Should Alibaba Group Holding Ltd (BABA) Replace Google Inc (GOOGL) Or Apple Inc. (AAPL) in Portfolios?

As portfolio managers make room for playing Alibaba Group Holding Ltd (NYSE:BABA) they are caught in the dilemma that which of the two technology companies should they sell, Google Inc (NASDAQ:GOOGL) or Apple Inc. (NASDAQ:AAPL)? On CNBC David Rolfe who is Chief Investment Officer of Wedgewood Partners disclosed how his fund is planning to play the world’s largest IPO.

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With all the hype around the equity event, Rolfe explained that the key is not to get caught in the heat of the moment. Time is the key element in playing such situations and impatience can be very risky and costly.  Overzealousness to make as much profit as possible from Alibaba Group Holding Ltd (NYSE:BABA) IPO is, according to him, not the best line of action.

“[…] Typically what we do with these popular IPOs, we wait a long time. Sometimes we wait years to get it at our price and if Alibaba Group Holding Ltd (NYSE:BABA) is a true great growth story for the next 10 to 15 years, we will find the time to get into it,” said Rolfe.

As far as the question of choosing between Google Inc (NASDAQ:GOOGL) and Apple Inc. (NASDAQ:AAPL) is concerned, Rofle said that they are both great companies with different incentives for investors.

Regarding Apple Inc. (NASDAQ:AAPL) he said that the company promises a high return of cash in the future and many  investors do not realise that. He pointed out that Apple Inc. (NASDAQ:AAPL) had bought back about 40 billion shares. Since this reduces the number of shares available on the open market, Earnings Per Share (EPS) are consequently higher. He also disclosed that almost a third of his fund’s holdings are in Apple Inc. (NASDAQ:AAPL).

While on the subject of future outlook for Google Inc (NASDAQ:GOOGL), he didn’t have to say much, since Google Inc (NASDAQ:GOOGL)’s growth prospects are seldom challenged by investors. Rofle simply pointed to Google Inc (NASDAQ:GOOGL)’s substantial Capital Expenditure, which is reaching nearly $10 billion.

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