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Today – taking a break from our normal publishing schedule – we are continuing our “12 Days Of Christmas” series.

Better than two turtle doves and three French hens combined, Porter & Co.’s version of the “12 Days Of Christmas” brings you something actually useful: hard-earned investment lessons to guide you through 2026. For the remainder of the year – in place of our regular research and insights – we will dish out key lessons from 2025… some earned from pain and others from gain.

Over the past year, editors across all of our publications have recommended stocks, bonds, or other trades that have resulted in a mix of outsized performances and humbling underachievements. Having begun on Tuesday, December 23, and extending through January 2, we will reveal a pivotal lesson – about why a stock soared to double-digit returns, or why one languished. We will also explore the ones that got away – that we sold too soon or that we didn’t recommend at all. 

Tech Frontiers editor Erez Kalir looks back at how his strategy of risk management – relying more on position sizing than stop losses – has played out over the performance of the portfolio. 

On Monday, Porter explained that for various reasons – including less foreign ownership of U.S. Treasuries, continued American energy independence, and the Trump administration’s desire to strengthen the private-sector economy – major structural changes are taking place in the global economy. In the short term, the changes are going to cause market volatility. But over the long term, these shifts should make the U.S. economy much bigger, and make U.S. businesses much more valuable. It should also reduce the size of government, and enable tremendous growth in America’s private sector.

He ended Monday’s Daily Journal with this message:

Today, he shares that idea…

Virtually every titan of the investing world – Warren Buffett, Stan Druckenmiller, Jim Simons – made their fortune investing other peoples’ money.

There is one notable exception: Wayne Rothbaum, the little-known billionaire who is arguably the greatest biotech investor in the world.  

Rothbaum has never raised or deployed outside capital. In his investing journey, there’s been no glossy pitch deck, no management fees, no carried interest – and no safety net. Every decision Rothbaum has made, every dollar he has committed, every loss he has absorbed has come directly out of his own net worth. It’s a far more unforgiving path to wealth. And it imposes a discipline few institutional investors ever apply.

Over decades, Rothbaum has turned his personal capital into one of the great fortunes in biotech and indeed the entire investment game. Making incredibly concentrated bets in contrarian, little-known companies such as Pharmacyclics, Acerta, and Cougar Biotech, Rothbaum’s approach has been marked by deep scientific understanding, patience through volatility, and a ruthless focus on long-term expected value that pierces through short-term ups and downs. His career stands as a quiet rebuttal to one of the most persistent myths in investing.

Let me explain . . . 

Most people still think of biotech as speculative – a domain of lottery tickets, binary outcomes, and roulette-type wagers on Food And Drug Administration (“FDA”) decisions. In this telling, biotech success depends less on judgment than on chance or fortune. A trial works or it doesn’t. A molecule hits or fails. You get lucky, or you don’t.

But Rothbaum’s journey proves otherwise. Rothbaum has grasped an essential truth that applies both in life and in biotech: Outcomes are uncertain, but some situations offer overwhelmingly favorable asymmetry. Others do not. The work lies in telling the difference – and then having the temperament to sit through violent price swings without confusing volatility for error.

This approach has likewise guided our journey at Tech Frontiers, which we launched in January 2024 as Biotech Frontiers.

Over the past two years, we’ve made 24 biotech recommendations. Of those, eight – or fully one third – have appreciated over 100% from our recommended entry prices. And we’ve achieved these results not during a biotech bull market… but instead, at a time when biotech has been mired in the worst bear market in its history, from which it has only just begun to emerge in the second half of 2025. 

Our success to date reflects the extraordinary opportunity that exists in biotech when fear is widespread, capital is scarce, and valuations are at historic lows, not historic highs – and far from the bubble territory of the AI world. But it also reflects something else: Our approach to risk management. 

As I observed in our Investment Guidebook, biotech brutally punishes recklessness. To succeed, investors must have a precise structure for their decisions and then stick to that structure with discipline. Our decision at Tech Frontiers structure rests on three pillars.

Pillar #1 is a well-defined investment framework

Every biotech recommendation we’ve made has successfully passed through our seven-part investment filter: 

This framework isn’t designed to generate excitement. It’s designed to eliminate mistakes. It keeps us out of story stocks, science projects, and companies whose survival depends on a single fragile assumption. It also gives us the conviction to hold positions through periods of discomfort – because we know we’ve eliminated the obvious mistakes in advance. 

Pillar #2 is to rely on position sizing, not stop losses, to mitigate downside risk

Over the years, I’ve spoken often with Porter often about the benefits of stop losses, and especially trailing stops. He and I agree that for many investments, trailing stops are a terrific and woefully underutilized tool to manage risk. 

But they’re not helpful in biotech. Biotech stocks are inherently volatile. More importantly, their volatility is often driven not by fundamentals but instead by headlines and sentiment. As a result, stop losses can do more harm than good – prompting investors to exit positions and to lock in losses at precisely the moments they should be doubling down to take advantage of misplaced fear.

Sagimet Biosciences (SGMT) – one of our biggest winners, and my favorite stock in the Tech Frontiers portfolio – offers a case in point. Within weeks of recommending Sagimet in January 2024, the company released clinical-trial results that propelled the stock to more than double in price. But after the company raised capital on the back of these positive results, the stock began a precipitous decline, eventually falling below the price where we’d originally recommended it. Had we exited the position with a trailing stop, we could not have doubled down at these lower levels… And we would have missed the powerful recovery that eventually saw Sagimet more than double again from its lows.

But shunning stop losses in biotech doesn’t mean we’re blind to risk. In place of stop losses, we use an alternative tool better suited to help manage our downside: position sizing. By understanding that positions do not need to be “one size fits all” – and instead, that we can calibrate our position size to reflect the risk of purchasing a biotech stock at a specific time and price – we’re able to manage our downside risk precisely.

Our investments in aTyr Pharma (ATYR) and Humacyte (HUMA) provide compelling evidence that this approach works. We knew when we recommended these stocks that they carried unusually high degrees of risk. We also understood that forthcoming information could potentially improve the risk/reward. Accordingly, we recommended that subscribers initiate both as “toeholds,” positions significantly smaller than an ordinary Tech Frontiers position. For aTyr, we recommended one-tenth the usual size, and for Humacyte, one-third.

Both aTyr and Humacyte ended up being rare losers in the Tech Frontiers portfolio (where our positive “hit” rate has been above 80%). But because we sized these positions as toeholds, subscribers who followed our sizing guidance suffered minimal financial damage – losing less capital in both positions combined than in even one of our average-size winners.  

Pillar #3 is exit discipline – selling half our positions when they’ve gained 100%

The final rule that helps structure our decisions is also the simplest: When a position doubles, we sell half.

This rule isn’t an expression of pessimism, but of humility: When a position has doubled, we’ve been right. Selling half recognizes that we’re fallible even (and perhaps especially) after success. It also accomplishes several practical things in one stroke: It locks in gains, recovering our entire principal. It reduces psychological pressure. And it leaves us with something invaluable: free optionality.

Our Iovance Biotherapeutics (IOVA) recommendation illustrates the benefits of this rule pointedly. Shortly after we recommended it in February 2024, the company received a landmark approval from the FDA, and its share price promptly doubled. We sold half. But unfortunately – and despite my optimism, which ended up proving misplaced – Iovance management badly mishandled its therapy’s commercial launch. The stock cratered, falling below our initial entry price. However, because we had harvested back our principal by selling half, we were protected.

Ironically, my two biggest regrets so far in the Tech Frontiers portfolio come not from following this rule, but from deviating from it. Chimerix (CMRX) and uniQure (QURE) are two Tech Frontiers recommendations that performed fantastically well for us: Chimerix gained over 25% within two months of our recommendation, while uniQure appreciated over 200% within six months. But in both cases, we exited the positions entirely – and left a lot of money on the table.

Chimerix was ultimately acquired at about 10x the price of our original recommendation, while uniQure announced additional data that rocketed its stock to a 7x gain from our entry price. I’m pained that we missed the chance to capture these profits.

The good news is I’ve also learned from these experiences. Our mistake with Chimerix and uniQure was not analytical – we didn’t get the recommendation wrong – but instead about process: We abandoned a rule that exists precisely to balance a healthy appetite for gains with humility. We should have simply stuck to our decision rule and sold half at a 100% gain.

Porter’s childhood friend and business partner Steve Sjuggerud often wrote – it only takes one biotech bull market to earn life-changing wealth.

The next biotech bull market is barely getting started – we’re in the first inning of a long game. What’s even better is that the transformations unfolding in biotech over the coming decade – which I’ve described as the Era Of Genetic Medicines – stand poised to deliver truly miraculous drugs and treatments for treating previously intractable diseases. For the investors who back these cures early, there will be trillions of dollars of gains.  

Our decision structure and risk management has already delivered amazing results for us in this field. I’m confident it will continue to serve us well as we head into what may be biotech’s next bull market.

I can’t promise you that we’ll earn the same returns as Wayne Rothbaum. But I know our approach is guided by a similar discipline.

Erez has degrees from Stanford, Oxford and Yale and has worked at McKinsey & Co. and for Julian Robertson at Tiger Management. Porter & Co. has recently expanded the domain of Erez’s investment research beyond biotech to include tech stocks, the blockchain, and science.

Three of the 11 open positions in the Tech Frontiers portfolio are up 2x or more since he recommended them. There are three more that have doubled before he suggested selling them to take gains. Overall, the portfolio is up 42% since he launched it last year. 

Erez’s next recommendation reaches subscriber inboxes on Thursday, January 8, 2026, at 4 PM ET. To get full access to that recommendation – plus a list of all open recommendations, “Best Buys,” the watchlist, closed positions, and all archived issues – click here to learn about becoming a subscriber.

Porter & Co.
Stevenson, Maryland