FICO's value destruction is attributed to management's deliberate decisions to raise prices excessively and bypass partners, triggering regulatory backlash and competition.

And of course, we have the "fail of the week," which in this case is FICO , the worst-performing company in the S&P 500 this year . Its stock has now fallen by 60% since the beginning of the year.

This is Dave Khantazarian's favorite company and it is going under.

I have just released an exclusive one- hour episode about FICO and you will gain access to a Discord community filled with thousands of investors.

In this case, I have to highlight FICO. This is a stock I've been a fan of for a long time, and a little concerned about. It turns out that concern, which led me to shy away from this company despite its amazing fundamentals, has had a very negative impact on FICO shareholders.

And that's truly unfortunate . This is one of the week's flops where I feel sorry for the whole situation. It seems unjustified, and it seems like a lot of people are being unfairly penalized by FICO .

It's a company that Dave made a key part of his portfolio. At one point, it was over 30% of his portfolio. The $ 4 billion investment in FICO alone. The stock had soared to $2,000.

Things seemed to be going well for Valley Forge Capital until this chain of events caused the company's trading to plummet.

I systematically reviewed everything that happened with FICO in a timeline in an exclusive episode. It's the story of FICO's downfall. What really happened? But looking at this company, there seems to be no logical explanation for this dramatic drop in value.

Over the past five years, FICO has underperformed the S&P 500. Yet the stock also plummeted from $2,400 per share to around $600.

It's a rapidly growing company . Revenue grew by 25% in the last quarter. Operating margins are incredibly high. In fact, for the valuation segment, they're at 90%. Even their software business, which is FICO's least successful aspect , is generating operating margins comparable to major corporations.

Their software operating margins are comparable to Netflix's. This is business Good, and their credit rating agency is exceptional. There's nothing like it.

Overall, FICO had one of the best companies in the world, hands down . It was an undisputed monopoly. And it seemed unshakeable . The whole world was in their hands.

But as Uncle Ben says in Spider-Man, great power comes with great responsibility. And that's something FICO didn't seem to grasp. They had it all. They really owned it. The whole world was theirs.

Incredibly profitable businesses, virtually no real competition, and regulators who didn't seem to care much. They watched from afar , but there was no alarm. And then FICO made deliberate decisions to blow up the whole situation. To simply sink it all.

You can blame the regulators. You can blame various parties, but much of this was self-inflicted damage. FICO had just come out of a Justice Department case that ruled it a monopoly, an antitrust investigation.

This meant the government was saying, "Hey, we think..." " You may be monopolists." We believe you have an audience that has no alternative to you." Then Vico raised her hand and said, "Yes, we are."

We will raise prices by 400%. Our customers can't do anything. The banks can't do anything. We control an audience that has no choice." We are a monopoly. We just wanted to confirm that and make sure it was perfectly clear to the regulatory bodies."

This was all the regulators needed. Once the price increases took effect, regulators intensified their pressure on FICO. Then Bill Bolte entered the scene. He used FICO's price hikes , along with senators like Josh Hawley, to push for regulation of the company.

When you go home, credit bureaus run your credit score when you pull your report. They would provide you with FICO's score and make a small profit from it. So, whenever FICO's score was run, both FICO and the credit bureaus were happy.

They were both making a profit. FICO decided to bypass the credit bureaus, circumvent them, and eliminate them from the equation. Their distributors and partners of many years, with whom they had a close relationship, were now targets of FICO's attacks.

FICO wasn't content with simply provoking anger. Regulators weren't the only ones affected by the price hikes; FICO turned on its partners and distributors, alienating them by bypassing them.

These partners and distributors aren't just FICO's partners and distributors; they're also the owners of Vantage Score, its main competitor. They also own the data from which FICO derives its credit ratings .

This was FICO's management choice: to destroy almost every relationship around it . And of course, none of this was necessary.

FICO could have managed its monopoly much better. They could have raised prices by 10 to 20 percent annually— enough to generate decent profits for shareholders without alarming regulators to this extent.

But by raising prices by nearly 1600 percent in just two years, they drove everyone into a campaign against FICO, whether justified or not. It has now become a public relations campaign aimed at destroying the company and introducing genuine competition.

This is reflected today in the company's stock price.

So, when we look at FICO today, we see that while some things have gotten out of their control, Much of it was due to management decisions themselves. This is unfortunate and unnecessary.

Monopolies should act responsibly, with restraint , and with partnership-based leadership . They should work in harmony with their customers.