May 14 (Reuters) - Twitter Inc and Facebook Inc will need to be more diversified to win the attention of one of the youngest, yet conservative, fund managers at Aberdeen Asset Management.
Ralph Bassett, managing about $3.5 billion of assets at just 30 years of age, believes most of the high-flying internet companies with frothy valuations do not have the fundamentals to be sustainable.
"They are being valued on aspiration down the road rather than reality over the next couple of years," said the deputy head of North American equities at Aberdeen. "We have seen things come and go over time."
Twitter's stock, at $33.39 as of Tuesday's close, is trading at 272.9 times forward earnings per share, according to Thomson Reuters StarMine, even after having lost nearly half of its value this year.
Facebook is trading at 37.9 times its forward earnings and LinkedIn Corp at 71.1 times.
"If Facebook were to diversify over time and be less reliant on one or two properties, we may get a bit more comfortable," Bassett said.
The fund manager likes safe bets, picking companies such as chipmaker Qualcomm Inc and cable operator Comcast Corp that he says promise steady growth.
Bassett considers Qualcomm, which is riding the smartphone boom, a safe investment given its "far superior" technology and relatively inexpensive share price.
The stock trades at $80.37, or 14.4 times its forward earnings.
Qualcomm is a part of the asset manager's Equity Long-Short fund that has outperformed its benchmark, the S&P 500 Index , with returns of 6.98 percent since its inception in December 1997, compared with the 6.05 percent return clocked by the benchmark.
On Comcast, which is trading at 16.4 times its forward earnings, Bassett said he favors the company for its growing broadband business and customer base.
He said the cable operator would be an attractive investment regardless of whether it completes its proposed $45 billion takeover of Time Warner Cable Inc.
Bassett also favors smaller stocks with potentially big rewards, companies such as transaction processor Heartland Payment Systems Inc and Syntel Inc, which gets most of its revenue from developing and maintaining software applications.
Heartland's pricing is among the lowest in the industry, while Syntel has evolved from providing business process outsourcing to more value-added services, Bassett said.
Solera Holdings Inc, which makes software for automating auto insurance claims processing, also finds a place on the small cap fund that Bassett oversees.
The Aberdeen Small Cap fund has outperformed its benchmark, the Russell 2000 Index, with a return of 9.17 percent over the last 10 years, compared with the benchmark's 8.53 percent return.
Bassett's funds are part of Aberdeen Asset Management Plc , which had $541 billion of assets under management as of March 31.
(Editing by Feroze Jamal)