May 13 (BusinessInsider) – Chamath Palihapitiya, the billionaire CEO of Social Capital, said in a Tuesday interview with CNBC that he thought Amazon CEO Jeff Bezos was a better investor than Warren Buffett, the famed “Oracle of Omaha” and leader of Berkshire Hathaway.
“People used to lambaste Jeff Bezos for not being profitable, but when you looked under the hood, he was the single best investor of our generation, even better than Buffett, because he would take billions of dollars of free cash flow and invest it into the future,” Palihapitiya said.
Palihapitiya’s comments came in a long interview with CNBC where he touched on Tesla, Elon Musk, the actions of the Federal Reserve, bitcoin, the US’s economic reopening, and more.
He also continued his recent crusade against stock buybacks, which he called a “fundamentally idiotic business practice.” Palihapitiya is a fan of Bezos because Amazon has largely skipped the practice under his leadership, instead investing in building the business.
In the company’s first-quarter earnings, Bezos told investors to “take a seat, because we are not thinking small,” before announcing Amazon’s plans to spend the roughly $4 billion it expects in second-quarter profit on “COVID-related expenses getting products to customers and keeping employees safe.”
Buffett, on the other hand, has argued for the value of stock buybacks when done in a responsible manner. Berkshire repurchased $1.7 billion of its own stock in the first quarter, it said in its earnings report in early May.
Palihapitiya said he agreed with Buffett that share buybacks needed to be executed under the right conditions.
“Coming out of 2020, I think what we should realize is we have a very brittle economy, a very fragile ecosystem of companies that are over-levered,” Palihapitiya said. “We need to create incentives for these folks to save and to invest in the future.”
He continued: “There is a business case to be made in every company to either save and/or spend to plan for the future, and instead to just give it back randomly in the open market is one of the dumbest business decisions you can make.”
