Leon Cooperman: The biggest threat to Google and other tech giants is the US government

Key Points
  • The biggest threat to Google-parent Alphabet and other big-name tech companies is the U.S. government, Leon Cooperman says.
  • The government wants to "pick their pockets," says the billionaire investor.
Leon Cooperman: Biggest threat to FANG is government

The biggest threat to Google-parent Alphabet and other big-tech companies is the U.S. government, billionaire investor Leon Cooperman told CNBC on Wednesday.

The government "is just looking at them," said Cooperman, the chairman and CEO of Omega Advisors hedge fund. "They want to see if they can pick their pockets."

"When you think of a company the size of Google ... putting out numbers with 20 [or] 30 percent type of growth rates. It's enormous," he added.

The tech industry has had its share of clashes with the government. The most recent is Apple, after admitting to slowing down older iPhones in order to preserve battery life.

Cooperman, whose firm has approximately $3.8 billion in assets under management, said 10 percent of his portfolio is in tech stocks.

Cooperman owns stakes in Facebook, Amazon, Netflix and Google, according to a recent SEC filing. Cooperman told CNBC on Wednesday he doesn't own shares of Apple.

The Omega chief likes Alphabet in particular, saying it has a fortress-like balance sheet.

"Google is 5 percent of our portfolio," Cooperman said. "We've owned it for several years. It sells for around 22 times what we think it's going to earn this year [and] less than 20 times what we think they're going to earn next year."

Alphabet reported disappointing fiscal-fourth-quarter earnings last week. The stock was trading down more than 1.5 percent on Wednesday.

Cooperman said a risk big tech stocks is they often trade together. "This whole group trades like a group," he said. "If one of them has a disappointment, they could all go down. That's the way the market trades."

Cooperman expects moderate gains for the tech sector in 2018, adding "valuations are very sound."