Investing in biotech stocks - My experience so far

Voyager2002

EVFM up by more than 20 per cent this evening! Truly an unpredictable world. Anyone planning to sell now and buy back once the prices are sufficiently low will need a great deal of luck.

BrockStoker

ferreroreeses said:

Very insightful post, if you don't mind disclosing, what have your average returns been each year?

Thanks. Not at all. It has been a bit of a roller-coaster ride to say the least.

Keep in mind I started with about 15 stocks (this may not be a bad strategy if you are just starting, since you are more likely to get at least one or two winners, although I'd suggest more like 7-10 stocks max, and try to keep it only the "best" stocks) which I started buying around the start of Nov 19, just as the biotech sector started to pick up after a few years of doing nothing, so I got a nice initial boost from that. By 19/02/21 I had £63K invested, and the value was nearly £140K, but since then it's been all down hill. I did decide that I had too many stocks around that time, and changed tack to what I think will be the more profitable (but also risky) strategy in the long term, and concentrating on just one or two stocks, with a couple of smaller side bets in more risky stocks here and there. So another 40K added in 2021 giving me a current total of £103K invested, and today that is currently worth 89.5K so I am technically down, and mainly because the 40K of contributions from last year have halved in value. My original portfolio (~15 stocks swapped for two - ARWR and EVFM, but mostly ARWR) is still in profit since I started buying ARWR at around $21.

If you are thinking of dabbling, now is not a bad time IMHO, just don't go all in - keep plenty of dry powder, do your due diligence, and don't risk anything you can't afford to loose, or need any time soon. I believe stocks are a good way to make significant money, but don't expect to do so overnight, and be prepared for your portfolio to go deep into the red before you see any green.

Do formulate a strategy and a plan for every situation. IMHO it's important to take advantage of market weakness and turn it to your own advantage, and the only way to achieve this successfully that I know of is to buy when others are fleeing (like now), but only buy companies that you have faith in after having done some DD. Once you have a toe in the water, keep up the DD, and when you become more confident commit more. This does take some discipline, and it may not be for everyone. The only way to find out if you have the right traits that are conducive to making money out of stocks is to try with real cash, but be careful. Markets can remain irrational for prolonged periods, and there is so much mis-info/FUD out there it can get confusing for someone new to the markets - many people decide to get out just at the wrong time when they get a little spooked. If you really want to sleep well at night you need to know what you own well enough to have confidence in it when times get bad and many are saying it's a bad investment and be prepared to buy at these times - not all find it easy, but it is, at least in theory!

Keep in mind I may also be wrong, and may end up loosing money myself. There are no guarantees, but if you do get it right, then there is the potential to make many times your original investment. I would suggest going through the whole thread if you have not already - sorry it's a long read and I tend to repeat myself - as there are so many potential pitfalls in biotech investing, and paying note to the dangers as well as the best ways to mitigate those dangers.

BrockStoker

EVFM has life in it yet! (if you can't read the article because you've "reached your free limit" try refreshing the page, and stopping the refresh as soon as the text appears)

Still risky as hell though, and a good chance of dilution coming again, but the chances of it flourishing just increased significantly. Will be interesting to see what it does in the days to come. I think it'll be back over $1 again by 1-2 weeks, but that may be overly optimistic!

BrockStoker

Voyager2002 said:

EVFM up by more than 20 per cent this evening! Truly an unpredictable world. Anyone planning to sell now and buy back once the prices are sufficiently low will need a great deal of luck.

Just saw your post Voyager. Yes, nice gap up, but still a way to go before it comes close to break even, here at least. I agree with your assessment - trying to time it has a good chance of being futile.

Still a tempting price too. £1K invested @ $.5 could easily turn in to 10K ($5 per share) in a short space of time (months or even weeks) if this continues.

Moe_The_Bartender

BrockStoker said:

Voyager2002 said:

EVFM up by more than 20 per cent this evening! Truly an unpredictable world. Anyone planning to sell now and buy back once the prices are sufficiently low will need a great deal of luck.

Still a tempting price too. £1K invested @ $.5 could easily turn in to 10K ($5 per share) in a short space of time (months or even weeks) if this continues.

Of course it could. It turned £10k into £1k in under a year so no reason why it couldn’t do the opposite.

BrockStoker

Moe_The_Bartender said:

BrockStoker said:

Voyager2002 said:

EVFM up by more than 20 per cent this evening! Truly an unpredictable world. Anyone planning to sell now and buy back once the prices are sufficiently low will need a great deal of luck.

Still a tempting price too. £1K invested @ $.5 could easily turn in to 10K ($5 per share) in a short space of time (months or even weeks) if this continues.

Of course it could. It turned £10k into £1k in under a year so no reason why it couldn’t do the opposite.

To take it a step further, the original £1K investment could turn into £100K if the share price goes to $50 (entirely possible). For those willing to risk £10K, that would be worth £1m @ $50 per share.

While I know this is all obvious to us, perhaps it's not quite so obvious to others reading this. I always like to do these simple calculations when I'm looking at a stock, so I can at least have a plan/aim. Of course the plan might not always work out, but it always helps to have at least a rough idea of where you want to go.

BrockStoker

@adindas Albert posted this on the AMRS YHMB not long ago:

AMRS Short - Jan 3 - Jan 19, 2022

Date
Volume
Short Volume
% of Vol Shorted

Jan 19
1,315,224
702,045
53.38%

Jan 18
1,879,133
893,612
47.55%

Jan 14
1,802,499
775,560
43.03%

Jan 13
3,350,511
1,661,233
49.58%

Jan 12
4,740,775
2,838,614
59.88%

Jan 11
1,491,427
769,267
51.58%

Jan 10
1,714,540
768,234
44.81%

Jan 07
1,331,213
656,245
49.30%

Jan 06
1,931,926
725,160
37.54%

Jan 05
2,674,176
976,405
36.51%

Jan 04
2,944,987
1,004,962
34.12%

Jan 03
3,689,092
1,486,741
40.30%

I'm not entirely sure what to make of the numbers, but it seems like quite a full on attack by the shorts to me.

adindas

BrockStoker said:

@adindas Albert posted this on the AMRS YHMB not long ago:

AMRS Short - Jan 3 - Jan 19, 2022

Date
Volume
Short Volume
% of Vol Shorted

Jan 19
1,315,224
702,045
53.38%

Jan 18
1,879,133
893,612
47.55%

Jan 14
1,802,499
775,560
43.03%

Jan 13
3,350,511
1,661,233
49.58%

Jan 12
4,740,775
2,838,614
59.88%

Jan 11
1,491,427
769,267
51.58%

Jan 10
1,714,540
768,234
44.81%

Jan 07
1,331,213
656,245
49.30%

Jan 06
1,931,926
725,160
37.54%

Jan 05
2,674,176
976,405
36.51%

Jan 04
2,944,987
1,004,962
34.12%

Jan 03
3,689,092
1,486,741
40.30%

I'm not entirely sure what to make of the numbers, but it seems like quite a full on attack by the shorts to me.

Indeed, the shortsellers keep attacking the stock. The data above suggests that they keep adding their short position. You could observe that the percentage keep increasing, they keep adding their short position day by day. Also the availability of the stock to borrow is becoming less day by day. The shortsellers intention here is to put pressure on price to bring the price further down.

When a shortseller “shorts” a stock, they are selling a specific number of securities that they currently do not own in hopes that the price of the asset will eventually fall. When an investor borrows the shares from a broker in order to immediately sell them, they will eventually be required to return them. If the investor was able to sell the shares at a high price point and then repurchase them for a significantly lower price, they will be able to realize a profitable gain after returning the shares to the original broker.

So the short sellers are making money when the stock price falling. So the more price drops the more money they will make when they finally close (repurchase, buy back) their position.

But for AMRS, it seems they are not very successful to bring the price further down as I just checked it the price action since the last few days, it literally stays flat despite the short seller’s attack. But this also explains why the price stays low (e.g still under the short sellers pressure).

Like I mentioned before the possibility of short squeeze to happen does not just depends on the short Volume / Short interest. There are other factors such as Days to cover (DTC), Utilization (U), and Cost to Borrow (CTB). Unfortunately, the above is not sufficient to draw a good conclusion about the possibility for the short squeeze to happen. Ortex / Fintel produce produce analysis as well as score. Unfortunately those data are only availbale to paid subscribers.

Voyager2002

This is truly an irrational and unpredictable segment of the market! I have just read the two following (and apparently contradictory) news items that appeared as alerts on my FT portfolio page:
1.

SORRENTO THERAPEUTICS ANNOUNCES COVISHIELD (STI-9167), A BROAD-SPECTRUM NEUTRALIZING ANTIBODY, POTENTLY NEUTRALIZES OMICRON AND OMICRON (+R346K) VARIANTS OF SARS-COV-2

https://markets.ft.com/data/announce/detail?dockey=600-202201200900PR_NEWS_USPRX____NY36493-1

2. SRNE:NAQ 

price reached a new 52-week low of 4.22 at 15:25 GMT.

BrockStoker

adindas said:

BrockStoker said:

@adindas Albert posted this on the AMRS YHMB not long ago:

AMRS Short - Jan 3 - Jan 19, 2022

Date
Volume
Short Volume
% of Vol Shorted

Jan 19
1,315,224
702,045
53.38%

Jan 18
1,879,133
893,612
47.55%

Jan 14
1,802,499
775,560
43.03%

Jan 13
3,350,511
1,661,233
49.58%

Jan 12
4,740,775
2,838,614
59.88%

Jan 11
1,491,427
769,267
51.58%

Jan 10
1,714,540
768,234
44.81%

Jan 07
1,331,213
656,245
49.30%

Jan 06
1,931,926
725,160
37.54%

Jan 05
2,674,176
976,405
36.51%

Jan 04
2,944,987
1,004,962
34.12%

Jan 03
3,689,092
1,486,741
40.30%

I'm not entirely sure what to make of the numbers, but it seems like quite a full on attack by the shorts to me.

Indeed, the shortsellers keep attacking the stock. The data above suggests that they keep adding their short position. You could observe that the percentage keep increasing, they keep adding their short position day by day. Also the availability of the stock to borrow is becoming less day by day. The shortsellers intention here is to put pressure on price to bring the price further down.

When a shortseller “shorts” a stock, they are selling a specific number of securities that they currently do not own in hopes that the price of the asset will eventually fall. When an investor borrows the shares from a broker in order to sell them, they will eventually be required to return them. If the investor was able to sell the shares at a high price point and then repurchase them for a significantly lower price, they will be able to realize a profitable gain after returning the shares to the original broker.

So the short sellers are making money when the stock price falling. So the more price drops the more money they will make when they finally close their position.

But for AMRS, it seems they are not very successful to bring the price further down as I just checked it the price action since the last few days, it literally stays flat despite the short seller’s attack. But this also explains why the price stays low (e.g still under the short sellers pressure).

Like I mentioned before the possibility of short squeeze to happen does not just depends on the short Volume / Short interest. There are other factors such as Days to cover (DTC), Utilization (U), and Cost to Borrow (CTB). Unfortunately, the above is not sufficient to draw a good conclusion about the possibility for the short squeeze to happen. Ortex / Fintel produce produce analysis as well as score. Unfortunately those data are only availbale to paid subscribers.

I do wonder how well the shorts research before shorting. It seems to me that it's not that much. I mean, look at the potential catalysts Amyrs could announce at any time now (completion of factory is probably the big one, but there are others potentially), which could send the price up. I guess while the market conditions are the way they are, shorts feel like they have free reign. Never the less it feels like the shorts are making a huge mistake here, but perhaps I'm being naive.