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In 1984, Warren Buffett wrote an article to promote value investing called The Superinvestors of Graham-and-Doddsville. The piece was based on a speech he gave in honorarium of Graham and Dodd’s book, Security Analysis and in response to the efficient-market hypothesis, a fashionable theory at the time. The article’s introduction refutes the idea that outstanding results in investing can be explained by a simple coin tossing experiment when so many great investors are value investors. Where value investors assess a business’ intrinsic value then decide whether to invest. Similarly in life sciences, there have been a series of investment firms that have been able to make great investments and multiply their capital. Just as a coin tossing experiment cannot explain the success of Buffett, Munger, Schloss, and Ruane the same is true for a set of life sciences investors.
Life sciences is a very impactful but treacherous place to invest. The opportunity to develop a new medicine for say AML is intertwined with the possibility the underlying data is flawed. The field constantly has brought in new entrants who come in with the excitement of transforming healthcare and often leave with the realization that they may not be the best person to do it. Not only does an investor in life sciences need to have…
