Biotech Basket Update: +51.88% Return on Invested Capital

The Power of Position Sizing

Back in October, I built a small “biotech basket” consisting of four names: TWST, REGN, NTLA, and CATX. I decided to weight my higher-conviction ideas at 3% each while keeping the more speculative names at a smaller 1% weight.

I know that investing in biotech always comes with volatility, and this cohort proved it. NTLA was hit after some bad news and the stock plummeted -50%. I took the loss in a non-taxable account so I could not even use it as a write-off. However, because it was sized correctly, this was barely a scratch on the total portfolio.

We lost some readers along the way especially those who don’t respect position sizing but the results speak for themselves: by sticking to the math of position sizing, this basket delivered a 50%+ return even as the QQQ dropped ~7%. It proves that generating alpha isn’t just about selecting the right tickers but also having the discipline to size appropriately.

The Individual Impact:

• TWST (3% position, +110%): Contributed +3.30% to the total portfolio.

• REGN (3% position, +45%): Contributed +1.35% to the total portfolio.

• NTLA (1% position, -50%): Contributed -0.50% to the total portfolio.

• CATX (1% position, flat): Contributed 0.00% to the total portfolio.

For disclosure:
I have already covered my entire cost basis in TWST, so those are now 'house shares.' I am currently on my second round in REGN after booking a 50% gain on the first. I have exited NTLA for a 50% loss and closed CATX for a nominal 2–3% gain, essentially flat.

The Bottom Line:
Even with one position losing half its value, this 8% total allocation delivered a 4.15% gain to the overall portfolio. That represents a ~52% return on the capital actually deployed. The power of Position Sizing.

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Thank you for reading and see you for the next one!