes perfect sense.

Does it matter to Twitter?
 Most social media companies sought out private financing before they went public. Groupon (Nasdaq: GRPN), for instance, solicited several large institutional investors before it went public last year. Moreover, those investments have been lucrative for investors; earlier this year,T. Rowe Price (Nasdaq: TROW) boasted a position worth more than $400 million in Facebook.

But with an investment of less than $2 million, Firsthand Technology Value's purchase of Twitter shares probably didn't involve Twitter at all. Instead, it probably represented a third-party transaction.

Is Firsthand a buy?
 Firsthand Technology Value's ownership of social media stocks has boosted its valuation through the roof. Shares have traded as high as $46.50 after starting the year around $15, and at its current level of almost $28 per share, the stock trades well in excess of the closed-end fund's net asset value of $24.56 as of March 31. Yet that didn't stop the fund from successfully offering 4.4 million new shares at $27 per share late last month -- raising yet more cash for purposes that are far from clear.

Unfortunately for investors, Firsthand Technology Value comes with a hefty price tag. In its recent prospectus offering new shares, the fund noted its 2% management fee, combined with another 0.75% in estimated other expenses. In addition, the management agreement allows for "incentive" fees of up to 20% of profits on the fund's investments. That closely mirrors the "2 and 20" compensation scheme that many hedge funds use.

Wait for the IPO
 Paying 2.75% in annual expenses for a fund that holds the vast majority of its assets in cash and trades well above the actual value of its assets doesn't make much sense to me. With the spotty performance of social media stocks after their IPOs -- including Yelp -- you'd be better off waiting for the froth to dissipate than jumping into Firsthand Technology Value.

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