Firsthand Technology Value Fund and GSV Capital Corp, two closed-end funds that bought shares of the social media company before the IPO, have taken a beating, used as proxies for betting against Facebook.

“Until investors can actually short Facebook, they have to keep shorting things that can give them some sort of proxy for Facebook,” said Thomas Vandeventer, manager of the Tocqueville Opportunity Fund, which owns shares in both closed-end funds.

Firsthand has fallen 26 percent in the three trading days since Facebook went public at $38 a share. GSV has lost 27 percent.

Investors have turned to funds such as Firsthand and GSV as a proxy to bet against Facebook because it is difficult to borrow shares of the company to sell short so soon after the IPO. Traditional mutual funds that own Facebook cannot be shorted.

Because both Firsthand and GSV are designated as “business development companies” under securities rules, they can invest like venture capital funds while taking money from public investors and trading on an exchange like other closed-end funds.

As a result, they can serve as tools for short-sellers. Some shorters sprang into action even before the Facebook IPO last Thursday. The number of GSV shares sold short had soared to 1.56 million as of April 30, the most recent figure available, from just 103,280 at December 30, Nasdaq data show. Short shares of Firsthand jumped to 29,588 from 300 over the same period.

The sell-off in Firsthand and GSV is out of proportion with their holdings of Facebook, which closed at $31 a share on Tuesday, down 18.4 percent from the IPO price.

Firsthand on Monday reported it held 600,000 Facebook shares acquired ahead of the IPO at an average cost of $31.50 each, or $18.9 million. At Tuesday’s closing price, the stake was worth about $18.6 million – still about 9 percent of the fund’s estimated gross assets.

Kevin Landis, manager of the Firsthand fund, said he is optimistic about Facebook’s future, noting that the recent drop in the fund’s share price pales next to the beating he took running a technology fund as the Internet bubble burst a decade ago. “This is nothing,” he said.

Landis did not blame short sellers for driving down the fund’s shares, saying it could be because investors wanted exposure to Facebook and switched from the fund to actual shares of Facebook after the IPO.

GSV, in a recent securities filing, said it owned $11.2 million worth of Facebook shares, or 9 percent of its total investments of $121.2 million, as of May 4. GSV managers were not immediately available for comment.

Vandeventer, of Tocqueville Opportunity, noted that the Firsthand fund was trading under $20 while it had cash of $19.93 a share. “Basically, you could buy Facebook for free,” he said.

(Reporting By Ross Kerber; Editing by Aaron Pressman and Leslie Adler)