Billionaire Chamath Palihapitiya has reaped a 997% return since 2011. He shares his 3-part strategy for navigating today's coronavirus-hit market - and outlines how he's mining real estate for opportunities.

• Chamath Palihapitiya, CEO of Social Capital, has developed an intuitive framework for thinking about investments during today's coronavirus-driven stock selloff.
• By employing this methodology, he's able to zero-in on sectors and specific names that should benefit well into the future.
• He says "it is excruciatingly boring, numbing, time-consuming - but in it is where you'll find, I think, the nuggets."
• Palihapitiya made headlines recently after he went on CNBC and argued that the US government should let debt-laden "zombie" companies get "wiped out" by the coronavirus pandemic.
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It's safe to say that Chamath Palihapitiya - CEO of Social Capital, chairman of Virgin Galactic, and billionaire part-owner of the Golden State Warriors - has a knack for making sound investment decisions.

"If you're going to allocate capital well over decades, what you really are - better than anybody else - is just a good observer of the current moment in time," he said on "The Pomp Podcast." "It's taken me a long time to sort of practice and refine a toolkit."

Last year, Palihapitiya's refined toolkit generated $1.7 billion in cash and cash equivalents for Social Capital through a handful of public investments - Slack, Tesla, Amazon, and Virgin Galactic, to name a few - and a broad base of private holdings.

Since the firm's inception in 2011, he's generated a 997% gross internal rate of return - more than triple the S&P 500.

Palihapitiya is perhaps best known lately for his polarizing CNBC appearance, which saw him argue that the US government should let debt-laden "zombie" companies get "wiped out" by the coronavirus pandemic. When specifically asked whether the US should let the airlines fail, he replied "yes."

So while it's safe to say that Palihapitiya is steering clear of airlines and other debt-heavy companies, he also has a proactive playbook for figuring out what to buy in their place. To him, it all comes down to three elements: (1) Prioritizing needs, asking (2) 'What won't change'?, and then (2) investigating.

Let's take a closer look. All quotes below are attributable to Palihapitiya.

1. Prioritizing needs

"What this moment is good at doing is clarifying the hierarchy of needs," he said. "And so the first thing that we're doing - and this is for us, and my team and I, a multi-week process - is just re-underwriting what are our basic needs. And that's what I'm doing right now."

2. What won't change?

"I'm trying to ask myself just really simple, kind of basic questions where I can look at my kids, and if I tell them: 'Here are the things that will never change,' they'll be like 'Yeah, it makes sense.'

"The way that I'm asking the questions right now is, first and foremost - 'What is not going to change?' - and there's a bunch of things that are not going to change," he said. "You're still going to go out; eventually. You're still going to travel; eventually. You're still going to buy things offline; eventually. You'll still want to make things that will require energy; eventually. You'll still need to eat; you'll still need to clothe yourself."

3. Investigate

"From there - and we've done this because we're a little bit further ahead in some of those sectors that we identified early ... they're not super complicated - but then what we've said is: 'Which companies have now been disproportionately punished, despite basic needs that should remain relatively inviolate over the long arc of time.

"We've been monitoring, very closely, all sources of alternative data."

A big bet on commercial real estate

By leveraging data from Open Table, Yelp, Second Measure, and TomTom, Palihapitiya is able to build an informed perspective and identify patterns within the prevailing economic landscape.

As a result of this strategic way of thinking, he now believes that commercial real estate is "fundamentally impaired."

He notes how the video chat in which he's conducting the interview costs nothing and is just as productive/effective as an in-person meeting - all without the exorbitant costs of cross-country flights and lodgings. To Palihapitiya, this spells bad news for the sector - but that doesn't mean there aren't opportunities.

"There are certain REITs that only service big-box retailers, specifically: Wal-Mart, Amazon distribution, and groceries," he said. "Now, they've seen 50% drawdowns as well because you throw the baby out with the bathwater when things like this happen. And so we've been going bottom's-up in certain REITs, literally looking at property-by-property, trying to figure out are these things valued fairly or reasonably."

Clearly, Palihapitiya thinks that REITs invested in the types of properties that service big-box retailers will be able to survive and prosper going forward.

"You got to be a worker in moments like this, a humble worker," he said. "It is excruciatingly boring, numbing, time-consuming - but in it is where you'll find, I think, the nuggets."

He concluded: "But that's what we're doing: We're prioritizing needs, we're asking ourselves: 'What won't change?', and then we're looking at things - and essentially what that leads us to is a bunch of offline businesses or hybrid businesses."

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