A Club Conversation with Michael Liu, Biotech Trading

Feb 16, 2026

Michael Liu, founder of Capuchin Capital and former analyst at Intelligent Fanatics, focuses on microcap and biotech trading. He talks about his shift to biotech-focused trading, navigating illiquid and volatile biotech markets, position sizing and risk rules, the role of institutional players and scale, and research tricks for small companies. Short, practical, and contrarian takes on trading small-cap biotech situations.

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ANECDOTE

From Teen Day Trader To Fund Manager

Michael Liu started in microcaps in high school, day trading small amounts and writing on Seeking Alpha. He later worked at Intelligent Fanatics Capital Management before launching Capuchin Capital in 2025 to focus on microcap biotech trading.

INSIGHT

Shareholder Transitions Drive Big Moves

Michael identifies 'shareholder-based transitions' as the key driver of explosive microcap moves when old holders are indifferent and new buyers are indiscriminate. He finds biotech particularly fertile because single news items trigger forced selling or buying by large institutions.

ADVICE

Use Liquidation Math As A Floor

Calculate liquidation value by subtracting burn and shutdown costs from cash to find a floor in failed-drug biotechs. Use that floor to size positions when institutions become price-insensitive sellers on bad news.

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In this conversation, Michael Liu, founder of Capuchin Capital, shares his journey from early experiences in investing to establishing his own firm focused on microcap and biotech investments. He discusses his unique investment strategies, the importance of understanding shareholder dynamics, and the challenges of managing investor expectations. Michael also emphasizes the significance of mental clarity in trading, shares resources for researching small companies, and challenges conventional investing wisdom. Throughout the discussion, he provides insights into the volatility and opportunities present in the biotech sector, as well as practical advice for aspiring investors.

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Chapters

00:00 Introduction to Michael Liu and Capuchin Capital

01:40 Michael Liu's Early Days in Investing

06:04 Transitioning to Capuchin Capital

10:24 Investment Strategies and Experiences

15:24 Understanding Biotech Investment Dynamics

18:36 Case Studies in Biotech Investments

23:47 Navigating the Challenges of Fund Management

33:22 Trading Biotech Stocks: Liquidity and Timing

36:00 The Importance of a Clear Mind in Trading

38:53 Daily Routines and Mental Balance for Traders

40:36 Position Sizing and Risk Management Strategies

44:30 Researching Small Companies: Resources and Techniques

46:23 Advice for Aspiring Investors: Education and Passion

51:00 Challenging Conventional Investing Wisdom

54:59 Understanding Scale in Investing Strategies

58:52 Utilizing Resources for Press Releases and News

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