Whitney Tilson published this article yesterday about why he likes Alphabet’s stock more than Apple’s – and why he thinks Buffett has the opposite preference – and did an 8-minute interview about it, which you can watch below.
Q2 hedge fund letters, conference, scoops etc
Why Whitney Tilson Likes Alphabet More Than Apple - And Buffett Doesn't
Transcript
Altho vs to buy just. Why would it be. Former hedge fund manager Whitney Tilson says they are both great companies but Google parent alphabet is the best. And he joins us now to discuss his exclusive Yahoo Finance piece. Hello this is a super interesting read. So I don't know I mean I get tough call from me you are coming out on the side. Of alphabet. Yes. Let's start with talking about the business models. What is it about Alphabet's that you like better than Apple's. Because personally I give a lot more money to Apple right.
While you may not be aware of how much money you're giving to Google because they're not charging you but they're monetizing you for sure. So look both are great companies. I published an article this morning on your Web site and I've been following Apple for a while because I've been a 20 year shareholder Berkshire Hathaway Warren Buffett's second big tech stock investment much better than his first one IBM which has exited but he now owns 46 billion dollars worth of Apple. And but he's talked about his regret at missing Google and I don't think it's too late.
So you think he could still get him to get on that high level.
I think it's a better buy the Apple today. I don't think it's it's sort of. It used to be a get rich quick get rich investment there sort of get rich investing and stay rich investing. Google and Apple are now you know giants and dominant companies and you know their market caps both approaching a trillion dollars. You can't expect the kind of returns you've gotten from them historically. But I think Google is a lot better bet to get to two trillion dollars before Apple why it's growing a lot faster for one Apple sort of got you know has had up and down growth over the past few years. But let's call it you know it's mid teens right now. I think probably given it's got double the revenue base of Google today it's going to be a lot harder for it to grow at a high rate. Google just yesterday reported another quarter of 25 percent year over year earnings excuse me revenue growth and earnings almost keeping up with that rate. It's fairly extraordinary for a company of this size to grow at that rate. I just don't think Apple can grow it nearly that right.
So there's the alphabet every year. Yes revenue growth from from here.
Yes that's each quarter from my article. Going back to the beginning of this decade. And you can see that the earnings growth rate is accelerating from sort of low double digits up into the mid 20s some fairly extraordinary for a company with 130 billion dollars of run rate revenues. But here's the thing. I mean I don't think Google is finished with a high growth rate. I think it's got another five or 10 years of fairly substantial high growth rate driven by the basically only one third of the adults on earth have smartphones. And when people make that transition they start using all seven of Google's products that have a billion monthly average users. You know from search to YouTube to Gmail to maps to Chrome et cetera. So I think as another for roughly 4 billion people on earth had smartphones over the next decade or so that's actually going to accrue more to Google than to Apple Apple will certainly benefit.
Please go ahead. Like if I need a smartphone. Isn't Apple going to be the place that I go to buy said phone.
No Apple only in fact sells about 16 percent of the world's smartphones. All the restaurant Android. That's another revenue source for Google and Apple is producing you know very high and you know sort of thousand dollar phones and the two thirds of the people on earth who don't have smartphones don't have them because they can't afford them. So as they as Android phones are a hundred bucks in places like MA where my parents live in Kenya for example more and more Kenyans and people in India and you know the four billion people on earth are generally tend to be fairly low income who don't have phones.
