Thread by @Biotech2k1

Looking at a little strategy:

Sharing some strategy while the sector is still down.

1/ I pick science themes like the use of #AI or #ML in drug discovery. Then I go out and find every company I can in that space. I make myself a list and start doing my research. I slowly whittle down the crowd to 5 names that stand out.

2/ Then I go further into the companies with listening to webcasts so I get to know if the management knows their stuff. I dig into the science and data. I even read the 10K or S-1 and understand the balance sheet. Then I look at the indications and the potential.

3/ I will even look at the partnerships to understand what part of that potential the company will get. Usually I will insist I get at least 4 names in a science theme and I love to have at least 5. This becomes my line up. I will than rank each company from top pick to weakest.

4/ I constantly evaluate these ranks as the companies develop and report earnings, data or events. Normally, only the top 3 in each science theme will go into my portfolio. That become my starters, and they stay in the portfolio unless then fall out of the top 3 ranking.

5/ When the market has a big crash like biotech the past 13 months, I will overweight myself by putting 4 or even 5 companies in a science theme. That is why I had 5 and now 4 for each theme now. I could not sustain 5 so I had to reduce them.

6/ When the market hits a new peak, I will start my fading that 4th position back down to 3 in each science theme. As the market goes higher, I will take profits on my companies so I can lock in some gains and raise cash for the next correction.

7/ I often trade around my core positions. My core tends to be 50% of my position or what I have paid for in capital gains. Which ever comes first. I have 4 companies now that are completely on the houses money so I try to own a lot of them.

8/ I will continuously grind the trading working on paying off my core position. Over time, things will develop and change. The best of breed companies will become bigger and bigger parts of the portfolio while the bad apples will get the boot.

9/ I have zero loyalty to any company. That is for suckers who want to lose money. My loyalty is only as good as the company. I go by the "show me the money" investing strategy.

10/ Most of the time, I find the great companies never last long enough to reach mega cap like a Celgene or a Regeneron because they get bought out. Not a bad thing, but its frustrating to have to start all over fining a winner.

11/ At the top last year, I had 5 companies that were big winners for me with $BPMC, $MRTS, $FATE, $BEAM and $CRSP. I could have just kept nibbling away at those 5 big winner all the way down and ended up with 20% of my portfolio in each, but that is too risky for me.

12/ 20% in each of 5 companies in this early stage is way too much concentrated risk. That is why I added new companies and even new themes. I added in the #AI in drug development, #SnytheticBiology and #Genomics spaces into my portfolio.

13/ I quickly went from 90% cash and a handful of winners to just a token position in 4 companies in 6 different themes. I even has 5 in 2 of those themes. This allowed me to spread out the cash across a wide variety of biotechs. Casting a wide net into the bear market.

14/ This works as some of these newer names will become winners over time to join the top picks I kept from the old winners like $BEAM, $FATE, $BPMC and $MRTX. I don't know which ones will emerge as those winners. Only the data, time and events will tell.

15/ The strategy is to continue to cash out the net and fill up on promising companies. Then I weed out the ones that are not worthy. I only keep the best of the best until I end up with a portfolio filled with winner.

16/ I had that issue a few year ago when many of my companies seemed to be winners and all was going wonderful. Then a bunch of them got bought out and it was back to the drawing board. Rinse and repeat.