GuruFocus had the pleasure of hosting a presentation with Gary Mishuris, the managing partner and chief investment officer of Silver Ring Value Partners, an investment firm with a concentrated long-term intrinsic value strategy.
Mishuris also teaches the Value Investing Seminar at the F.W. Olin Graduate School of Business.
Prior to founding the firm, Mishuris was a managing director at Manulife Asset Management from 2011 to 2016, where he was the lead portfolio manager of the U.S. Focused Value strategy. From 2004 through 2010, Mishuris was a vice president at Evergreen Investments (later part of Wells Capital Management), where he started as an equity analyst and assumed roles with increasing responsibilities, including serving as the co-PM of the Large Cap Value strategy between 2007 and 2010. He began his career in 2001 at Fidelity as an equity research associate. Mishuris received a bachelor of science in computer science and a bachelor of science in economics from the Massachusetts Institute of Technology.
Watch the full presentation here:
Key takeaways
To kick off his presentation, Mishuris jumped into the origin story of his firm's name. He told the tale of a gold family ring that he was unable to keep as a child while his family was in the immigration process. Eventually he had the opportunity to purchase what looked to be a similar ring, only to learn it was silver with a gold coating that wore off. The point to be made from the story was that not everything that has a cheap price is actually a bargain.
From there Mishuris dove into the debate of value versus growth. He explained there is no winner between the two. Instead, he feels there is a best approach for each person on an individual basis. One strategy does not work for everyone and there is no way to say what works best across the board.
After taking a look into a few examples of stocks that he had personally invested in, Mishuris explained his investment process. First and foremost, he explained that every investor should have a written investment process that they are able to stick to.
His competitive advantage comes down to taking a long-term horizon, using a microeconomic focus, keeping a limited asset base and maintaining his temperament to stick to his process. To generate ideas, Mishuris uses a three-stage funnel to take in a broad set of companies. Once he has established a pool of companies to pick from, he excludes anything that fails his criteria and finally prioritizes investments based upon quality and valuation.
When Mishuris has determined potential candidates, he leans on a rigorous five-step research process to answer how predictable the economics of the business will be long term and the reasonable range of intrinsic values the business offers.
To round out the presentation, Mishuris explained how he likes to balance his portfolio alongside some of the common pitfalls he has seen other investors stumble into when balancing their portfolios. He ended things by explaining his portfolio can be upwards of 100% cash at any given time should there not be any investments worth the money.
Stocks
Mishuris used two different stocks during his presentation as real-world examples of investments he has made. The first example he looked at was Covetrus Inc. (CVET, Financial).
Covetrus offers up a unique business model with a mature veterinarian distribution business alongside a high-growth SaaS platform. In Mishuris' eyes, each of these businesses is likely worth over $10 a share, but throughout 2020 there were many opportunities to buy the stock for around $6 a share.
The second stock he looked at was Qurate Retail Inc. (QRTEA, Financial), which engages in online and video commerce via channels like QVC and HSN. Mishuris explained that the company has essentially recurring revenue from return buyers and also offered a special dividend that was very appealing. Buyers had the opportunity to purchase the stock at very low prices that had almost no reasonable business scenario to justify such low prices.
Questions
While taking inquiries from the audience, Mishuris had several questions come in regarding valuation and establishing the intrinsic value of companies. While he does employ several different strategies that work for different types of companies, his explanations came down to one simple idea:
"Valuation should hit you over the head as obvious because if it does not, it probably is not undervalued," Mishuris said.
Another interesting question came in asking about getting a chartered financial analyst credential. Mishuris explained that the process is great for education and there are parts of the process that he does agree with. There are also parts of the curriculum that he does not think are useful.
Overall, in Mishuris' eyes, the CFA designation gives people a foot in the door to prove to potential employers that they are serious about the work and that they have spent the time to learn the process. For those looking to get into the business, the lack of a CFA license or an MBA degree can cast a negative light. However, those qualifications do not mean that someone will be a successful investor.
Disclosure: Author owns no stocks mentioned.
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