Even the professionals have regrets. Here are half-a-dozen stocks that made them eat humble pie.
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Earlier this month we revealed 5 ASX stocks that professional investors regretted, either for losing money or missing out on gains.
It reminded everyone that investing, even for those who do it for a living, never has a 100% win rate.
“To be perfectly honest, we target getting 60% of our decisions correct,” Sage Capital portfolio manager Sean Fenton told The Motley Fool.
“If you don’t do the hard accounting and actually track your investment decisions and work out your wins and losses, people tend to overestimate their skill. But we do do that — and if we can get 60% of our investment decisions right, it means we’re absolutely knocking it out of the park.”
So to counter that friend who brags about his new-found riches, here are stories of 6 more ASX shares that fund managers regretted:
Temple & Webster Group Ltd (ASX: TPW)
Online retailers did very well out of the first wave of the COVID-19 pandemic.
People around the world stayed bunkered down and ordered homewares remotely to make their lives more comfortable.
Sage Capital portfolio manager Kelli Meagher regretted not buying into Temple & Webster, with its shares as low as $2.05 last year. They are trading for $10.16 early Thursday afternoon.
“I regret how conservative I was with my valuation discipline, I suppose, when it came to pure online retail stocks when they first started moving last year,” she told Ask A Fund Manager.
“And they’ve gone up, doubled and tripled, I saw that I’d missed the opportunity – and they just kept going. So there’s definitely some remorse from sitting on the sidelines there.”
Challenger Ltd (ASX: CGF)
Investment company Challenger has frustrated many shareholders over the last few years.
Trading at $5.34 Thursday afternoon, the stock is more than 38% down on 5 years ago.
U Ethical portfolio manager Jon Fernie admitted defeat.
“The one stock retreat where we got the timing wrong was investing into Challenger several years ago when we thought that interest rates were going to move higher. We also thought that there were going to be regulatory changes that would drive underlying demand for annuities,” he told Ask A Fund Manager.
“Unfortunately, both those things didn’t happen. And that led to us ultimately exiting the stock at a lower level. So that was probably one investment decision that we regretted.”
Nike Inc (NYSE: NKE) and Lululemon Athletica Inc (NASDAQ: LULU)
For Forager research analyst Chloe Stokes, she wished she was better prepared when markets nosedived in March 2020.
“We saw brilliant companies like Nike and Lululemon down more than 30% in a couple of days,” she told Ask A Fund Manager.
“Those stocks would have been excellent investments at market prices, but because I never thought they were cheap enough to invest any time into, I didn’t have a thesis ready.”
Nike is up almost 30% in the past 12 months, while Lululemon shares have risen 19.2%.
The big lesson for Stokes was that investors, whether professional or amateur, need to have a ‘hit list’ ready for price dips.
“It might seem like a waste of time, but you never know when the opportunity could come along to own a high-quality business at a more than reasonable price,” she said.
“I wouldn’t want to miss out on owning some of my favourite businesses if the opportunity presents itself again.”
Zoom Video Communications Inc (NASDAQ: ZM)
If ever there was a COVID beneficiary, the video conferencing company that became a verb is it.
Zoom shares have risen about 460% since the start of 2020 when no one was thinking twice about going into the office 5 days a week.
Spaceship portfolio manager Jason Sedawie regretted not getting a piece of that action.
“It’s always what you don’t buy that hurts you because they can be the potential multi-baggers,” he told Ask A Fund Manager.
“Whenever I’m on a Zoom call or Google Meet, I just get reminded of that company.”
The video tech provider surprised Sedawie in the way it rose above hot competition from deeper-pocketed rivals.
“We did know about it, but it wasn’t something we were really excited about because everyone used Microsoft Teams, Google Hangouts,” he said.
“They were a business service that schools and consumers just all of a sudden knew. So they went from 10 million daily meeting participants to 300 million a couple of months later. Just how they scaled and executed and pivoted – I just have a lot of respect.”
Tripadvisor Inc (NASDAQ: TRIP)
Hyperion Asset Management lead portfolio manager Jason Orthman remembers buying Tripadvisor shares thinking the business could disrupt traditional booking engines.
“Our research didn’t pick up how sticky consumer behaviour was and how strong the competitive offerings were,” he told Ask A Fund Manager.
“It took us about 2 quarters to realise our research was incorrect, and we exited. And that saved our investors a lot of money. We lost money on that investment, but we didn’t experience the significant downside that those that have held onto that business had.”
Tripadvisor stocks have lost more than 34% over the past 5 years.
But there was a final twist to rub salt into the wound.
Stocks for Tripadvisor rival Booking Holdings Inc (NASDAQ: BKNG) have surged almost 83% in the last half-decade.
“We compounded that error, not only buying Tripadvisor, but selling out of Priceline, which is now called Booking Holdings.”
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Motley Fool contributor Tony Yoo owns shares of Temple & Webster Group Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Booking Holdings, Nike, Temple & Webster Group Ltd, TripAdvisor, and Zoom Video Communications. The Motley Fool Australia owns shares of and has recommended Challenger Limited. The Motley Fool Australia has recommended Booking Holdings, Nike, Temple & Webster Group Ltd, TripAdvisor, and Zoom Video Communications. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.