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Executing The Strategy Of Investing In The 'Blood On The Street' List Of Companies

May 04, 2020 11:35 AM ETAMZN, BRK.A, BRK.B, DIS, GOOG, GOOGL, HACK, MA, MSFT, SCHW, V9 Comments


  • The strategy is based on making investment when milestones of disease containment and economic recovery are reached.
  • Risks of a resurgence of new cases and protracted time of recovery caused me to lightly load the portion of capital for the early milestones.
  • First milestone, inflection of new cases, has been reached and I bought some Berkshire Hathaway and Visa shares.
  • 1Q results provided an early look of an ugly 2Q but also confirmed the strength of these companies.

A March 26 article described a list of companies that I would consider buying when there is “Blood on the Street”. The intention of that article is to share and to solicit feedback on the companies which have the business model, balance sheet strength and ample liquidity to not only survive this Covid-19 induced economic downturn, but will exit the downturn stronger than before. I did get a lot of feedback and added two names to my list.

An April 12 article described a strategy to commit fresh capital to these companies. The strategy is centered around a set of milestones regarding containment of the pandemic and the reopening of the economy. The strategy is to commit a portion of my available capital when these milestones are reached. I also presented a list of risks to watch.

In this article, I will describe the status of the execution of this plan and some refinement to the milestones and risks. I will also provide some takeaways from recent 1Q earning releases. I should caution the readers that I am not a health care or medical science professional. All the information that I gather about the disease are from publicly available sources from which I draw my conclusions to help navigate my investment decision. The purpose of this article is to share my thoughts and solicit feedback to help refine my strategy and to uncover potential blind spots.

A recap of the shopping list and execution strategy

The companies on my “Blood on the Street” shopping list are Amazon (AMZN), Alphabet (GOOGL), Visa (V), Mastercard (MA), Berkshire Hathaway (BRK.B), Charles Schwab (SCHW), ETFMG Prime Cyber Security ETF (HACK), Microsoft (MSFT), and Disney (DIS). The last two companies were added after feedback from SA readers.

My strategy for committing fresh capital is based

This article was written by

30+ years of trading part time, managing my own money. Value investor. I focus on the industry, business strategy and management execution, rather than the stock price and market trends. I have a long term (3 to 5 year) investment horizon. My research is done to guide my own investment decisions. I look at many companies, conduct detailed research on a few, and invest in those where my research shows compelling value within my investment horizon. I share my research on SA to gain feedback to sharpen my research and logic, and also to discover potential blind-spots.

Analyst’s Disclosure: I am/we are long AMZN, BRK.B, GOOGL, V. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold the author harmless.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (9)

rny1sa profile picture
LTBI - a straight question on your lead-in to this article ...business model, balance sheet strength and ample liquidity... There are lots of discussions on what makes a good balance sheet, ratios and such, but there almost as many choices on good ratios to use as there are authors picking their favorites. i notice that if the author is an 'accountant', he looks at one set, if the author is a 'trader', he will look at other ratios. i haven't as yet found clear common ground or 'target values' for the ratios to use [eg: peg ratio < 1 is perhaps a value company, >1 is a perhaps a growth company]

do you have a 'view' to a screen for 'balance sheet strength'? perhaps this might lead to some screen to use to find such companies besides checking their capitalization first? i recognize that this might vary by industry, such a screen, but some good feedback might at least give a start.

thanks, ron
Long-Term Business Investor profile picture
@rny1sa I am not an accounting professional and do not have a screen for balance sheet strength. However, I generally look for a lot of net cash on the balance sheet first and foremost. Since I am also interested to invest in turn-around situation, where net cash is not typical, I look for free cash flow to pay down debt to a comfortable level within a relatively short time. In other words, I prefer to see a strong free cash flow (defined as cash flow from operation less capital expenditure). Hope this helps. Thanks for reading.
I'll admit, Warren has me spooked a bit.
Long-Term Business Investor profile picture
@Pops007 People may be interpreting his conservative approach as weakness within the Berkshire businesses. Maybe that is why the shares have been trading down.
I agree these are all great companies but they are simply not experiencing blood on the streets. The only blood running is that of inferior businesses. If anything the flight to qualify has made the great companies expensive without recognising the headwinds they face. I own Microsoft and Google but there is no way I’m adding at today’s prices.
Long-Term Business Investor profile picture
@davo_toon The share prices of many of these companies have rebounded quite a bit. That is why I am cautious in committing a large amount of fresh capital. There may be volatility still ahead. If so, I want to be ready. Thanks for reading.
I agree. The markets are irrational (at least they appear to be to me). Interesting times. Thanks for the article.
Jorel Boston profile picture
Well seeing as how all but 2 of these companies are in the top 20 of my VTSAX, I guess I will put more money there :)
Happy Investing Brothers. Have a great $$$ Week
Long-Term Business Investor profile picture
@Jorel Boston The companies in VTSAX are all great companies. They should all do well in the long run. We just need to get through this pandemic, which we will. Thanks for reading.
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Related Stocks

SymbolLast Price% Chg
Amazon.com, Inc.
Berkshire Hathaway Inc.
Berkshire Hathaway Inc.
The Walt Disney Company
Alphabet Inc.

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