Thread by @RamBhupatiraju

Volatile Weeks, Edition#2.

I hope this doesn't become a weekly thing - of wild swings during the wk & me itching to write something abt it on wknds.

Thread.👇

@TMFJMo @saxena_puru @Gautam__Baid @BrianFeroldi @7Innovator @BluegrassCap @GavinSBaker @Matt_Cochrane7 @FromValue

Only two companies I bought this week - at 164.88 (on 03/05) and at $303.50 (on 03/06).

(Yes, the routine/boring disclaimer that these are absolutely not recommendations, and not going to elaborate/defend my actions).

Some of the criteria I'm currently looking for in buying (as of this week, subject to change).

1)No direct impact from the Coronavirus like Travel/Hospitality/Entertainment/Energy/Industrials.(indirectly, pretty much all sectors will get impacted to some extent sooner or later).

2)Their Product/service being very important to their end Customers and not getting dis-intermediated anytime soon. Providing actual value, High Switching costs and a growing moat will help.

3)Customer concentration is not an issue.

4)Even if Rev growth takes a dip temporarily, they can get back on track once Macro resolves since underlying trends are strong with a long runway.

5)Very manageable (or no debt) levels. Dilution not expected. Do not need to raise capital even under extended Macro stress.

6)FCF positive already, with attractive FCF/Sales% and getting better.

7)Good and capable Management that can navigate short term issues.

At one point, there's going to be some real value in many Travel/Hospitality/Entertainment stocks too. IDK when that is. 🤔

Some companies could already be there, if you absolutely know the biz strengths, and have a long-term time horizon and a stomach for volatility.

At some point, the virus will be controlled, safety/normalcy will return and the appetite for fun/travel will start again.

The Companies that can thrive after that are those that
-can withstand this stressful period w/o going under or big capital raise
-maybe even do share buybacks at low prices (with existing cash, ongoing FCF, or debt issued at very attractive levels), w/o hurting Cap structure

-especially are going to be in a position to recapture the demand that's coming back later to get back on Revenue/Margins/FCF growth track etc.

Everyone needs to identify/decide what those Co's are for themselves (the only one I can relatively/confidently point out is $BKNG🙂)

If the markets keep going down, I plan to continue slowly buying into other companies (& sectors) that I believe can outlast this issue, and have an even brighter and stronger future. (Absolutely personal position, not a rec again)

Those sectors generally are Tech/E-Commerce/SaaS, Financial services/FinTech, Healthcare (especially Medical devices), Consumer, some Industrials...

All the best for everyone out there in staying safe first, and then in navigating these turbulent markets. 👍

/END.