It's tough to pick a set of stocks that will beat the market -- although David Gardner's Rule Breakers and Stock Adviser portfolios both have done so consistently. Nobody's perfect, however, and as he has often said, every portfolio is going to have losers. But here at the Fool, we're serious about the need to acknowledge them, and learn from them. So in this week's Rule Breaker Investing podcast, David will break down his biggest losers of 2015, 2016, and 2017 -- with some help from a few Foolish guests to take some of the sting out of it.

In this segment, he's joined by analyst Aaron Bush to talk about Under Armour (NYSE:UA) (NYSE:UAA), which has lost almost two-thirds of its market cap since he added it to his portfolio in August 2016. They discuss the many headwinds for the athletic apparel and sporting goods company, and where its tailwinds, if any, are coming from.

A full transcript follows the video.

This video was recorded on Jan. 10, 2018.

David Gardner: David's Biggest Losers No. 5 and 6: And now to my fifth and sixth worst stock picks of the last three years, and for both of them I've invited my friend Aaron Bush in to talk about them. Aaron, welcome!

Aaron Bush: Thank you, David!

Gardner: Aaron, how long have you been with us at the Fool?

Bush: Well, I've been a member for about 10 and a half years, I think, believe it or not. And I've been with Supernova for almost six years now and in-house for about four.

Gardner: And how old are you, Aaron?

Bush: I'm 23.

Gardner: And that's pretty awesome. Aaron got started as a member. As a subscriber to The Motley Fool as a teenager. Were you a tween?

Bush: I was in seventh grade. Whatever age I was in seventh grade is what I was.

Gardner: You were real close to being a tween-in-Fool, and it's a delight to have you, here, at HQ 10 years later. It's not a delight, though, Aaron, to have you bringing the message that you are bringing today, because we're going to talk about some horrific losers.

Bush: Let's do it!

Gardner: Thank you. Because you're going to be presenting them, you know what they are. I'm here to make sure I let my listeners know that both of those, speaking of sports, and football, and an athletically themed podcast, are athletic companies. It's kind of all coming together here, at the end and a really dark ending.

Bush: I guess it was meant to be.

Gardner: And the first one, the ticker symbol is UA, or, if you will, UAA, depending on the share class of stock of the Under Armour corporation. This one is kind of a shocking loser for me, because I just can't believe it's been such a loser. I mean the other companies we've talked about -- Synchronoss, FireEye, Trivago -- these are not big companies or big brands that people know. But Under Armour is a big brand that is known globally, but especially here in the U.S. Football, basketball. All of their wicking gear. I mean, we're talking about a big-time company that is down from my pick of it at $38.88 on Aug. 24 of 2016. It's been a tough year and a half, down 64%.

Aaron, first off, a couple of sentences. What does Under Armour do?

Bush: Under Armour is a fitness apparel and sporting-goods company. They sell clothing, footwear, and accessories for all sorts of sports that are out there.

Gardner: And Aaron, what is thing-that-went-wrong No. 1 for Under Armour?

Bush: I'll keep point No. 1 pretty broad and just point to the North American retail woes that are going on right now. As many Foolish investors already know, there's a pretty major transition in U.S. retail right now. Digital and mobile sales are booming. Mini malls are closing. Most big box retailers are closing stores, now, and a lot of other retail companies are laden with debt or whatever other problems they may have. They're not doing so hot. And naturally, as big sales points to Under Armour, when those companies struggle, Under Armour has to struggle along with them. That's been a pretty tough environment for them to be in.

Gardner: It sure has been. Aaron, what is thing-that-went-wrong No. 2? I realize there might be a three, four, and five. You can even pack in a few items if you like into No. 2, but for Under Armour.

Bush: I'll just call it unprepared overambition. I don't think Under Armour can blame the retail sphere for all of its problems. I think that CEO Kevin Plank has always been an ambitious leader, but let me just provide you with a couple of recent examples of where maybe his ambition was to a fault.

First, Under Armour has wanted to play a bigger role in footwear for many years, and over the past two years, or so, they've redoubled their efforts there. They have Steph Curry as the face of the brand, the well-known Warriors basketball player. But even so, they've struggled pretty terrible reviews on their shoes and pretty abysmal sales. They operationally just couldn't get it done. They just can't get it done right now, and I don't see them making that much progress. That's an example of a new line that had a lot of promise, but they just have failed to really capture the opportunity.

Second, I'll say that in 2015 Kevin Plank thought connected fitness would be the next big thing.

Gardner: And I agreed with him. I thought it was smart that they were in a way sort of becoming a tech company. Maybe even disrupting themselves a little bit in order to get into a space where with all of us with our mobile phones, we might be part of a huge community of fellow athletes and, like me, lamer athletes, but still part of a community tracking our steps, and keeping up getting insights about fitness for us. Getting healthier. It felt like the right thing to do.

Bush: Sure, and in 2018 it still is a big idea. It's still a big possibility that could come true, but I think the issue lied in maybe how Under Armour went about tackling that market. In that year they spent well over half a billion dollars acquiring pre-revenue connected fitness apps. The problem there is that the acquisitions really went nowhere. They couldn't figure out strategically how they fit. They never made any money. They're barely even mentioned anymore, even on earnings calls.

Also, this big financial move completely destroyed the healthy balance sheet that the company had. Now Under Armour has $800 million in net debt and that's pretty significant for a $6.5 billion company.

So if you combine these flops with expectations -- in 2015 and 2016, the P/E tipped 100 at one point -- it's pretty easy to see why the stock came crashing down.

Gardner: And now the company is worth what, roughly?

Bush: $6.5 billion.

Gardner: $6.5 billion, and that's so far down from where it was three years ago. So a very ambitious CEO. A founder-led company. A guy who's created a huge amount of value. If you think about his roots as a University of Maryland football player and then transitioning into becoming CEO of a dynamic company, taken all in all, it's a remarkable story of winning, but in the last three years it's been a remarkable story of losing.

Bush: Absolutely.

Gardner: A big theme for this podcast, and I'll have a couple of quotes at the end to speak to this. Aaron, what's one thing we can watch going forward as Under Armour shareholders? And I include myself, of course.

Bush: Beneath a really strong brand that Under Armour still has, they have two promising growth engines: international sales and direct-to-consumer sales. International sales, right now, represent only 20% of revenue, or so, and direct-to-consumer is about 35% of revenue, and there's some overlap in there. But both of those are growing very rapidly. And when you look at Under Armour and how small it is compared to Nike, which I believe is now a $100 billion company...

Gardner: And the ratio used to be much lower, but 100 or so to 6 is like we're 15-20 times larger than you are, and it was not that way four years ago

Bush: Right. That big gap still exists. The way I see it is the opportunity, the runway is still there. These headwinds will still persist, but the opportunities of international growth and direct-to-consumer growth still remain.

Gardner: All right. Thus much for Under Armour. We'll keep waiting, watching, and in my case hoping. And still believing. Believing. I mean, it's been a really tough few years. They kind of shot themselves in the foot just by investing so much in something that hasn't shown up so well for them. Making some acquisitions, another theme that's emerging in this week's podcast. Making some poor acquisitions, but we'll watch.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.