Dan Rasmussen and Greg Obenshain of Verdad Capital discuss their white paper on quantitative investing in biotech. Topics include why biotech’s complexity makes it attractive for systematic investors, how specialist fund ownership serves as a quality signal, and why insider buying and spending-based valuation metrics can outperform traditional financial analysis. The conversation also examines momentum within therapeutic categories, risk management on the short side, and how diversification and rebalancing help address biotech’s event-driven volatility.
Verdad paper on investing in biotech: https://t.co/JZ1uDURDG2
[00:00:00] Introduction to biotech quant paper
[00:02:53] Why biotech attracts value investors
[00:05:07] Specialist ownership as quality signal
[00:08:24] Defining biotech sector specialists
[00:11:29] Acquisition patterns and return drivers
[00:19:37] Managing short risk in biotech
[00:23:06] Short interest as negative signal
[00:27:38] Insider buying predictive power
[00:32:44] Spending-based valuation framework
[00:40:21] Classifying biotech by clinical trials
[00:45:34] Momentum within therapeutic categories
[00:48:23] Events versus underlying return drivers
[00:51:34] Verdad’s contrarian investing philosophy
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