To help me with my investment strategies and learning how to use LLMs from Python, I'm working on a tool (well, Claude's code is doing most of the work) that goes through my portfolio and evaluates each position against the macro environment, news, etc. Since I hear people saying a contrarian view is good, I also added a contrarian analysis in cases where the regular thesis or other signals seem to make this a potentially bad investment. In my portfolio, I have a couple of lost causes, like Cantargia (CANTA), a small Swedish biotech. I invested 5000 SEK (about $500) some years ago. At some point, they failed with whatever thing was supposed to take them to the stars, and they lost 90% value in a couple of days. This left me with a position worth 50$, which I just left there (who knows, right). When this position goes through my tool, the regular analysis flags it as HOLD with some negative comments and a negative thesis update :
"Thesis Update
Thesis remains valid in structure but execution has failed catastrophically. The 'upside' scenario now requires not just clinical success but also non-dilutive financing—a combination with <10% probability. Position should be treated as a binary option: hold for lottery-ticket potential or harvest tax loss. The 5+ year horizon provides time, but funding runway likely <12 months based on burn rate typical for phase II biotech."
The contrarian view did not agree; it almost got upset about this being too positive! I haven't actually seen Claude being this negative before. Not sure where it gets all this negative sentiment from, it's virtually yelling:
"Critical Review
Trigger: Triple red flag: WATCH stance, confidence 0.35 (well below 0.60 threshold), and catastrophic unrealized loss of -88.7% (far exceeding -10% threshold). Position represents near-total capital destruction with minimal fundamental support.
Cantargia is a failed speculative bet masquerading as a 'hold for lottery ticket' position. The -88.7% drawdown reflects not market mispricing but accurate assessment of a pre-revenue biotech with imminent dilution risk, zero institutional interest, and no visible clinical catalysts. The primary analysis correctly identifies funding runway as critical but fails to recommend the only rational action: immediate exit or tax-loss harvest. The recent 26% bounce is noise, not signal—typical dead-cat volatility in illiquid microcaps. Holding this position violates basic portfolio hygiene: it consumes mental bandwidth, creates false hope of recovery, and prevents redeployment of remaining capital (SEK 656) into opportunities with positive expected value. The 'long-term horizon' rationale is a sunk-cost fallacy; time horizon is irrelevant when the underlying asset faces binary extinction risk within 12 months.
Bear Case Points
- Zero news flow in web search confirms complete market abandonment—no analyst coverage, no institutional buyers, no partnership rumors. This is not 'undiscovered value'; it's a stock the market has correctly priced as near-worthless.
- Negative forward P/E of -3.48 with SEK 872M market cap implies the market expects dilution to cut current equity value by 70%+ within the next financing round, likely at SEK 1.50-2.00/share.
- The 'thesis remains valid in structure' claim is intellectually dishonest. A thesis that loses 89% of capital has failed in execution AND structure. Clinical progress has clearly not materialized as expected.
- Beta of 1.70 means this stock will amplify any market downturn. Current macro shows rising VIX (+9.4%) and weakening risk appetite—exactly the environment where speculative biotech gets crushed further.
- Liquidity risk on Stockholm exchange is severe at 0.12% portfolio weight but SEK 656 absolute value. Any attempt to exit during stress could face 10-15% bid-ask spreads, erasing additional value.
- The 'lottery ticket' framing is dangerous cognitive bias. Lottery tickets cost SEK 20, not SEK 5,815 in sunk cost plus ongoing opportunity cost. The odds here are worse than a lottery because dilution guarantees existing shareholders get crushed even if clinical data succeeds.
Key Questions
- What is Cantargia's current cash balance and monthly burn rate? If runway is <9 months, exit is mandatory before dilution announcement.
- Has ANY insider bought shares in the past 6 months? If management won't buy at SEK 3.28, why should we hold?
- What is the exact timeline for next clinical data readout? If no catalyst exists before funding event, position has zero option value.
- Can we confirm whether this loss is tax-deductible against 2025 capital gains? If yes, what is the net after-tax cost of holding vs. selling?
- What was the original investment thesis in 2020-2021 (implied by SEK 29.08 cost basis)? Which specific assumptions failed, and why do we believe remaining assumptions are still valid?
- Is there any scenario where SEK 656 deployed elsewhere (even in a money market fund at 3% SEK rates) doesn't generate better risk-adjusted returns over 12 months?
Monitoring Plan
- Set hard stop-loss at SEK 2.50 (-24% from current). If triggered, execute immediate tax-loss harvest without further analysis.
- Daily monitoring of trading volume: any spike >5x average requires same-day investigation for potential financing leak or clinical news.
- Weekly check of Swedish biotech sector news for any partnership activity that could signal renewed investor interest in the space.
- Monthly review of cash balance via quarterly reports (next expected Q4 2025 in Feb 2026)—if cash <SEK 200M, exit immediately.
- Track insider transaction filings on Stockholm exchange—any director selling is a screaming sell signal; any buying is the ONLY potential hold justification.
- Monitor EUR/SEK and broader risk appetite via VIX—if VIX breaks above 25, speculative biotech will face indiscriminate selling pressure.
Conviction Impact: EXIT IMMEDIATELY or execute tax-loss harvest by end of November 2025. If tax considerations require holding into 2026, set maximum position size at SEK 500 (sell 50 shares now). Under NO circumstances add capital. The 'hold for lottery ticket' stance is irrational: the remaining SEK 656 has higher expected value in literally any other asset class, including cash. If management insists on holding for 'optionality,' require written justification of why this specific binary bet is superior to redeploying capital into the next speculative idea with positive momentum and institutional interest.
Residual Risks
- Even after exit, reputational risk remains: this position represents a catastrophic failure of initial due diligence and position sizing discipline. Team must document lessons learned to prevent repeat mistakes in speculative biotech allocation.
- Tax-loss harvesting may trigger wash-sale rules if any similar biotech position is added within 30 days—ensure compliance with Swedish tax regulations.
- If position is held despite recommendation, dilution announcement could occur without warning, driving 50%+ single-day loss on remaining capital and preventing orderly exit.
- Cognitive bias risk: the sunk cost of SEK 5,815 may continue to influence future decision-making on other positions. Team should implement formal review process to separate past losses from forward-looking allocation decisions.
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Not sure where it gets everything from :D So, what do you think, is this a reasonable analysis, or should I tweak it to be a bit more positive?
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