I’m going to attempt something a little odd today, Fools. Even though MAKO Surgical Corp. (NASDAQ:MAKO) stock makes up just less than 1% of my real-life holdings, I’m going to be giving you three reasons to consider selling the stock today.
Why am I doing this?
Recently, Nobel Prize winner Daniel Kahneman visited Fool headquarters in Virginia. While visiting, he talked about how a number of different biases can lead us to believe we can predict the future with relative certainty. In reality, he argued, we are just deluding ourselves.
It got me to thinking about how I don’t write enough about the risks of owning the stocks I own. So, though I don’t plan on selling my MAKO stock right now, I think it’s healthy for me to practice and model this behavior.
1. Management doesn’t have a good idea of what’s going on
One of the biggest reasons why MAKO Surgical Corp. (NASDAQ:MAKO)’s stock sits 70% lower today than it did in March 2012 is that management has not been able to get an accurate read on how its product will sell. This led to overly optimistic predictions that sent shares as high as $43.75. Today, MAKO Surgical Corp. (NASDAQ:MAKO) trades hands at about $12.30.
The trouble started in May 2012, when management announced that sales of the company’s RIO system — which helps perform hip and knee replacements — came in at only six units. Revenue missed even the company’s low-end projections.
To the frustration of investors, those overly optimistic projections continued. In July, the company announced the sale of only nine RIO systems. It’s not a good sign when management seems that out of touch with its product’s realistic potential.
2. There’s no guarantee MAKOplasty will catch on
MAKOplasty is the name given to the procedure that the company’s RIO robotic system can perform for partial knee and total hip replacement.
Many investors — including myself — were quick to point out that MAKO Surgical Corp. (NASDAQ:MAKO) was a lot like fellow robotic surgical company Intuitive Surgical, Inc. (NASDAQ:ISRG). Intuitive Surgical, Inc. (NASDAQ:ISRG)’s da Vinci robot has become a standard in hospitals around the world for performing prostatectomies and hysterectomies. It is also being explored for a variety of other potential surgical operations. Since March 2003, Intuitive Surgical, Inc. (NASDAQ:ISRG)’s stock has returned more than 6,500%!