Buffetts' Berkshire vs Jobs' Apple for 2010?

I was befuddled after carefully explaining my position to receive the following, "Are these your only arguments?" and later received, "Apple can only go one way at this time, and that is up, up and up again." which I felt just made may case all the more. Rather than go over old ground you can refer back to Serious Money: Sell Apple, sell gold!.

The stimulus for this post is that last week I stated that Berkshire would be a better investment in 2010 than Apple. As usual I thought I should as a matter of integrity and forthrightness with our readers record the figures and follow both stocks as I often do -- and take my lumps publicly if I am wrong, not sweep it under the rug and only bring up if I am right.

On Friday December 11, 2009 BRK.B closed at $3,287.00 and AAPL at $194.67. Berkshire is about 40% below its all time high and has made strategic investments, in railroads, Chinese electric cars, insurance, banking, and home improvement that I think will contribute to my expected results. Adding to that the proposed 50:1 stock split and entry into the S&P index and I think this is a no brainer.

Apple on the other hand is only 3% off it's high, has the whole world gunning for it and has to keep inventing and not just succeeding, but excelling at whatever it does to hold onto its lofty valuation, a doable but much harder task.

One of the standout metrics leading to my conclusions was the major difference in P/CF investors are paying for Apple over Berkshire. Furthermore, while both companies have monster cash-flows and piles of cash too, Berkshire has demonstrated a superior ability to allocate it. It seems to me that this metric is important since in Apple you are paying more for less in this regard.

Both companies have extremely strong balance sheets and stellar management teams. We are off and running to December 11, 2010. I will do periodic reviews during the year.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: Among the positions discussed in this post I own shares of BRK.B.