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My Worst Investment: $MTTR
It's tough for me to answer the question of "what is your worst investment?" because I've made so many bad ones in the brief time since I've joined this game we call investing. That said, one stands out as a particularly poor outcome, but a particularly great learning event.
Matterport is an interesting company. It sells itself as a platform for the digitization of the built world. With the current direction of the world, I loved the story, but precisely at the wrong time -- and at a time when valuation was the least of my concerns (now it is the highest of my concerns).
I bought into the company at a multiple of over 20x sales! I held it for several months and slowly came to the realization of my error. But so did the market. The stock continued to drop from where I bought it, and my mental anguish at my mistake continued to rise until I made the decision to cut the fat and recognize a lesson learned. I never lost confidence in the 10-year story, but I lost confidence that my returns would make sense given the risk.
Looking back on this experience, a few things stand out:
- Valuation matters -- a lot -- for future return expectations.
- Overpaying for a business can create a mental drag that impacts your thinking.
- Sometimes it's better to just get out, reset your thinking, and move from there.
- Don't be afraid to take a loss.
These lessons aren't universal, but they are a few things I picked up from making what I believe to be an error early in my investing journey.
This is also my worst investment of the last 5 years.
I crystallised an 82% loss on this stock.
I only came across this company because of Josh Wolfe's tweet and I decided to put the business on my watch list while I did some fundamental research.
I thought this might've been the best play for the Metaverse at the time. A picks and shovels play on a vertically integrated business, selling the cameras, providing the digitisation SaaS platform and one of the largest existing 3D spatial libraries in the world.
Obviously valuation was a huge concern, but it's always difficult to get a true feeling for valuation when a company has only recently been listed. Decided to take only a 0.22% position, which is well under my usual 0.5% to 1.0% position size.
I should have sold when the stock fell below the 200-Day SMA, but rationalised my hold stance because my business thesis wasn't broken and the position size was so small. This is the Achille's heel of a fundamental-technical hybrid trader. You should sell on the technicals, but you still like the business, the position size is tiny, and you don't want to become one of those skittish investors who sells at the first sign of trouble, especially when the long-term thesis remains intact.
Ended up selling at an 82% loss when the stock failed to breached the 200-Day SMA for a second time. By then, I felt the stock wasn't going anywhere and it wasn't worth my effort tracking any more.
Two lessons learned:
- Adept position sizing saved me yet again from suffering big losses (it always has).
- Being a hybrid fundamental-technical trader is like having 2 conflicting personalities. I've always known this, but never quite resolved it. I've since decided that my trading rules will now take precedence over my business thesis. I'll sell on a breakdown of technicals, even if my business thesis remains intact.
@jazziyoung thanks for sharing your story!
Great summary! I think every investor has to learn these lessons sooner or later :)
Awesome summary and love the takeaways at the bottom. Those were such insightful ideas and something all investors need to learn and internalize. Thanks for sharing 🙏
Thank you for sharing. It’s not always easy to do these type of posts
Thanks for sharing 🙏
I made a similisr mkstake with this one. Was ultra hyped up during the spac craze. Definitely not living up to their original projections. Still holding a tiny stake in the spec category.
At the end of the day, $MTTR is the leader of spatial data by a far shot. Great lessons to be noted in your memo.
Great summary! Thanks for sharing
This is a very cool company imo, but I’m not familiar with the financials. I hope they succeed!
Always thought this was a fascinating business, in terms of their service. Good write up, thanks for sharing!
Thank you for sharing, @valuetowhom. I've watched Matterport from the sidelines for a little while and have heard some convincing bull cases for it from smart folks. How many total purchases of $MTTR did you make and would you say the % allocation was typical for your portfolio?
@tomato off the top of my head probably 3-4 purchases and not too big a % of the portfolio. Was during a time when I didn’t really have a codified strategy
interesting one ... thanks!
I have about 20 stocks like this all down more than 90% and about $5k-$20k in them. I bought them all at the worst possible time in history at the end of 2021. Most of the money will never be recovered, I expect.
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