Silver Ring Value Partners LP’s Q2 2019 Investor Letter

Silver Ring Value Partners LP is a Boston-based investment firm that specializes in delivering long-term value by utilizing an intrinsic and robust approach to investing. The company was founded in 2016 by Chief Investment Officer and Managing Partner Gary Mishuris. This MIT alumnus started his career in 2001 at Fidelity where he worked as an Equity Research Associate. He also worked with other big companies including Evergreen Investments and Manulife Asset Management.

In its Q2 2019 Investor Letter, Silver Ring Value Partners LP reported 11 investments with a 0.4% cash level and a 106% option-adjusted net exposure. At the end of the quarter, the fund reached a 60% price to base case value estimate.

“Dear Partners:

I hope that you are well. I greatly appreciate the confidence that you have placed in me by entrusting me with your capital, and I appreciate your continued support. Throughout the letter I will make references to the Owner’s Manual that you should have received; if you would like me to send you an additional copy, I would be happy to do so.

At the end of Q2 2019 the portfolio was attractively priced, with the Price to Base Case value ratio at 60%. The portfolio had 11 investments and cash at 0.4% at the end of the quarter. The ratio of Price to my estimate of Normalized EPS was 9x for a collection of businesses that I expect to grow profits at mid-single digit rates on average over the long-term.

The results, while substantially improved from the end of last year, are still not where I hope that they will be over the long-term. The underlying companies that we are invested in are, in most cases, showing good fundamental traction and I remain excited about the future prospects of our portfolio. The most significant period of time to judge the partnership’s outcome is over a full economic and market cycle that includes a typical share of good and bad environments.

With the U.S. stock market again at an all-time high, the opportunities for finding undervalued securities of good businesses are few and far between. My standards remain as high as ever and I continue to study high quality companies as a way of preparing for possible future price dislocations. The advantage of a long-term time horizon is that it encourages patience and concentrates the mind on what will happen to our capital in 5-10 years. With such a mindset it would be foolish to compromise on either the quality of the companies we invest in or the margin of safety in the form of a large discount between their price and my estimate of intrinsic value.”