@lowway Sure, why not.

There have Been a few, but one that instantly comes to mind is Retail food Group. I held on for a long time, with the conviction of a true believer, but alas, I did my dough. Oh the pain!!

Great topic @lowway - one of my worst has been Zoono (ZNO) which I got into at what turned out to be damn close to their peak in mid-2020 on the basis that (a) the idea had been passed on to me by a prominent professional full-time fund manager who held Zoono in his own portfolio and thought it had enormous upside but he hadn't yet really promoted ZNO or highlighted the ZNO opportunity in his own monthly newsletter at that point, and (b) I agreed with him about Zoono's upside potential on the basis that Covid 19 was only getting worse (in mid-2020) and Zoono were struggling to keep up with the huge demand (apparently) for their hand and surface sanitising products that contained no alcohol and were much longer lasting on surfaces than alcohol based sanitising solutions - the tech apparently came from an invention that had been used to treat the hulls of ships to stop barnacles and other things from sticking to and growing on ship hulls which increased corrosion and created drag, so less barnacles meant less below-waterline maintenance and better fuel economy for the vessels.

When the share price started falling, pretty much immediately after I bought in, I kept adding more because I figured the market was being irrational and Zoono's issues were temporary and were all about capacity constraints plus contract delays - so the revenue WOULD flow, it just meant we had to wait a bit longer. Yeah, Nah! Not even close. I didn't do my DD properly until I'd been holding them for around 2 years, and then found out that their founder and MD Paul Hyslop was a serial promoter and jack-of-all-trades in terms of his background, rather than a serious businessman. He had even been a used car salesman - big red flag when I read that.

According to Commsec: Mr Hyslop founded the Company to address the need for a highly effective, alternative method of combating bacteria and microbes and quickly realized the business opportunity surrounding this technology. Prior to establishing Zoono, Paul was involved in several entrepreneurial ventures ranging from the establishment of a private car sales business in Auckland in 1990, to real estate development and business brokerage. He also set up a franchise business in the USA in 2005. Paul's experience in business development dates to the 1970s, when he started a personalcare services business after high school, grew it into eight locations and later sold it to his employees. He has also been a commercial flying instructor and Airline pilot, having flown commuter planes for Eagle Air, owned by Air New Zealand.

Reminds me of a movie - staring Leonardo DiCaprio - what's the title? Oh yeah, Catch me if you can (2002).

So I had bought into Zoono near their $2+ highs in 2020 and bought more at lower levels as they fell, eventually selling out in early February 2022 at 28 cps. ZNO closed on Friday at 2.3 cps ($0.023) - so despite me achieving a -60.80% p.a. total return (loss) they have fallen another -91.8% from where I sold out.

That was my worst example of thesis creep where I kept modifying my investment thesis to fit the management narrative, without digging deeper - enough. I was assuming I just needed to give them more time and that the cheaper they got the more upside they would have when they came good (hence the dollar cost averaging as they fell), instead of realising that their management (Paul Hyslop) was flat-out lying about some things in terms of imminent contracts or deferred revenue, while completely avoiding all of the negative news such as test results that showed that the product wasn't as good as they claimed it was and that the technology behind it was also NOT unique - there were other very similar products out there using very similar tech that were owned by much larger companies who didn't have any of the issues that Zoono clearly did. So their mighty competitive advantage was really mostly hype, and the hype faded and all we were left with was lots of promises of better times ahead, that never came.

That really underlined to me that "Management Matters!!" and due diligence also involves thoroughly checking out the backgrounds of the founder and leader of the business - i.e. the guy/gal whose story you are buying into. And relying on the company itself for the vast majority of your research into that company is a dangerous way to go - and tends to give you a view that is overly optimistic in relation to the company's position and their future potential. Some of those Covid stocks did OK, most didn't.

It started off as a small position for me - I watched one interview with Paul early on and he said they loved providing shareholder returns and that's why they had just declared a large (for them) dividend. I got the dividend but it didn't offset the massive capital losses. Because the position started off small, I was more focused on my larger positions and didn't really keep track of how much in total I had tipped into Zoono through small top-ups as their share price fell until Sharesight displayed it for me. To be clear, I didn't buy them for income, I bought them for capital growth, and I took the dividend to mean that management were very confident that the business had plenty of capital so were returning excess capital to shareholders. In reality the truth was far more likely that Paul as the largest shareholder wanted to get some money for himself out of the business without selling shares which he would have to declare as the company's Managing Director, the dividend was all about that, similar to AVA's last dividend (IMO).

Here's his IPO interview: https://www.youtube.com/watch?v=N4vygvMaVsg [22-March-2017].

And on 28-Sep-2021 during Covid-19 lockdowns he was still being very bullish despite the share price then being down to about 30 cents/share (from almost $2.50 at their peak) - he even mentions big things happening in China for Zoono at around the 10:20 minute mark here: https://www.youtube.com/watch?v=vV0BThoYXEE

It was always a massive growth story from management's POV. The reality, sadly, was very different.

The other bad investment I'll mention here is Swoop (SWP) where I also engaged in a lot of thesis creep based on having checked out their Board and Management and being very happy with their past performance in other companies that made heaps of money for shareholders. I was also happy that Twiggy Forrest's Tattarang (private investment company) was a cornerstone investor with 19.99%. To my knowledge Tattarang have never sold a Swoop share, or participated in their capital raises either, so they have been diluted purely by the share count increasing due to share-based payments for acquisitions and capital raises involving further shares being issued. However Swoop peaked at around $2.40 in late September 2021 after backdoor listing (via a shell that had been suspended from trading) in late May 2021, so their first 4 months saw them rise rapidly, but then from October 2021 it's been all downhill and they're now bouncing around 20 cents/share. With Swoop I set limits and didn't keep buying more IRL, but I I did here, and I finally sold out in June (this year) in real life @ $0.175/share (for a -37.54% p.a. return), and in mid-July here - at $0.20/share (for a -32.55% p.a. return). I had a June 30 deadline for that real life portfolio to be liquidated but that's another story. I knew I'd get a better price in July, which is why I waited until July to exit here. There was heaps of tax-loss selling of Zoono in June, and I can totally understand that - and it's what I ended up doing myself in that real money portfolio.

With Swoop, what I failed to appreciate was (a) that the conditions during which those dudes made all their big bucks in prior years had changed and the easy fruit in terms of Telco and ISP infrastructure and retailing company roll-ups had already been picked, and (b) their strategy changed significantly in the face of that fact, and they pivoted to less-serviced areas of the market such as regional and remote communities where the profit margins were far lower due to less economies of scale in lower population density areas, and their own attractiveness as a takeover target themselves was greatly diminished by their apparent inferior or less-profitable business model, hence the M&A premium that had been built into their SP (market valuation) back in September 2021 is no longer there, and hasn't been there for some time.

So Swoop tried to carve out a new niche for themselves which is great for those areas they are servicing, but not great for shareholders. And I failed to appreciate just how much the investment thesis was busted until around May/June this year.

I think I am usually good at selling out of companies quickly where I recognise that my investment thesis is being seriously challenged - or is busted - such as fully exiting ABB (Aussie Broadband) on the day they anounced an offer for SLC (Superloop) and selling out of TPG Telecom (TPG) on the day they announced David Teoh was leaving, effective immediately, quite soon after the TPG-Vodafone Australia merger was completed. Teoh is now the driving force behind Tuas (TUA.asx) - have a look at their chart - they've gone better than 5x in 3 years from below $1 to above $5/share. I SO wish I'd bought Tuas shares when I realised he was leaving to run that company full-time - that was not disclosed at the time and only emerged during the following months, but TPG's chart is all top left to bottom right since Teoh left, the exact opposite of TUA's chart, so I made the right call to dump them when he left.

So why didn't I sell out of Swoop or Zoono earlier? Because it was death by a thousand cuts - there were no real pivotal moments for me that made me immediately re-check my investment thesis - just lots of small misses and plenty of delays and things not quite panning out as expected, but success seemed only just around the corner, and remained that way, for years. So my investment theses now include timeframes and I try to be strict about them. I need to have some flexibility - if the facts changed, I'm allowed to change my mind - however, the timeframe within each investment thesis is now a far more important factor in terms of triggering a thesis review - and usually a sell if there's not a really good reason to double down in the face of a falling share price.

Swoop and Zoono had one thing in common - they both had somebody who I thought was smarter than myself who had done their own DD and was happy to invest in them (that person was Andrew "Twiggy" Forrest in Swoop's case) and that gave me some sense of "everything will pan out OK, these people aren't silly - you just have to be patient."

Yeah, nah, not usually a good idea to rely on other people doing their DD on something that you end up buying some of as well - because they may realise their mistake and sell out without disclosure (as happened with that fund manager who recommended Zoono to me - he hasn't mentioned them since and they were never in his disclosed top 10 positions in his monthly newsletters) or they may have much longer investment timeframes than me - or the willingness to allow some investments to fail because the majority end up being winners - so a totally different type of risk tolerance and ability to absorb substantial losses without batting an eyelid. I did some DD myself obviously, but not as much as I should, and not enough reviewing of the positions as their share prices kept falling to discover why the market was so negative on them and becoming more negative as time went on.

I let those other guys' initial conviction provide me with a sense of comfort around the investment decisions that I made with buying and adding to my Zoono and Swoop positions, and while I did have conviction, it was partly based on their conviction, which is crazy - but that's what I've discovered with the benefit of hindsight.

Nothing wrong with stock tips, always interested in investing ideas, but I have to do my own work and never let what other people are holding sway my own decisions. Bottom line: I didn't do enough of my own homework, especially after I bought in and the share price fell significantly, which would now trigger me to do another deep dive (or a decent investigation) into what had changed and how any changes impact my investment thesis.

Lessons learned. Investing is all about making money and learning, and the learning can sometimes be expensive.

Thanks @Bear77 for making me feel not quite as bad about my expensive investment lessons. I love your takeaways from Swoop & Zoono and would have said exactly the same thing about my lessons learnt from failed investments if I had your literary skillset!!

Maybe I'll list my best two stocks next month to ease the pain.

Thanks @lowway for suggesting this conversation and yes I am too old enough to remember ABC learning. I find if fascinating to hear what others have experienced in the big losses and how it shaped them going forward. Great to hear that the learnings are being positive for you and your portfolio is doing well.

My big loss to date came from Whitehawk (WHK). I found out about this company in 2020 through one of those subscription services promoting the company. I liked the sound of what they did, and I believe that cyber security was going to be a big up and coming business based on our significant update of the internet.

I had a look over the financials at a high level they looked quite promising from the growth. Got in initially at a cheap 17c with a small investment and decided to take a bigger stake a few months later near the top of their peak at 40c. The ride down was definitely not anywhere near as fun as the ride up. They are now like 1c a share and my bank balance is quite a lot lighter.

The thing that kept me in for so long was that they continued to show promise in some of the quarterly reporting with growth and positive cash flows, however it was clear now that their income was very lumpy and they would continually keep posting a loss after loss when they finally did their half and yearly reporting.

The loss did however come as a learning exercise for me, which prompted me to unsubscribe from the mailing list (they were a pump and dump kind of company) and invest some money in myself and do some further study in the accounting field. A few years on, and with the help of some further investment books and podcasts I find that I have a much better understanding of what to look for in a good company.

This still doesn't hurt anywhere near as much as the bad investment decision that was listening to my brother on some investment advice while I was going through a tough period in my life in 2011 (relationship dissolved and got diagnosed with an auto immune condition that really impacted my day to day). All this is was able to be convinced to sell my then my 40,000 shares in this up and coming lotteries company called Jumbo Interactive for a measly 40c a share. I know this doesn't exactly meet the criteria you asked for but Oof this one still hurts from an opportunity cost perspective.

Ouch @SudMav, especially in relation to JIN.

At least the once bitten, twice shy saying has worked for you as well. In my case, I know I'm bound to have many more losses in the future, maybe (God forbid) some big ones amongst them. That's ok for me as long as I'm eyes wide open and have done my own due diligence.

Absolutely, my strategy is to be able to sleep comfortably at night with the investment strategy and picked companies that were proven to be profitable.

I'm a big believer that everything in life and investing happens for a reason and you learnings from past experiences help you to become a better version of you going forward. You need to have losses sometime to help you determine your strategy, and build confidence/discipline.

Yeh selling JIN back then does suck, however if I didnt I probably wouldn't have learnt any of the important lessons. Knowing me I probably would have got cocky with my investing and would have found some speculative mining stock and lost most of the gains.

Gosh @lowway, not sure the character limit is long enough for me to list all my mistakes!

Great thread though, and I think critically analysing your mistakes is essential for any self improvement. (And not just in terms of investing)

I could also put my hand up for RFG, and speaking of childcare I could also nominated G8 education. The autopsies have been well discussed, but for me another part of what went wrong was being publically supportive of both. So when all the warning signs started to show up, rather than acknowledge a broken thesis I felt a need to argue the affirmative -- probably because I was more worried about saving face than saving money! And the worse things got, the more I dug in. And I rationalised it all through some insidious thesis creep where I'd (eventually) acknowledge some of the problems, but then say "well, shares are down x% now anyway. So it's "in the price". Or worse, the market has overreacted and shares were cheap.

I think often about the definition of a stock that's down 90%: it's one that has lost 80% and then proceeds to halve.

Ie. No matter how much of a drop you've suffered, you can still do the rest of your dough.

Ego is a killer in this game.

Good discussion @lowway and I am grateful to read others stories and lessons too @Bear77 @Arizona @SudMav and @Strawman.

My biggest loser has been Paradigm (PAR) and with the benefit of hindsight it was also my biggest mistake. I came across it through a market beating value fund manager who was very high conviction on it about 3 years ago. I read their thesis, all sounded good, so I added it to my portfolio. Then as they didn't execute the plans either at all or at best delayed, I kept adding to my position as the share price fell, telling myself that the opportunity was still there and it can still multi bag from here.

The biggest red flags I ignored (and never well again as the lesson), was when the overall governance and Board was severely compromised, the new hired gun CEO departed a few months after joining and the Board members never bought in themselves despite talking it up. The founder and CEO continued to pay himself and the other executive very well and kept adding more free options in the business, despite poor execution.

After lots of dilutive capital raisings and poor overall sentiment, my remaining holding is now a fraction of a percent of my portfolio. The only good news is at this stage the opportunity does still exist, IF management can keep the lights on long enough to realise it.

I should have sold a long time ago, so have kept it as a painful reminder of what I should have done and as a lotto ticket in case luck rather than skill plays out from here.

Will never make this mistake again though - both buying a pre revenue wonder drug or to ignore the governance and continual execution failures...

Likewise @Strawman - my list of losers is long, but we're only concentrating here in this thread on our worst one or two (hopefully). And I've lost money on others where things happened suddenly, there was a massive drop, and I did make the right decision and exit, and they subsequently went into VA, so I did save my remaining capital rather than lose 100% - examples are RCR and FGE (RCR Tomlinson and Forge Group). In one case it happened so fast I didn't really get a chance to react - like, a trading halt, rolled into a trading suspension, rolled into Administration - Babcock and Brown was the best example of that during the GFC. But, I really should have been more across B&B's business model and enormous debt levels and understood the massive risk in the event of a credit crunch when the need to refinance (roll-over existing debt) becomes problematic, and impossible in B&B's case because nobody wanted to loan them more money during the worst of the GFC, so they were forced into Administration.

The GFC has been labelled a Black Swan event, sure, but highly indebted companies with highly leveraged balanced sheets are still risky propositions, and until Babcock and Brown folded, that wasn't really front-of-mind for me. And they were NOT small. They were a multi-Billion-Dollar company, but they still were NOT too big to fail.

In terms of both RFG and G8 Education, I did understand the risks of mature roll-ups (growth-via-acquisition companies), and I was highlighting those risks both back on MFDI (Motley Fool Dividend Investor) and here, and to your credit @Strawman , as the head of MFDI, with other MF services still pumping up RFG, you were the first to break ranks and call Retail Food Group a sell. I clearly remember Scott Phillips continuing to promote them on MFSA (Motley Fool Share Advisor) as a Buy for months after you changed your own recommendation, and Scott finally conceding they were indeed a sell when they were priced substantially lower than your own exit point. And because MF were paying your salary at that point, I considered that a brave call of yours to go against the boss there. But the right call on your part for sure - better late than never.

And the majority of your Buy calls were on the money, and I do understand that it's hard to quickly acknowledge bad calls when running a for-profit subscription-based stock-picking service such as MF, because of reputational damage - much easier for Scott to maintain companies with falling share prices as a Buy and hope they recover enough to make him look like a steady hand at the rudder who doesn't panic in the face of turmoil and chaos, despite the risks of greater losses for subscribers if he is ultimately wrong and should have sold out of that company much earlier. And RFG wasn't Robinson Crusoe in MFSA either - there were a few other disasters as well.

Understanding those same roll-up risks, I made money in Uniti Group a couple of years ago, but sold out just before they got a takeover offer that meant I left a good chunk of profit on the table despite making good coin on the trade. I didn't lose any sleep over that call to exit Uniti Group when I did (i.e. too early in terms of their peak), or a few others, because I've spent years developing some rules and strategies around risk management, and my system has worked well for me for the past decade, and especially the past 3 or 4 years, so I trust in my process and accept that it's going to limit some of the upside but also protect me from a fair whack of downside too.

My understanding of roll-ups are that the more succesful they are, the greater the hype and the pile-in (FOMO), and when they unravel - which they almost always do - it can be swift and brutal, especially when you have a few dodgy practises that the company has engaged in that are already out there in the public domain but just haven't been highlighted in a national newspaper expose yet (yep, talking about RFG again). In Uniti's case, the way they dumped the founders of Uniti Wireless the day after they reverse-listed by acquiring Uniti Wireless showed me how ruthless Michael Simmons was, and I was about to sell-out but then Simmons brought his old mate Vaughan Bowen in to Uniti (ex-M2T and Vocus) who was also a little dodgy but nowhere near Simmons' level of ruthlessness, and I had previously admired Bowen's work in terms of total shareholder returns at M2 and Vocus, so I decided to hang in there for a little longer.

So I decided to ride them up until I spotted some trouble, and I don't even remember what my trigger was to sell but I do know it was 1 or 2 weeks short of the announcement in April 2022 that Uniti Group had agreed to a nearly A$3.62 billion (US$2.70 billion) takeover offer by a unit of Canada's Brookfield Asset Management Inc and fund manager Morrison & Co who manage Infratil - IFT - a company I have also made money on - and they are NOT a roll-up company, they are more of an asset manager and company developer who take stakes in companies and add value before flipping them for profit, usually after a few years.

In IFT's case, I was a "Raider" (from Lee Freeman-Shor's "The Art of Execution") instead of a "connoisseur", so that was a mistake also, look at IFT's graph today. Another one that got away from me.

I have lost far more money by selling out of companies too early than by holding onto companies with falling share prices too long, because your downside is capped at 100% but your upside can be a lot more than 100%. But I make less mistakes as the years go by. Still making them, just less often, and capping the losses by exiting more quickly, and making larger gains by trimming winning positions instead of selling out completely.

And, yeah while you need enough ego to back yourself most of the time, you don't want to let that ego blind you to your own mistakes, because even the world's most succesful investing billionaires make mistakes - and as George Soros said, "It's not whether you're right or wrong, but how much money you make when you're right and how much you lose when you're wrong."

So NOT capping your winners while also capping your losses goes a long way to improving your returns, as explained brilliantly in Lee Freeman-Shor's "The Art of Execution".

There was a bit of pressure to tow the company line @Bear77 , but I should have fought harder. Totally my mistake to own:(

I was also an early investor in PAR (Paradigm BioPharma) and it's one of the main reasons why I now tend to usually steer well clear of early-stage biotechs and pharma companies @Karmast - PAR as well as larger losses on Oncosil (OSL) who wanted to be the next Sirtex Medical but weren't, and a sub-par experience with Acrux (ACR) when the FDA said ACR's topical (skin-absorbed, or trans-dermal) testosterone replacement therapy could only be used on a fraction of what Acrux and their big pharma US partners / distributors (Eli Lilly) had considered to be the TAM for Axiron - a TAM that the FDA heavily reduced due to the suggestion by some studies of increased risk of heart attacks and strokes when testosterone therapy had been used in older men whose testerone levels were naturally declining because of their advancing age. Eli Lilly pulled the pin on Axiron and the treatment was discontinued in the US and probably everywhere else too soon after, and Acrux was left with a trans-dermal application technology but no approved drugs to use it on that made any real commercial sense - except in animals (dogs I think it was) where the "does no harm" argument is easier to win apparently.

I made money on Acrux by getting in before the first - and only, as it turns out - milestone payment was received by Acrux from Eli Lilly - and the subsequent special dividend to ACR shareholders that ACR had promised to make when they received that milestone payment - and the associated very positive market re-rating that Acrux got when they announced that special dividend. I made money on ACR only by trimming the position at higher levels before they crashed and burned. My last ACR sale (final exit) was at 53 cps in August 2016 and ACR closed yesterday at 5.8 cps (less than 6 cents) so definitely one I was better off getting out of when I did, if not sooner.

ACR were de-risked, or so I thought - because they already had approval to sell Axiron in various countries, like most of Europe (had their CE Mark), and the FDA had already approved Axiron's use in the USA when I bought in, and Acrux had other drugs using the same trans-dermal technology in various stages of development for both humans and animals (veterinary use); however, what I did NOT see coming was the FDA's decision to significantly narrow the allowable indications for which Axiron could be prescribed and used to just men with medically diagnosed hypogonadism - because of some studies that were brought to their attention (by other big pharma companies I suspect) which had indicated that there was probably an increased risk of heart attacks and strokes with testosterone supplementation - and the FDA considered the benefits outweighed the risks for the relatively small percentage of men whose bodies do not naturally produce sufficient testosterone to be in the normal range for men of their age (hypogonadism) but that the risks outweighed the benefits for everybody else.

When I bought into Paradigm (PAR), I also thought that they were substantially de-risked considering they were "only" seeking to repurpose a drug that was already approved and being used in humans - for something else - so the safety studies were all done and dusted and the drug was already approved for human use, and being widely used in Europe at the time - from memory - just not for the treatment of OA.

Like you @Karmast I was also very unimpressed with their management's failure to make any significant progress while milking the company for generous salaries and directors' fees - for YEARS. There were already studies that showed significant improvement in terms of symptom reduction (including pain reduction) when PPS was used for OA, but Paradigm seemed unable or unwilling to take the necessary steps to leverage that into the larger scale and more expensive double-blind studies that were necessary to get FDA approval for the use of PPS to treat OsteoArthritis. My understanding is that PPS is the only FDA-approved medication for interstitial cystitis, and its usage spans beyond this indication, including irritable bowel syndrome and pelvic pain syndrome, but can still not be prescribed by doctors for the treatment of OA at this point due to PAR's failure to prove efficacy beyond any reasonable doubt to the FDA's satisfaction.

Looking back, PAR's highly-promotional management were attempting to achieve two things, being (a) to prop up the share price by creating more buying demand for PAR shares, and (b) to entice a global "big pharma" company to either buy PAR or to partner with them to fund the studies necessary to obtain regulatory approvals and then distribute the drug under licence from PAR. What I didn't consider too much was that the longer they could last without being bought out, the more money could be milked from the company by its board and management.

This is also something I found to be the case with Oncosil (OSL) who wasted so much time - in terms of years - that their medical device / procedure became obsolete and has no real value now because it won't even be used as a salvage treatment for pancreatic cancer, as Sirtex's SirSpheres were eventually used as a salvage treatment for liver cancer, and probably now as a front-line treatment for larger tumours that need to be shrunk before surgical removal becomes viable.

Oncosil's treatment also has some data to suggest that there are occasions where their method of injecting radioactive matter directly into tumours does shrink those tumours to a point where surgery (to remove the tumours, so in pancreatic cancer that means a resection of the pancreas) becomes a viable option, but not in the majority of cases. In some cases it made very little difference. In other cases there was some pain relief for a while. Many different outcomes. I wanted it to work because people diagnosed with pancreatic cancer have something like a 5% chance of survival beyond 3 years (something along those lines) - it's a cancer that is very hard to treat because of the location of the pancreas in relation to a number of other vital organs - so radiation therapy is usually not an option unless it's targeted via injection directly into the tumour. And pancreatic cancer is usually well advanced by the time symptoms are picked up and investigated.

But a worthy cause does not always make for a good investment.

I lost more on OSL than I did on PAR, because of thesis creep, and that was likely because Sirtex Medical (SRX) who had a very similar treatment for liver cancer had been one of my biggest winners up until that point in time (when I invested in Oncosil) - so I had seen how things could pan out positively for both patients and investors, despite a period of very poor management at Sirtex (the Gillman Wong years) - Sirtex was eventually acquired by China Grand Pharmaceutical and CDH Genetech who paid A$1.90 billion for Sirtex - or A$33.60 per share - in 2018.

That joint offer from those Chinese companies came just days before Sirtex shareholders were due to vote on another lower offer of A$28.00 per share from Varian Medical Systems, Inc – an offer valuing Sirtex at A$1.5 billion and which had been publicly recommended by the Sirtex Board, "in the absence of a superior proposal". The Varian offer was largely unconditional, as all regulatory approvals had been received - so it took a clearly superior offer from the Chinese bidders to get the Sirtex Board to change that recommendation and instead recommend the Chinese offer. And that's what happened.

[Edit - 02-Oct-2024 - I've just edited this post to reflect that I was NOT still holding SRX when that takeover battle occured in 2018 - I sold the last of my SRX in mid-2017 after trimming the position at various prices including two sells in 2015 that were higher than the eventual takeover price, as explained here: https://strawman.com/forums/topic/9987#post-29970 - Sharesight and Google got together and reminded me of what actually happened - and I needed reminding as it was 7 years ago when I sold out of SRX and 6 years ago that SRX were acquired and delisted from the ASX - and I had thought that both happened at around the same time when I first wrote this particular post, but there was a year or so between them, so I've fixed that error of mine here now]

I thought OSL had similar potential albeit a smaller TAM (pancreatic cancer is far less common the liver cancer, but has a much higher mortality rate) - but as it turns out OSL didn't really have an edge over what was already available in the market and what was being developed by better funded and better managed companies overseas.

What I learned from that was that I am better off donating to accredited medical research organisations than propping up the salaries of early-stage biotechs / pharma companies - because as much as I wanted Oncosil to be a viable approved treatment for pancreatic cancer, and PPS to be approved for the treatment of OA in Australia and the USA (for a start, even if it just lowered pain levels and had a localised anti-inflamatory effect), hoping for a positive outcome that will assist millions of people is not a good basis for profitable investing - and I was clearly outside of my sphere of competence (or wheelhouse) with those biotechs / drug companies and indeed ANY biotechs / drug companies.

PAR were 33 cps a decade ago, went to over $4/share in February 2020, and they're now back down to 20 cents, and have been in a downtrend that has lasted 4.5 years so far.

The only thing I got right with PAR was trimming the position on the way up; I bought my first tranche at $1.38 in December 2018, added more at $1.01, then trimmed all the way up to $3.10 (in October 2019), and then sold more as they were falling at $2.35 in April 2021, before loading up again at $1.92 in December 2021, then finally calling it, and selling out completely at $1.035 in July 2022.

My lessons were mostly that I should not invest in companies who do things or are trying to get approvals to do things where I don't fully understand the industry and the risks they face, particularly regulatory risks - but instead I need to leave those companies to experts in those fields, or at least people who have a much greater understanding of those sectors than I do. And that when I DO dabble in companies / sectors that I do not understand well, I often do not notice poor management actions as quickly as I would if I was more clued up, but it all becomes crystal clear with the benefit of hindsight.

So stick to my wheelhouse (/ lane / circle of competence) is the short version - and pharma and biotech just ain't in it.

Wow @Bear77 that is some dissertation on pharma and biotech investments

I don't have a bad news story here, as i tend to leave this field alone, other than (like you) riding the Sirtex gravy train back in the days when some brokers advice actually paid off.

I reckon we seriously should address best 2 winners next month to dissipate the bad taste of losses in this forum post. ????

Sounds good @lowway , so tomorrow then? (1st October) I'll just go and ask Sharesight for my answer to that.

Ripper, can't wait @Bear77 I reckon you'll have some beauties.

I do shudder to think what @Strawman has up his sleeve for a response (3000%+ I'm guessing)

Oh Man. @Bear77 i had completely forgotten Acrux. I lost a ton there for the exact same reasons. Single product pharma, is so risky. Pre-clinical single product pharma is so low down on the probabilities of making shareholders any money it’s a wonder they ever get to list in the first place.

I had a whole bunch of similar speech biotechs 25 years ago. Probably 10. Only one was a success and that was SPL. I will add, that was only because I sold out after I worked out the thesis was busted ( see SPL straw) and not because the company was a success. Exhibit A:

emergency exit at around the arrow. It was actually a reasonable return of 3x but the company is now heading for insolvency.

Can’t believe @mikebrisy is starting to get me interested in ASX:BOT. !

@Chagsy I make no bones about the fact that I've decided to roll the dice on this one. However, the product has grown steadily in Japan for four years and the NDA is approved in the US. That's quite a different risk profile than a pre-clinical, single product business, as well you know!

The great news, we're all going to find out one way or another in the next 12 months, with maybe initial indications in 6 months.

For the record, even if it turns out to be a market flop and the shares are $0.05 in 12 months, I won't count it as a mistake, as I am holding it knowing there is a non-zero (1%-5%? or is it 10%-20%) chance that could happen. We'll only know when we get numbers on patients coming back for refills.

So, all holders are strongly advised to have their own views on the risk of that happening, and to size their positions according to their risk appetite. I'm locked and loaded.

@Chagsy @mikebrisy

BOT interested me because of the track record of the chairman Vince Ippolito in getting companies up to heady valuations with a combined total of 7.8 billion. Seeing his interview on how the achieved this also helped. Plus having something approved already in Japan helps.

So this is a good example of researching about management track record. There is another one I hold where research in the CEO paid off - the CEO had discovered and successfully developed and commercialised cancer therapy including FDA approval, but I won't mention them because they are not earning revenue yet (you may know already which one :) )

Still nothing is for certain despite whatever research you do on management.

Anyway CCU was one of my shockers. Held until it went into administration when silver price crashed and they couldn't get funding from the bank. And the MD was from Western Mining Corp before it was taken over by BHP!

I select my worst investment decision ever on the ASX in terms of the dollars lost. Because it was a stupid decision by me that turned what would have been a poor result into a material loss that wiped out 6% of my RL ASX portfolio in one go. The case was Freedom Foods ($FNP), now Noumi ($NOU).

I don't blame myself for the allegedly fraudlent management behaviour that masked the underlying problem of an unprofitable business.

What was stupid is that with an initial orange flag raised ($25m inventory writedown due to consolidation of warehouses amidst the fog of war of regular COVID-19 updates), I proceeded to increase my stake, and then again when the SP dropped several weeks later on the CFO resignation, more than doubling my holding overall.

I bought more blinded by a mis-guided conviction. Then the CEO was fired the next day, and shares went into a c.12-month suspension, from which I ultimately extracted only about 10-15% of my initial investment.

Although obvious in hindsight, I learned to distinguish between Bad News Type 1 (BNT1) - a company misses market expectations, and SP falls, but the result is objectively a good one and Bad News Type 2 (BNT2) - an objectively bad operational result. The fact that the CFO resigned with an unresolved Orange Flag on BNT2 should itself have been a red flag. But embarassingly, I didn't join the dots. It still embarasses me to have to admit I did that.

If I understand a business well, I will happily buy on BNT1 - and I have very often done this with much success.

But for BNT2, I have learned at best to wait and understand more fully the implications, or, if the bad news highlights a potential flaw in the thesis or a lack of my understanding of the risks in the business, to reduce or exit.

I believe there is some merit in "buy on bad news, sell on good news" ... but you have to understand the nature of the "goodness" or "badness" and maybe just wait if you're not sure.

Wow, review of Sharesight in response to this question has ruined my day …

Biggest Net Loss - SBM (St Barbara) … although there is a miniscule lining in the cloud that is what was salvaged by buy out by GMD for cents on my dollar. The learnings … mining sucks, don’t believe analyst reports (I’m sure Goldman Sachs or whoever it was had the summer intern on this one),

Biggest Percentage Loss - DCFC (Tritium) … there still seems to be an OTC market where shares are trading for a few cents but because its in receivership, I can’t sell my small remaining holding. The learnings … if even the Australian Government isn’t dumb enough to invest in these guys then I probably shouldn’t put my money there, don’t go near SPACs, if you want to invest in the EV theme, just buy Tesla stock.

Still in the portfolio - RFT (Rectifier) … tied to the one above, not sold as liquidating won’t even cover the brokerage. The learnings … I could see the biggest customer of these guys driving it into the fence and I was just fixated on the car smash, add to that some absolutely shocking governance and enough said.

Still in the portfolio and I don’t know how bad the damage is - STA (Strandline) … how hard is it to commission a machine. These guys have been suspended now for 11 months. Massive restructuring can’t wait for the share price to drop and massive dilution as they need to raise capital. The learnings … definitely one of good money after bad, looked like their revenue had started and all they had to do was wave their magic scanner against the machinery and they would be into the higher margin from doing their own processing … wasn’t the case.

There are a long list of others in there as well including a bunch of shitcoins (now out of those), but I’m getting too depressed because I’m still holding a number of other positions that need to be multi-baggers from here just to break even. Anyway, doing the review has allowed me to update my custom categories and there are a number in the “penalty box” (thesis intact but share price not) and a number that have now been moved into the “exit lounge” (something fundamentally changed in thesis … get rid of them).

‘Interesting psychological note … I’m not instantly selling these as it feels like I’ve still got plenty of time for tax loss harvesting this FY and I’m not yet sure how much capital gain I need to offset. Kind of stupid thinking since I can roll losses forward.

Nice characterisation of the different types of "news" @mikebrisy

I am doing much better nowadays when I buy or add to a position if the "bad news" is the company missing guidance by a bit, or even more so third party analysts expectations. As we know, business doesn't move in a perfect upwards line very often. So I am happy to take advantage of this type of news given I have a 5 year view and a reasonable idea of what I think the business is worth today (if today's price is now well below that).

When it comes to sudden departures of C suite or Directors, with no replacements/succession in place, my alert goes off these days and it's not an add, possibly even an immediate sell.

In my view, good businesses usually have internal succession plans in place and at worst lengthy timelines when an existing manager leaves for good reasons, so the transition can be handled properly.

We've all been there @RhinoInvestor

I was looking for a short list of 2 stocks, so i didn't have to discuss all my other baddies, with some in the "penalty box" (nice term) like you., e.g.ERD.

Lessons learnt from expensive mistakes is the theme!!

It will be more fun to do the best 2 stocks soon as a pick me up!!

01-Oct-2024: Some clarification on my earlier posts - and just a quick note that all of the following relates purely to my real-money portfolios, none of it relates to my Strawman (play money) portfolio which is not tracked via Sharesight (except for #6, Swoop, where I do refer to my Strawman.com position in Swoop below, because I already did so yesterday in this thread): Having just run the numbers through Sharesight (using their Sold Shares reporting function) for my combined real-money portfolios:

1. RCR was my worst loss in dollar terms, even though I did sell out before they went into Administration, followed by MFG (Magellan Financial Group), CDU (CuDeco, a truly horrible copper project developer story that I won't go into now - still involved in a class action with that one), Norfolk Group (NFK, no longer listed, I sold out while they were still listed), Regis Resources (RRL), Sunrise Energy Metals (SRL, formerly known as CleanTeq when I "invested" in them - another Robert Friedland story), then Zoono (ZNO) was actually my 7th worst investment in terms of dollars lost, however it's one of the companies that I remember well in terms of mistakes I made (mostly thesis-creep) and not exiting a lot earlier than I did.
2. Oncosil (OSL) was one I did actually make money on, when viewed across two portfolios that I held it in (combined), because I traded them in 2018 in one portfolio, buying at between 12 and 14.5 cps (January to April 2018) and selling most of them for between 18.5 cps and 25 cps between May and July 2018, finally exiting completely at just 4.8 cps (less than five cents) in March 2019, however those earlier trim trades meant that I came out in front overall, but not by much. That's not how I remembered it yesterday, but that's the reality according to Sharesight. I did remember being active on HC at the time (after exiting completely) and being dismayed by people stubbornly holding on, continuing to buy more and more, and continuing to try to justify the actions of the management of OSL despite clear evidence that this was going to be a big loser for those who continued to hold. Some people on HC get very defensive when faced with facts that seriously challenge their investment thesis, and they get nasty too. That was actually what made me stop using HC altogether.
3. I also made a small profit on Forge Group (was FGE) before they went broke. I got out before that final trading halt from which they never returned. Again, I only came out in front on FGE because of trimming my position multiple times as they rose, before finally selling out at substantially lower levels as they crashed and burned. My final profits on OSL and FGE were small - less than $2K in each case, and I had over $30K to $50K invested in each at various times. So there was stress plus opportunity costs - that money would have produced far better returns if placed elsewhere.
4. Babcock & Brown (was BNB) and Paradigm BioPharma (PAR) were both losses but in dollar terms and percentage terms quite small losses because of earlier profit taking (trimming on the way up). In BNB's case I had already doubled my money on them (on paper) and taken out amounts equal to the majority of my cost base before they went broke during the GFC, so even though I got hit with a 100% loss on the shares I still held in BNB when they went into Administration, I had already made enough money out of trim sales that the eventual overall loss was small. In PAR's case, I described the trims in my previous post in this thread, and that's why it was only a small loss in both dollar and percentage terms in the end.
5. While I did make money on Acrux (ACR) early on, as I described here yesterday, Sharesight tells me that my total return overall on ACR was a loss, although not one of my biggest losses.
6. Swoop (SWP) was a loser, but I only lost just over $9K on them all up over two portfolios combined because I did do some trading in one which did work out OK, but did not fully offset the losses in the other portfolio where they were not traded (buy and hold strategy in that one), so SWP aren't within my top 20 losers in either percentage or dollar terms. In one portfolio the total return was +11.34% p.a. (profit) and in the other larger portfolio it was a -37.54% p.a. (loss) (which is the number I quoted in my first post in this thread) for a combined loss of -26.2% p.a. - Swoop were always a smaller position for me in my real-money portfolios because my level of conviction was not strong enough to double down on them when they were falling - I wanted more confirmation that they were on the right track before doing that, and I never got that confirmation - there were some positive reports but the underlying numbers didn't suggest they were worth doubling down on. Heaps of potential based on management's prior records, but no hard data to prompt me to take a larger position than I did. Here on SM I did keep buying more (trying to lower my dollar-cost-average) but I did not do that in my real money portfolios.
7. I'll post a summary of my biggest winners today in an hour or two - in a different forum thread.

P.S. And I have also now added a correction paragraph to my previous post in this thread that mentions Sirtex Medical (SRX) - because I found when I checked Sharesight that I did NOT hold them through to their takeover - I sold the last of my SRX the year before they were acquired. Still made good coin on them, but what I had said about holding them through to their eventual takeover was incorrect, and I've now corrected it.

Yes @Karmast I loved @mikebrisy's 2 bad news information qualifications as well. Certainly C Suite and Board disruptive behaviour is a massive red flag for me these days. In the old days I would sit and forget, hoping for the best. It meant i tended to let the good stocks run and the bad stocks to fester badly and in some cases (probably most) was not aware they were dying right before my eyes.

With a better focus these days on company announcements and forums like SM, hopefully this mismanagement of my portfolios is now greatly reduced.