Biotech stocks can offer some of the most spectacular returns in the stock market, with relatively small companies sometimes seeing their share prices double or even triple following positive clinical trial results, regulatory approvals or takeover announcements.
Of course, the opposite can also happen, with disappointing trial results or rejected drug applications wiping out a substantial proportion of a company’s value almost overnight.
So how do you identify the potential winners whilst avoiding some of the many pitfalls in this notoriously volatile sector?
That’s where ROTY Biotech Community, a specialist investment service run by experienced biotech investor Jonathan Faison through the popular Seeking Alpha platform, aims to help.
ROTY stands for Runners of the Year, which gives a good indication of the service’s approach. Essentially, it looks to identify biotech companies with the potential to deliver substantial share price gains, particularly those approaching important clinical or commercial developments.
The service is led by Faison, who has more than 15 years of experience investing in biotech stocks, and brings together a community of hundreds of investors, traders and industry veterans.
Members receive access to model portfolios, individual stock recommendations, investment research and an active live chat community, where investors can exchange ideas and discuss opportunities.
One interesting aspect of ROTY is its emphasis on companies that already have approved products and are generating commercial momentum, alongside selected earlier-stage biotech companies with promising drug pipelines.
This could potentially offer a more balanced approach than simply chasing speculative clinical-stage stocks in the hope of finding the next blockbuster treatment.
There is also an emphasis on risk management, position sizing and identifying catalysts that could drive share prices higher.
However, whilst the strategy certainly sounds promising, biotech investing remains an extremely challenging business. Even experienced investors can suffer heavy losses, and identifying attractive companies is only half the battle. Knowing when to buy, take profits or cut losses can be just as important.
So can ROTY Biotech Community really deliver profitable stock picks and justify its subscription cost?
To find out, we’re going to put the service through a live trial here at Trade Stocks and Forex, tracking its recommendations and monitoring how they perform in real market conditions.
We’ll be looking at the profitability of the selections, the quality of the research, the ease of following the recommendations and, ultimately, whether the service offers genuine value for money.
As ever, we’ll report our findings as the trial progresses, so stay tuned to see how ROTY Biotech Community gets on.
In the meantime you can check out ROTY Biotech Community for yourself here.
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