Podcast Summary: "10 Cents on the Dollar | Gary Mishuris on Mispriced Fear and Lessons from Warner Brothers"

Podcast: Excess Returns
Date: January 21, 2026
Host(s): Matt Zigler, Bogomil
Guest: Gary Mishuris (CFA, Managing Partner & CIO, Silver Ring Value Partners)

Episode Overview

This episode explores how mispriced fear creates compelling investment opportunities, focusing on Gary Mishuris’ real-world case study involving Warner Brothers Discovery. Gary shares his journey from learning under legendary investors at Fidelity during the Peter Lynch era, to developing a nuanced value investing approach, to leveraging AI in his research process. The discussion weaves together behavioral finance, mental models, investment process design, the challenges of holding unpopular positions, and the evolving role of AI in investment analysis.

Key Discussion Points & Insights

1. Early Lessons at Fidelity and Value Investing Philosophy

• Fidelity in the Peter Lynch Era

  • Gary recounts joining Fidelity in 2001, just after graduating MIT and as the dotcom bubble burst.
  • Describes the privilege of meeting Peter Lynch and learning formative investing lessons.
  • Pivotal advice from Lynch:

    "Just cheap doesn’t work."
    — Peter Lynch to Gary Mishuris [00:00, 04:26]

  • Reflection: Buying undervalued stocks by surface metrics alone is insufficient—quality matters, and the implementation is critical.

• Mentorship and Observing Legends

  • Gary describes Joel Tillinghast and Will Danoff’s unique investing approaches.
  • Anecdotes highlight unconventional but incisive questioning in company meetings, underscoring the importance of getting to business fundamentals.

2. The "Silver Ring" Story – Lessons from Life and Value

• Personal Story Behind the Firm’s Name
  • As a child émigré from the Soviet Union, Gary’s first major purchase—a “gold” ring in Italy that turned out to be cheap plating—taught him about the difference between price and value.
  • Key lesson: Surface-level cheapness isn’t real value—you must investigate beneath the "gold plating."

    “Surface cheapness is just not enough. It’s not necessarily a marker of value...you have to do your research...”
    — Gary Mishuris [07:54]

3. Case Study: Warner Brothers — Opportunity in Revulsion

• Buying a Hated Stock

  • Gary outlines the context: Warner Brothers Discovery following its troubled merger.
  • Despite storied assets, the company became one of the market’s most reviled, akin to AOL Time Warner or a “broken private equity deal.”
  • Most professionals avoided the stock given its deeply unpopular status:

    “I talked to my former coworkers...‘Gary, you’re insane. This is a structurally declining business. Why are you involved?’”
    — Gary Mishuris [12:18]

• Mental Models Applied

  • Good Business/Bad Business Combination:
    Asset value is obscured when a profitable segment is bundled with a declining one, leading markets to undervalue the whole.
  • Potential and Kinetic Energy:
    Undervalued companies may need a “nudge” (catalyst) to unlock latent value.
  • Event-Driven Unlock (Spin-off):
    The planned spin-off of the declining cable networks created a rational path for value realization.

• Valuation & Opportunity

  • Gary’s estimate: Stock trading at $7–$8 per share; intrinsic value for component parts >$20 per share.
  • “Price was like slightly more than a third of intrinsic value, which is shocking for a large, liquid company.” [18:12]
  • Majority of market participants failed to distinguish temporary profit dominance of declining business from long-term value of core IP and streaming assets.

• Catalyst & Option Structure

  • Used long-dated options due to both the mispriced options (structural model flaws in Black-Scholes) and a clear, time-bounded catalyst (the spin-off).
  • Portfolio construction compared to a soccer team: most is safe, solid positions; a few “strikers” are high-risk/high-reward, size-controlled bets.

4. Auction Dynamics and Investor Psychology

• Auction Model and Ego’s Role

  • When the business entered an auction, value perception shifted from intrinsic value to “what’s the most somebody’s going to pay for this.”
  • Auction mental models: Bidders often exceed “fair value” due to ego, public reputation, and competitive dynamics.

    “Once you have two serious bidders, it’s not just about money to them...it’s shiny, I already decide I want it, and I’m going to get it.”
    — Gary Mishuris [38:25]

  • Strategy: Take most profits off the table as price approaches intrinsic value; let a convex tail position ride for potential right-tail gain, but sized small to avoid gambling.

• Key Investing Principle

  • “It’s not enough to have the right mental model. You have to apply it. You have to understand what circumstances does it apply under.”
    — Gary Mishuris [43:41]

5. The Entertainment Industry Transformation

• Permanence of Demand vs. Delivery Disruption
  • “We always want to be entertained...the inventory—movies and libraries of content—never go stale.”
  • Distribution and monetization are in seismic transition, benefiting the nimble (e.g., Netflix), catching legacy players flat-footed.
  • Netflix’s rise was a case study in Innovator’s Dilemma: low-end entrant (mail DVD), underestimated, then scaled to disruptors.
  • “The winners are the consumers. The losers ...are the legacy businesses that didn’t adjust in time.” [48:20]

6. AI in Investment Research: From Skeptic to Superuser

• Personal Adoption Story
  • Started with little AI use; now drives hundreds of hours optimizing processes with LLMs (e.g., ChatGPT, Gemini).
• Process Over Hype
  • “If you take the hype away...let me just go from first principles to tools. I’m very much a process guy...” [50:32]
  • Systematic experimentation with AI in: idea generation, pattern recognition, and qualitative analysis.
• Unique AI Advantages
  • Not just time savings—AI can identify patterns and subtexts in expert interviews difficult for any human to synthesize.
  • “Category two...doing something we couldn’t do even though we had more time or money.”
    — Gary Mishuris [55:38]
• Prompts and Continuous Improvement
  • Investing with AI is iterative; prompts and techniques evolve with the models.
  • Advocates for open sharing and public collaboration (e.g., his freely available AI Equity Analyst white paper).

7. Investor Wisdom and Closing Thoughts

• The Danger of Incentives
  • “The incentives in the industry on average are not in the favor of the customer...if you can’t understand something yourself, chances are someone else who is selling it to you, they’re selling it to make money off of your portion.”
    — Gary Mishuris [60:35]
• Simplicity for Most
  • Suggests most people should favor ultra-low-cost index funds unless they have clear reason/expertise not to.
• Implementation Over “Secrets”
  • “Buffett gives away all his secrets. How many Buffetts are there? … The trick is in implementation.”
    — Gary Mishuris [58:59]

Notable Quotes

• On value and surface cheapness:
  “Surface cheapness is just not enough. It’s not necessarily a marker of value...you have to do your research...”
  — Gary Mishuris [07:54]

• On holding unpopular positions:
  “You have to be wired to think from first principles and have the temperament to ignore the crowd.”
  — Gary Mishuris [12:25]

• On auction dynamics:
  “It’s not just about money to them...there’s so much public reputation, ego invested that it’s no longer about what is the intrinsic value...”
  — Gary Mishuris [38:25]

• On AI and research:
  “There are going to be steps that you can purely use AI for...category two is doing something we couldn’t do even though we had more time or money.”
  — Gary Mishuris [55:38]

• On safeguarding typical investors:
  “The incentives in the industry…are not in the favor of the customer...if you can't understand something yourself, chances are someone else who is selling it to you, they're selling it to make money off of your portion.”
  — Gary Mishuris [60:35]

Key Timestamps

• 00:00-04:26: Early lessons from Peter Lynch and Fidelity’s investing culture
• 07:44-11:10: Personal “silver ring” story and the price vs. value lesson
• 12:18-19:16: Warner Brothers—buying a hated stock, staying rational amid market revulsion
• 20:04-23:25: Researching “good business / bad business” combinations; understanding market neglect
• 26:24-34:01: Use of mispriced long-dated options; portfolio sizing rationale
• 34:01-42:09: Auction theory, behavioral drivers, and risk management in exits
• 43:41-45:12: Recognizing when & where to apply different mental models
• 45:12-49:43: The entertainment industry’s enduring appeal and channel disruption
• 49:43-55:00: Integrating AI into investing processes—from curiosity to structured experimentation
• 55:38-58:59: Advanced AI advantages—spotting patterns, implied truths in expert research
• 60:35-62:04: One thing to teach the average investor: incentives matter; favor simplicity unless you really know what you’re doing

Conclusion

Gary Mishuris offers a masterclass in combining traditional value investing, behavioral insights, and modern AI tools. His Warner Brothers thesis illustrates the rewards of deep research, sound mental models, and the courage to act on “mispriced fear,” especially when catalysts are present. He advocates for disciplined process, humility in the face of complexity, and constant learning—a message relevant for professionals and individual investors alike.

Find More:

• Gary’s Substack: Behavioral Value Investor
• AI Equity Analyst white paper: (Link available via Gary’s Substack or by request)
• Gary on LinkedIn: Gary Mishuris