Episode summary
10 Cents on the Dollar | Gary Mishuris on Mispriced Fear and Lessons from Warner Brothers
Excess Returns
· · 1 hr 3 min · Guests: Gary Mishuris
Summary
Gary Mishuris frames his investing philosophy around a lesson that took years to absorb: cheapness alone is not value. He traces that lesson to his early days at Fidelity in the Peter Lynch era, when Lynch told him, “Just cheap doesn’t work,” and to an immigrant childhood story that taught him to look past surface appearances and investigate what is really underneath.
The episode’s central case study is Warner Bros. Discovery, which Mishuris saw as a classic “good company, bad company” mispricing. He argued that the market fixated on the declining cable business and underpriced the value of the stronger assets, including Warner Bros., HBO, and the content library. The planned spin-off of the weak business became the catalyst that could separate the two and force a rerating.
He also explains why he used long-dated call options only in rare cases like this one: the equity was deeply mispriced, the event horizon was identifiable, and the options themselves were also discounted. More broadly, Mishuris ties the story to mental models such as reflexivity, auction dynamics, and lollapalooza effects, then closes by describing how AI is now becoming part of his research process as a tool for faster work, deeper pattern recognition, and better judgment rather than a substitute for it.
Key takeaways
- Mishuris says Warner Bros. Discovery was mispriced because the market treated a two-business combination as one declining asset and ignored the value of the stronger segment.
- He argues the planned spin-off of the weaker cable business created the catalyst that could unlock the value of the good assets.
- He used long-dated options only because the equity was, in his view, around 10 cents on the dollar and the catalyst timeline matched the option expiration.
- Mishuris says the biggest lesson from Peter Lynch was that “just cheap” does not work; investors need quality plus price.
- He thinks AI can improve investing by speeding up research and surfacing patterns humans miss, but not by replacing judgment.
Notable quotes
“Just cheap doesn't work”
“The trick is in implementation”
“it felt lonely owning Warner Brothers”
“I was buying them at what I thought was about 10 cents on the dollar of intrinsic value”
How the episode opens
At one point during lunch, he dealer turned to me and said, "Just cheap doesn't work." And I'm like, "What?
What did you just say? You know, like he just basically like, you know, hammer to my my whole like, you know, treasure chest of beliefs there. Buffett gives away all his secrets.
How many Buffets are there? You know, people with Buffett like returns. I mean, you know, not to get into this tangent, but there are plenty of people claiming to try to clone Buffett.
No one has succeeded so far as far as I know. The trick is in implementation. Just think of you have a good company that's a division and it's earning $2 a share and a bad company losing a dollar a share.
Combined company is making a dollar a share and the market is like you know let's put a multiple on that let's say 15 times. The whole thing trades at 15 times even though you know you could shut down the money losing business and have $2 of earnings and you know the stock would be rate fairly quickly. You're watching Excess Returns, the channel that makes complex investing ideas simple enough to actually use where better questions lead to better portfolios.
Our guest today, Gary Mashurus, CFA, managing partner, chief investment officer of Silver Ring Value Partners. He's an MIT trained investor known for combining rigorous intrinsic value analysis with behavioral finance insights. And his northstars always compound capital over the long term.
He teaches the value investing seminar at Babson's College FW Olan Graduate School of Business. He writes behavioral value investor on Substack where he explores this intersection of classical value and cutting edge AI enhanced research. And this is all part of why I wanted to get this guy who's come all the way from the Soviet Union originally to leading a disciplined investment firm.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- value investing discipline
- mispriced fear
- behavioral investing
- options use in value portfolios
- ai in equity research
Companies and tickers mentioned
- Warner Bros. Discovery
- Fidelity
- Silver Ring Value Partners
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
More from Excess Returns
-
We Asked Fidelity’s Director of Global Macro Who Wins If AI Spending Slows -
An AI Bubble Could Hit Stocks. Inflation Could Hit Bonds. How Do You Diversify and Keep Both? -
Tech Is Priced for a Boom. 86% of the Economy Grew 0.7%. What If AI Slows? -
Tech Is the Cheapest Since 2022. Walmart Is 46 Times Earnings. Where Is the Bubble? -
This $1.5 Trillion Manager Expects More Fed Hikes. So Why Is He Still Bullish? -
AI Stocks Cracked. Margins Could Be Peaking. So Why Is a Liquidity Expert Watching the Debt Wall?
Excess Returns, this episode and its artwork belong to Excess Returns. Octagon is not affiliated with the show; this page is an independent summary.
