How To Trade Stocks Like Warren Buffett With Coattail Investing
Posted by Charles Mizrahi | May 2, 2019 | Investing, Winning Investor Daily
Ever since I’ve known him, I don’t think he’s ever had a losing trade.
Some of his holdings have gone on to be 10-baggers, and a few have gone up even more than that.
He’s the most successful investor I know. Which is incredible considering he doesn’t make many trades throughout the year.
In fact, he hardly trades at all.
My friend spends months of his time researching a company, and he waits even longer for its stock price to hit his target.
Then, once everything lines up, he backs up the truck and buys as much as he can.
I spent years watching this guy make winning trade after winning trade, and I decided I wanted to know his secret.
So, some number of years ago, I asked him out to lunch to pick his brain about investing.
What he told me not only made my head spin, but it ended up changing my entire research process…
RIDE THE COATTAILS OF GREAT INVESTORS TO BIG PROFITS
I already knew how deeply my friend researched the companies on his radar.
He even told me once where the CEO of a certain company shopped for clothes — that’s how dedicated he was.
But what got me excited that day was his method of finding breakout stocks.
He called it “coattail investing.”
In other words, he kept an eye on what other great investors were buying and rode their coattails to profits.
My friend said it was easy to identify great traders. The hard part was actually looking over their shoulders to see what they were buying.
I asked him how he could do that from a legal perspective, and it was then that he told me about SEC form 13F.
You see, back in 1975, Congress passed Section 13f. It forced advisors with more than $100 million to disclose all of their long U.S. holdings and file them with the Securities and Exchange Commission (SEC).
My friend would then request copies of the filings after they became public. Then, he’d jot down the new positions of the investors he followed.
It’s even easier to gain access to these files today, because you can look up this information on the SEC’s website.
That lunch date changed my way of thinking forever. It made me realize that no one has a monopoly on good ideas.
Better yet, it gave me access to a constant flow of new opportunities every quarter … for free!
I’ve used this coattail investment strategy, along with my own Alpha-3 Approach, for years. And believe me when I say it’s allowed me to hit some amazing home runs.
Take one of my recent Alpha Investor Report recommendations, for example…
BUFFETT’S STAMP OF APPROVAL
Nowadays, when I see two or more great investors start to build up a sizable position in a company, my alarm bells go off. Especially when I’m following an investor like Warren Buffett.
I pay careful attention to the stocks that Buffett buys and sells, because it’s not every day of the week that he finances a new deal.
I reason that, for him to want to own a piece of a company, he must understand its business and its competitive advantage, and have confidence in its management.
It turns out I was on to something.
In January, I told my Alpha Investor Report readers to buy into a company that Buffett decided to back. And in just a few months, that stock has already shot up to double digits.
But that’s just one example.
Coattail investing is a shortcut that every investor can follow. It’s an easy way to leverage the greatest investment minds with a few clicks every quarter.
But if you don’t want to do any of the heavy lifting yourself … I can help you get started.
I teach readers of my Alpha Investor Report newsletter the secrets behind some of Wall Street’s brightest minds. Then I tell them how to profit from their best ideas.
I’d love to show you how to do the same.
All my best,
Editor, Alpha Investor Report
P.S. While the stock I gave my Alpha Investor Report readers is already above my buy-in price, I have several other open positions in that service that would make great additions to your portfolio. Each of these stocks have a long runway of growth ahead of them. So, if they’re not already on other investors’ watch lists … they soon will be.