I'm feeling for you @DrPete and thanking you enormously for the well written and considered post. The thoughts/information/events described above are invaluable for anyone who may find themselves in a similar situation.

Really respect you for sharing this experience and your learnings from this unpleasant and vulnerable experience.

We stand on the shoulders of giants in this community as a way to gain some hedge and point of difference on the rest of the market.

In the words of David Goggins "don't stop when you're tired, stop when you're done.

Mad respect and appreciation for a leader like you Pistol Pete who shares his time and learnings with others for nothing more than the work being the reward.

Sounds brutal @DrPete.

I don't generally like sharing paywalled articles but ... you were right in your suspicions that it was Waislitz.

I've been out of XF1 for a while now but can share my unvarnished thoughts at the Sydney Meetup, hope to see you there.

See below for AFR article on it this morning...

Alex Waislitz’s Thorney swoops on failed Seek target Xref

Jemima Whyte, Emma Rapaport and Tess Bennett

Updated Feb 5, 2025 – 8.05am

Billionaire investor Alex Waislitz has swooped on ASX-listed workplace software firm Xref a day after helping scupper a $41 million buyout of the company proposed by Seek and backed by the board.

Mr Waislitz’s Thorney Investments vehicle increased its stake in Xref, which makes software that assists with pre-employment and reference checks, from 6.7 per cent to 8.7 per cent on Tuesday. Shares had slumped more than 20 per cent on the failure of the deal with Seek.

Rich Lister Alex Waislitz. Eamon Gallagher

The vote against the takeover proposed by the jobs listing giant was surprising, given it had been endorsed by the board and BDO, the independent expert engaged to assess if the offer was fair and reasonable.

However, the company said only 67.6 per cent of Xref shares were cast in favour of the buyout. That fell short of the required 75 per cent threshold.

“We did vote against. We have been pretty consistent with our view and as to how we’ve communicated with the company about it … We feel the company has runway and will continue to support it,” a Thorney spokesman said, describing Seek’s takeover offer as “opportunistic”.

Xref shares dived 3.5¢ to 12¢ on Tuesday, a fall of almost 23 per cent, giving the company a market capitalisation of just over $23 million.

Alberto Colla, a deals advisory partner at Minter Ellison, said it was striking that there had been no clear indication – at least publicly – that there was shareholder disquiet about Seek’s takeover proposal.

“There were many positive signals that the scheme should get approved – founder and director support, a 61 per cent premium, independent expert endorsement, emergence of arbitrage funds on the register. This would all indicate [it] was heading towards a safe landing,” Mr Colla said.

Harvest Lane Asset Management chief investment officer Luke Cummings, whose fund owned shares in Xref, said the failure of the takeover was “highly unusual” given it had been declared best and final by Seek – meaning no higher offer can be made – when it was agreed in November.

“This should have been a slam dunk from the outset. People would have been highly surprised, including us,” Mr Cummings said. Harvest Lane sold some of its shareholding into the vote, paring its stake to 11.6 per cent.

The online jobs listing platform, led by former Commonwealth Bank chief executive Ian Narev, offered 21.8¢ a share for Xref in October. Seek hoped to use the tools offered by Xref’s software, which assist with checking references, to help its customers vet candidates during the hiring process.

Seek, the country’s largest job search site with a market capitalisation of more than $8 billion, has been expanding its product suite and the sophistication of its services.

Last year, it created a new executive position for artificial intelligence and hopes the technology can be used to make it easier to match job seekers with prospective employers.

Goldman Sachs advised Seek, while Sydney’s TMT Partners acted for Xref.

Seek on Tuesday said it would consider other growth options.

Thanks for sharing your experience and insights @DrPete. How maddening!!

I definitely concur with the not assuming large sophisticated players know what they are doing. The 'smart money' isn't always that smart.

Well outlined @DrPete, as the dust is beginning to settle it seems Thorney was the main instigator here, though based on the votes have convinced others to join their cause.

In the article @Slomo shared Thorney appear have stated their strategy: "We feel the company has runway and will continue to support it". The problem with not accepting the Seek offer is that XF1 almost certainly needs a capital injection. $5m cash, but $8m debt and still burning cash, unless there is a rapid operational turnaround XF1 will need to raise capital in the next 6-9 months.

I suspect Thorney's definition of support is to cornerstone any capital raise and increase their equity stake at a beaten down valuation. Is it a smart move? Only hindsight will tell us, but I do note Thorney forwarded $5m to a company whose CEO stole $28m so as @Strawman said, let's not assume the smart money is smart!

For disclosure, I share your pain. We sold some on the initial bid with Mere but held a good chunk into the vote and got blindsided as well.

As I shared with you via DM, my thoughts go out to you @DrPete (and @Wini). For those who don't know DrPete and I shared a stock pitch night to SM members way back in October 2021. You can still find it on the meetings page - hack, search 'Pitch' (or better yet, don't!). DrPete kicked off with a compelling pitch for Stealth (ASX:SGI), which no one was talking about at the time. I followed with a clumsy attempt to talk my book and lure unsuspecting punters into Xref (ASX:XF1).

The results speak for themselves. Stealth went on to multi-bag and is now the top held company on SM. Xref...didn't. In fact, I demonstrated an uncanny ability to pick (though not call!) the very top of the loss-making tech hype bubble. Incidentally, @Strawman ended by laying out the case for Catapult (ASX:CAT), which hasn't worked out too bad either. So, I'm going to claim it as a group assignment and say that on balance we did pretty good!

That's not quite where this story ends though. You see, it turns out DrPete - in addition to being a Doc - had founded and led a successful employee engagement company. It was something of a coincidence that my pitch partner knew the industry I was pitching pretty damn well! But that's not where this story ends either. Late in 2022 Xref announced it was acquiring Voice Project. DrPete's company. The cash and script deal made my pitch partner one of the top shareholders in the company I had pitched!

Though no longer a shareholder, I've continued to keep an eye on Xref and was very surprised the deal got voted down. Not only did it have the support of the Board and 'independent' valuer, but it also had the CEO/co-founder's support, who is the biggest shareholder. I'm not sure where that leaves Lee now. He is leading a company that, to some extent, he must have mentally checked out of. Can he re-find the energy and passion to lead the company to a sustainable platform? If he leaves, or is pushed, you then have the top shareholder with a motivation to sell. I do note that it appears Lee's fellow founder sold his holdings in December, so there's one less large block of potentially disgruntled shares to have to worry about.

As DrPete says it highlights you can't take these things for granted and harvesting takeover arbitrages is fraught. It's also interesting that 'insiders', or at least large shareholders, can be as blindsided by these things as us mugs on the outer.

Anyway, all the best Pete - and thanks for agreeing to allow me to relate this story to the SM community.

Show me an investor who’s never made a bad call, @Noddy74, and I’ll show you a liar.

Lord knows I’ve had my fair share of mistakes... I'd list them all, but not sure there's enough of a character count on the forums.

For what it’s worth, I thought your pitch was well reasoned. And when it became clear the thesis wasnt working, you adjusted course.

From what I can see on your SM portfolio, your average buy price was 24c and your average sell price was 20c. Far from a disaster, and could easily have been worse.

And since you’re too modest to say it, I will -- five years on Strawman with a 16.2% CAGR is no small feat. Hats off to you, sir!

Was about to write almost exactly the same @Wini , Thorney are in quite a different position to the average punter on strawman, in they can later cornerstone a deal and increase ownership at discounted price to what other shareholders can, which appears to be one of the objectives here with them voting against the deal. Late last year they got a lot more Dubber stock at 1.5c, whilst that cap raising participation working ok for them now, the stock overall has not been kind to them.

Looks like Alex Waislitz trying to build a controlling stake from buying those shares. Maybe wants more than just a higher price. Maybe a greater voice on the board.

Should get a list of what he is selling and build an inverse Alex Waislitz fund. I'm not counting the ones he currently holds as I think we both hold Raiz!

I noticed he sold all his HUB24 shares last year just around the time I bought so was great timing there!