My Worst Investment Ever Podcast Carter Malloy – Valuation Is Not a Reason to Invest
BIO: AcreTrader’s CEO, Carter Malloy, grew up in an Arkansas farming family and has had a lifelong passion for agriculture and investing. Before founding AcreTrader, he spent five years as part of the founding team of a successful global equity investment firm.
STORY: Carter was super impressed by a healthcare software company whose stock was really expensive, and the valuation was crazy high. Carter decided to short the company’s stock. However, he lost most of his money because the stock almost doubled on him.
LEARNING: Valuation is not a reason to invest. Don’t bet against really good management teams.
“Valuation should inform your position size. However, look at it across a large spectrum of metrics and measurements to help you determine whether you have a thesis or not.”
Carter Malloy
Guest profile
AcreTrader’s CEO, Carter Malloy, grew up in an Arkansas farming family and has had a lifelong passion for agriculture and investing. Before founding AcreTrader, he spent five years as part of the founding team of a successful global equity investment firm.
Before joining in 2013, Carter was a Managing Director with Stephens Inc., a large private investment bank, where he was an equity research analyst.
At AcreTrader, Carter has successfully raised over $60 million in Series B funding and grown from 20 employees to 120 employees across the company’s two business divisions, which include AcreTrader, the farmland investing platform, and Acres, a land research platform.
Worst investment ever
As an equity investor, Carter would generally chase okay businesses valued as great ones. One particular company, a healthcare software business, caught Carter’s attention. He had a thesis around the macro developments—both cyclical and secular headwinds—that this company faced. He realized there were these real pressures on that business that the rest of Wall Street and the investment world was seeing. The stock was really expensive, and the valuation was crazy high.
Carter started digging into the company. He met with the company CEO, and this guy was unbelievably impressive. Carter dug deeper into the company culture and the people who worked there, concluding that this was a well-run business. Carter decided to invest in the company. However, he lost most of the principal because the stock almost halved on him.
Lessons learned
- Valuation is an essential part of your research. It can support an investment decision but is not a reason to invest.
- Don’t bet against excellent management teams because they can absolutely—and often do—determine the outcome.
- Valuation should inform your position size.
Andrew’s takeaways
- Valuation will be a tool if you don’t have any other fundamental things driving your investment decision.
Actionable advice
Don’t invest in single securities. Instead, invest in ETFs.
Carter’s recommendations
If you want to be a good investor, understand what CFAs read and then take the Kaplan Schweser CFA Level One course.
No.1 goal for the next 12 months
Carter’s goal for the next 12 months is to spend more time with his children.
Parting words
“This has been fantastic. I sincerely appreciate you.”
Carter Malloy
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Connect with Carter Malloy
Andrew’s books
- How to Start Building Your Wealth Investing in the Stock Market
- My Worst Investment Ever
- 9 Valuation Mistakes and How to Avoid Them
- Transform Your Business with Dr.Deming’s 14 Points
Andrew’s online programs
- Valuation Master Class
- The Become a Better Investor Community
- How to Start Building Your Wealth Investing in the Stock Market
- Finance Made Ridiculously Simple
- FVMR Investing: Quantamental Investing Across the World
- Become a Great Presenter and Increase Your Influence
- Transform Your Business with Dr. Deming’s 14 Points
- Achieve Your Goals