Recap Hey guys! If you’re new here, I am running a 6 month long experiment to see if a Large Language Model (like ChatGPT) can be a skilled micro-cap portfolio manager. I give it daily closing data at the end of every trading day and it has full control over its assets. Also, once every week it gets to use Deep Research to completely reevaluate it’s account. Can ChatGPT carve consistent alpha in the dangerous world of micro-cap stocks? Lets find out. Overview The week started off promising. After Tuesday’s close, FBIO’s key update hit: the FDA cited manufacturing issues during inspection and issued a rejection. The stock fell ~30% on Wednesday, and the position was liquidated at the open. Modest gains followed over the next two days, but the portfolio still finished down week-over-week. This marks a new low for ChatGPT, driven by concentration risk and limited diversification. Performance Graph Current Portfolio [ Risk & Return ] Max Drawdown:                            -42.81%   on 2025-10-01 Sharpe Ratio (period):                   -0.5159 Sharpe Ratio (annualized):               -0.5864 Sortino Ratio (period):                  -0.5693 Sortino Ratio (annualized):              -0.6470 [ CAPM vs Benchmarks ] Beta (daily) vs ^GSPC:                    0.6119 Alpha (annualized) vs ^GSPC:             -48.64% R² (fit quality):                          0.004     Obs: 67 Note: Short sample and/or low R² — alpha/beta may be unstable. [ Snapshot ] Latest ChatGPT Equity:           $         81.42 $100.0 in S&P 500 (same window): $        108.23 Cash Balance:                    $         20.33 [ Holdings ] ALDXShares: 6.0Buy Price: $4.9475Cost Basis: $29.685Stop Loss: $4.00SPROShares: 13.0Buy Price: $1.8900Cost Basis: $24.570Stop Loss: $1.65 ALDX ALDX Shares: 6.0 Buy Price: $4.9475 $4.9475 Cost Basis: $29.685 $29.685 Stop Loss: $4.00 $4.00 SPRO SPRO Shares: 13.0 Buy Price: $1.8900 $1.8900 Cost Basis: $24.570 $24.570 Stop Loss: $1.65 $1.65 Portfolio Review Portfolio Review To see the full report: Click Here Click Here The portfolio now holds four micro-cap biotech stocks, each driven by clear upcoming catalysts and balanced by risk controls (stop losses, position sizing). The strategy aims to capitalize on FDA or clinical milestones while maintaining downside protection. four micro-cap biotech stocks 1. Aldeyra Therapeutics (ALDX) – High-Conviction PDUFA Play 1. Aldeyra Therapeutics (ALDX) – High-Conviction PDUFA Play Catalyst: FDA decision (PDUFA date: Dec 16) for dry eye drug Reproxalap.Thesis: Strong chance of approval supported by positive trial data; potential partnership upside with AbbVie.Action: Trimmed position to manage binary FDA risk; retained core for major upside.Target: ~$9.50 average analyst price.Role: Near-term catalyst cornerstone. Catalyst: FDA decision (PDUFA date: Dec 16) for dry eye drug Reproxalap. Catalyst: Reproxalap Thesis: Strong chance of approval supported by positive trial data; potential partnership upside with AbbVie. Thesis: Action: Trimmed position to manage binary FDA risk; retained core for major upside. Action: Target: ~$9.50 average analyst price. Target: Role: Near-term catalyst cornerstone. Role: Near-term catalyst cornerstone 2. Spero Therapeutics (SPRO) – Low-Risk Value with Medium-Term Catalyst 2. Spero Therapeutics (SPRO) – Low-Risk Value with Medium-Term Catalyst Catalyst: NDA filing and acceptance (expected late 2025) for tebipenem HBr in complicated UTIs.Thesis: Backed by GSK partnership; Phase 3 success largely de-risks program.Valuation: ~$2/share, ~$110M market cap—seen as undervalued.Role: Steady compounder with limited binary risk and steady upside potential.Risk Control: Stop at $1.65. Catalyst: NDA filing and acceptance (expected late 2025) for tebipenem HBr in complicated UTIs. Catalyst: tebipenem HBr Thesis: Backed by GSK partnership; Phase 3 success largely de-risks program. Thesis: Valuation: ~$2/share, ~$110M market cap—seen as undervalued. Valuation: Role: Steady compounder with limited binary risk and steady upside potential. Role: Steady compounder Risk Control: Stop at $1.65. Risk Control: 3. OKYO Pharma (OKYO) – Early Catalyst with Asymmetric Upside 3. OKYO Pharma (OKYO) – Early Catalyst with Asymmetric Upside Catalyst: FDA meeting outcome or partnership deal after strong Phase 2 results in neuropathic corneal pain.Thesis: Novel treatment in an area with no approved drugs; potential for partnership or buyout.Risk Control: Moderate position, stop at $1.60.Role: Early-stage high-upside play; limited loss, multi-bagger potential if progress continues. Catalyst: FDA meeting outcome or partnership deal after strong Phase 2 results in neuropathic corneal pain. Catalyst: Thesis: Novel treatment in an area with no approved drugs; potential for partnership or buyout. Thesis: Risk Control: Moderate position, stop at $1.60. Risk Control: Role: Early-stage high-upside play; limited loss, multi-bagger potential if progress continues. Role: Early-stage high-upside play 4. Tiziana Life Sciences (TLSA) – High-Risk, High-Reward Pipeline Bet 4. Tiziana Life Sciences (TLSA) – High-Risk, High-Reward Pipeline Bet Catalyst: Ongoing trials in MS, ALS, and Alzheimer’s using intranasal foralumab immunomodulation.Thesis: Novel delivery mechanism with early promise; multiple upcoming data readouts possible.Positioning: Smaller size, wider stop due to risk.Role: “Multiple shots on goal” speculative play; any positive interim data could drive major gains. Catalyst: Ongoing trials in MS, ALS, and Alzheimer’s using intranasal foralumab immunomodulation. Catalyst: foralumab Thesis: Novel delivery mechanism with early promise; multiple upcoming data readouts possible. Thesis: Positioning: Smaller size, wider stop due to risk. Positioning: Role: “Multiple shots on goal” speculative play; any positive interim data could drive major gains. Role: “Multiple shots on goal” Next Week & Overall Strategy Next Week & Overall Strategy Catalyst Timeline Mix:Immediate: ALDX FDA decisionMedium-term: OKYO (partnership/FDA update), SPRO (NDA news)Long-term: TLSA pipeline progressApproach: Diversified catalyst exposure, disciplined risk management (stops, trimming), and readiness to pivot.Goal: Outperform S&P 500 by capitalizing on biotech catalyst-driven upside while containing downside risk. Catalyst Timeline Mix: Catalyst Timeline Mix: Immediate: ALDX FDA decision Immediate: Medium-term: OKYO (partnership/FDA update), SPRO (NDA news) Medium-term: Long-term: TLSA pipeline progress Long-term: Approach: Diversified catalyst exposure, disciplined risk management (stops, trimming), and readiness to pivot. Approach: Goal: Outperform S&P 500 by capitalizing on biotech catalyst-driven upside while containing downside risk. Goal: My Thoughts With no major catalysts immediately on the horizon, the portfolio’s performance in the near term will likely be driven more by momentum and sentiment rather than binary event outcomes. ChatGPT has shown strength in navigating momentum-driven setups before, particularly ATYR’s run, so the next few weeks will test whether it can capture a similar trend within this new lineup. The focus now shifts from reaction to anticipation, as we wait for the next wave of biotech catalysts. This project is purely educational and research-focused. Nothing here should be taken as financial advice. Full disclaimer: Here Here GitHub Page and Email: GitHub Page and Email: To see all past deep research reports and summaries: Here Here Full chats: Here Here Have a question? Check out: Q&A Q&A If you’d like to see the raw logs and full portfolio simulation code: GitHub Page GitHub Page If you have any suggestions or advice, my Gmail is: nathanbsmith.business@gmail.com nathanbsmith.business@gmail.com

Can ChatGPT Outperform the Market? Week 14

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