Selling Universal Biosensors, Inc. (ASX:UBI) (oh the embarrassment!)

Well, I'm currently setting myself an embarrassing track record of buying and then immediately selling stocks. Last week it was Integrated Research (buy, sell) and this week is the turn of Universal Biosensors. I lost a couple of percent on the round trip.

This u-turn is especially humbling as it was another who picked apart my flimsy thesis. The investor in question kindly shared this crucial evidence with me, which shows that UBI is likely to keep making losses from producing blood coagulation test strips placing its cash pile at risk. The company may outsource manufacturing pending negotiations with Siemens, but it will still have to carry administrative overheads. These are forecast to be more than $1 million next quarter excluding salaries. Another point that was spoon fed to me is that UBI has received a few million from Siemens for development work that is not yet complete. Therefore, should the company want to sever ties with Siemens altogether, it would have to pay termination charges. The cash pile still covers the market capitalisation after taking this into account, but the margin of safety is diminished.

I opined earlier this week that I was comfortable with my rapid decision making on trades. This time I lost a bit of money and publicly examining the insufficiencies of my work is painful. On the other hand, my quick draw meant that a highly skilled investor helped me with the work. It may have taken me much longer to identify the crucial information alone and I might have missed it altogether. But these are excuses and I ought to do the work properly before buying. Although I can't guarantee that I won't fall into the same trap in the future, at least if I publish my actions there is a good chance that when I do someone smart will pick me up on it.

This diary is like a notebook for scribbling down ideas. When they are properly worked out I share them with my friends at Ethical Equities (who are more experienced and have better track records as investors than me). If they are happy, then my research is published under a general advice AFSL. What is contained in these pages is not reliable research, merely my meandering thoughts.

Comments

  1. For mine it shows a critical tool of the competent investor, the ability to overcome all the biases that come into play when you take new position, being open to new information which impacts your thesis and acting on it. Well played, sir.

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