| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | 0% | 0% |
Silver Ring Value Partners maintains a contrarian value approach in an increasingly speculative market environment. The manager emphasizes that current market conditions mirror historical patterns of excessive optimism, with credit spreads near lows and equity valuations near highs, warranting extra caution. The portfolio trades at 59% of base case value excluding cash, demonstrating significant undervaluation. Recent investment activity includes new positions in Jazz Pharmaceuticals, Pediatrix Medical Group, and Qurate Retail, while increasing Babcock International and reducing Liberty Latin America. The manager applies rigorous quality metrics across business, management, and balance sheet dimensions. Key risks include potential mean reversion from current elevated valuations and earnings at cyclical highs. The portfolio maintains 9% cash as a bottom-up residual, reflecting selective opportunity set. Forward positioning emphasizes not losing money given widespread market optimism. The manager commits to independent thinking regardless of crowd behavior, focusing on individual company analysis while applying process improvements for better portfolio construction and risk management.
Independent, contrarian value investing approach focused on buying undervalued securities with strong margins of safety while maintaining disciplined risk management in an overvalued market environment.
Manager remains very cautious about investment environment due to elevated valuations and widespread optimism, but believes nimble partnership can find opportunities in most markets. Focus remains on individual company analysis while applying process improvements to construct better, more balanced portfolio.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Nov 13 2024 | 2024 Q3 | ALFAA.MX, ALPEKA.MX, BAB.L, JAZZ, LILAK, MD, QRTEA | contrarian, portfolio construction, Quality, risk management, Turnarounds, value |
JAZZ MD QRTEA |
Contrarian value manager maintains disciplined approach amid speculative market conditions. Portfolio trades at 59% of intrinsic value with new positions in specialty pharma and healthcare services. Emphasizes quality metrics and risk management while market sentiment reaches extreme optimism. Cash at 9% reflects selective opportunity set in overvalued environment. |
| Aug 20 2024 | 2024 Q2 | ALFAA.MX, EVRI, HRL, IGT | Catalyst, Food, gaming, Intrinsic Value, Mexico, Quality, Spin-off, value |
IGT ALFAA.MX |
Silver Ring maintains disciplined value investing with 30% cash amid scarce opportunities. Added IGT lottery business expecting pure-play catalyst within a year. Largest position Alfa S.A.B. trades at 5x earnings with spin-off catalyst expected within two years. Portfolio at 60% of intrinsic value provides significant margin of safety while waiting for better opportunities in greed-dominated market. |
| May 29 2024 | 2024 Q1 | AAPL, AMZN, BWA, CMCSA, GTX, NFLX, PHIN, WBD | Automotive, Growth Duration, Media, Process Evolution, small caps, value |
PHIN WBD |
Value-focused fund maintains high cash levels amid scarce opportunities, evolving process to balance traditional value with long-duration growth. Key positions in automotive aftermarket (Phinia) and media (Warner Brothers Discovery) reflect contrarian positioning in unloved sectors. Manager emphasizes discipline over external pressures while implementing systematic improvements to enhance future returns through better portfolio balance and catalyst identification. |
| May 2 2024 | 2023 Q4 | AIM.TO, ALFAA.MX, GTX | Behavioral Finance, Cash Management, Concentration, Portfolio Management, Quality, value | GTX | Value manager maintains strict discipline with portfolio at 72% of intrinsic value and 29% cash. Reduced Garrett Motion after losing preferred stock protection but increased Alfa as Mexican conglomerate trades below core business value. Emphasizes patience over activity, behavioral awareness, and high quality standards while waiting for exceptional opportunities with large margins of safety. |
| Oct 30 2023 | 2023 Q3 | AIM.TO, ALFAA.MX, GTX | Behavioral Finance, Conglomerates, Electric Vehicles, Portfolio Management, Turbochargers, value | GTX | Silver Ring maintains disciplined value investing with portfolio at 72% of intrinsic value and 29% cash. Holdings include turbocharger leader Garrett Motion facing EV headwinds but trading cheaply, and Mexican conglomerate Alfa simplifying into food business. Manager emphasizes behavioral discipline and high investment standards despite pressure to deploy capital, confident in long-term process execution. |
| Jul 17 2023 | 2023 Q2 | OI | Margin Of Safety, Process, small caps, special situations, Temperament, value | - | Value manager acknowledges seven-year underperformance but maintains conviction in deep value process. Portfolio trades at significant discount to intrinsic value with 29% cash reflecting scarce opportunities. Focuses on smaller, out-of-favor situations while avoiding popular growth stocks. Expects superior risk-adjusted returns over full cycle despite recent struggles. |
| Apr 5 2023 | 2023 Q1 | AIM.TO, GTXAP, OI | Cash Management, Convertible Preferred, Glass, Patience, Quality, value |
AAOI GTXAP AIM.TO |
Silver Ring maintains disciplined value approach with 28% cash, waiting for quality companies with sufficient margin of safety. Portfolio trades at 74% of intrinsic value. O-I Glass exceeding expectations while Garrett Motion loses preferred downside protection. Manager emphasizes patience over forced deployment, demonstrating mathematically how waiting for better opportunities typically outperforms rushing into mediocre investments. |
| Mar 2 2023 | 2022 Q4 | FRII CN, WINE LN | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2024 Q3 |
ValuePortfolio trading at 59% of base case value excluding cash, demonstrating significant undervaluation. Manager emphasizes buying securities well below intrinsic value estimates with strong margins of safety across positions. |
Undervaluation Intrinsic Value Margin of Safety Discounted Cash Flow Base Case |
Specialty PharmaNew investment in Jazz Pharmaceuticals represents high uncertainty with low risk pattern. Company transitioning from Xyrem to improved Xywav drug with strong management ownership and solid balance sheet. |
Sleep Franchise Drug Transition Patent Expiry Management Ownership Free Cash Flow | |
QualityPortfolio construction emphasizes business quality, management quality, and balance sheet strength. Manager tracks quality quintiles across these three dimensions as key risk management metrics. |
Business Quality Management Quality Balance Sheet Competitive Advantage Risk Management | |
| 2024 Q2 |
ValueManager emphasizes investing in genuinely attractive investments where mispricing is clear, avoiding the need to squint to see value. Portfolio trades at 60% of base case value excluding cash, with focus on businesses trading well below intrinsic value estimates. |
Intrinsic Value Mispricing Undervalued DCF Base Case |
GamingNew investment in International Game Technology (IGT), a lottery operator and slot machine game designer. The lottery business has high barriers to entry, switching costs, and long-term contracts, making incumbent operators very hard to replace. |
Lottery Slot Machines Barriers Contracts IGT | |
FoodLargest position Alfa S.A.B. owns Sigma, a branded food business focused on meats and dairy across Mexico, US, Latin America and EU. The business demonstrates resilience with strong brands and fragmented customer base in key markets like Mexico. |
Branded Foods Meats Dairy Consumer Habits Sigma | |
| 2024 Q1 |
ValueManager emphasizes disciplined value investing based on first principles, seeking meaningful undervaluation combined with sufficient quality. Portfolio priced at 63% of base case value excluding cash, with focus on companies trading below intrinsic value estimates. |
Undervaluation Intrinsic Value Quality Discipline First Principles |
Auto PartsSignificant exposure to automotive suppliers through Phinia and Garrett Motion positions. Manager views these as undervalued despite secular EV transition risks, focusing on aftermarket businesses and balance sheet strength. |
Automotive Aftermarket EV Transition Suppliers Consolidation | |
MediaInvestment in Warner Brothers Discovery despite negative sentiment. Manager sees unique assets with substantial value through studio, HBO, and cable networks, viewing potential acquisition as likely catalyst. |
Content Streaming Studios Cable Networks Acquisition | |
| 2023 Q4 |
Electric VehiclesThe manager discusses the negative impact of electric vehicle adoption on Garrett Motion's turbocharger business. EVs don't need turbochargers, creating a headwind for the company's revenue growth that will likely flip from positive to negative in 3-5 years as EV penetration increases. |
Electric Vehicles Turbochargers ICE Automotive Disruption |
ValueThe manager emphasizes strict value discipline, maintaining high standards for business quality and margin of safety. The portfolio trades at 72% of base case value and 60% excluding cash, with the manager preferring to wait for exceptional opportunities rather than compromise on criteria. |
Value Investing Margin of Safety Intrinsic Value Discipline Quality | |
| 2023 Q3 |
Electric VehiclesThe manager discusses the negative impact of electric vehicle adoption on Garrett Motion's turbocharger business. EVs don't need turbochargers, creating headwinds for the company's revenue growth in 3-5 years as EV penetration increases. |
Electric Vehicles Turbochargers ICE Auto Parts Energy Transition |
ValueThe portfolio trades at 72% of base case value and 60% excluding cash. The manager emphasizes finding securities with large margins of safety and attractive returns, maintaining high standards for business quality despite behavioral pressures to act. |
Value Margin of Safety Intrinsic Value DCF Quality | |
| 2023 Q2 |
ValueManager emphasizes deep value investing with large margin of safety, seeking securities trading below 60% of intrinsic value. Portfolio currently priced at 73% of base case value, with securities averaging below 60% of estimated value excluding cash. |
Value Margin of Safety Intrinsic Value Undervalued Deep Discount |
Small CapsFocus on smaller, out-of-favor special situations that are particularly marked down in current market environment. These positions are contrasted with larger, popular stocks that have performed well. |
Small Caps Special Situations Out of Favor Marked Down | |
| 2023 Q1 |
ValueManager emphasizes disciplined value investing approach, seeking large gaps between price and intrinsic value. Portfolio trading at 74% of base case value, with focus on quality companies at attractive prices rather than forcing investments. |
Intrinsic Value Margin of Safety Quality Price to Value Discipline |
GlassO-I Glass consistently exceeding expectations with raised EPS guidance. Manager sees limited cyclicality, secular decline concerns overblown, and expects re-rating or private equity buyout as catalysts. |
Packaging Cyclical MAGMA Technology Free Cash Flow |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Nov 13, 2024 | Fund Letters | Silver Ring Value Partners | JAZZ | Jazz Pharmaceuticals | Health Care | Pharmaceuticals | Bull | NASDAQ | Biotech, Patent Transition, pipeline, Sleep Disorders, Specialty pharmaceuticals, Strong Management, undervalued, Value | Login |
| Nov 13, 2024 | Fund Letters | Silver Ring Value Partners | QRTEA | Qurate Retail | Consumer Discretionary | Internet & Direct Marketing Retail | Bull | NASDAQ | asymmetric bet, call option, customer retention, Distressed, high-risk, Portfolio Hedging, turnaround, Video Commerce | Login |
| Nov 13, 2024 | Fund Letters | Silver Ring Value Partners | MD | Pediatrix Medical Group | Health Care | Health Care Services | Bull | NYSE | Competitive Advantage, Healthcare services, Low Cyclicality, margin of safety, Medical Staffing, NICU, turnaround, Value | Login |
| Aug 20, 2024 | Fund Letters | Silver Ring Value Partners | ALFAA.MX | Alfa S.A.B. | Consumer Staples | Packaged Foods & Meats | Bull | Mexican Stock Exchange | branded, Catalyst, Chemicals, defensive, Food, Mexico, spin-off, Value | Login |
| Aug 20, 2024 | Fund Letters | Silver Ring Value Partners | IGT | International Game Technology | Consumer Discretionary | Casinos & Gaming | Bull | NYSE | Apollo, Catalyst, dividend, Gaming, government contracts, Lottery, Share Buybacks, spin-off | Login |
| May 14, 2024 | Fund Letters | Silver Ring Value Partners | WBD | Warner Bros. Discovery Inc. | Communication Services | Movies & Entertainment | Bull | NASDAQ | cable networks, content library, entertainment, HBO, M&A, media, Streaming, turnaround, Value, Warner Studios | Login |
| May 14, 2024 | Fund Letters | Silver Ring Value Partners | PHIN | Phinia Inc. | Consumer Discretionary | Automobile Components | Bull | NASDAQ | aftermarket, automotive, capital allocation, commercial vehicles, Ev-Transition, Free Cash Flow, Fuel Systems, spinoff, Value | Login |
| Oct 30, 2023 | Fund Letters | Silver Ring Value Partners | GTX | Garrett Motion | Consumer Discretionary | Auto Components | Bull | NYSE | Auto Components, Electric Vehicles, Free Cash Flow, ICE, oligopoly, Turbochargers, Value | Login |
| Oct 30, 2023 | Fund Letters | Silver Ring Value Partners | GTX | Garrett Motion | Consumer Discretionary | Auto Components | Neutral | NYSE | Auto Components, Automotive Suppliers, Electric Vehicles, Free Cash Flow, oligopoly, secular decline, Turbochargers, Value | Login |
| Oct 30, 2023 | Fund Letters | Silver Ring Value Partners | - | Alfa | Consumer Staples | Food Products | Bull | Mexican Stock Exchange | Branded-foods, conglomerate, Cyclical, Food Products, Mexico, Simplification, Value | Login |
| Oct 30, 2023 | Fund Letters | Silver Ring Value Partners | - | Alfa | Consumer Staples | Food Products | Bull | Mexican Stock Exchange | Branded-foods, Business Simplification, conglomerate, conglomerate discount, Food Products, Mexico, Petrochemicals, Value | Login |
| May 4, 2023 | Fund Letters | Silver Ring Value Partners | AAOI | O-I Glass | Materials | Glass Products | Bull | NYSE | balance sheet improvement, Cyclical, Free Cash Flow, Glass Manufacturing, Packaging, Private Equity Target, Technology investment, Value | Login |
| May 4, 2023 | Fund Letters | Silver Ring Value Partners | GTXAP | Garrett Motion | Consumer Discretionary | Auto Parts & Equipment | Neutral | NYSE | automotive, Bankruptcy Recovery, Convertible Preferred, downside protection, Position Sizing, Recession risk, Turbocharger | Login |
| May 4, 2023 | Fund Letters | Silver Ring Value Partners | AIM.TO | Aimia | Industrials | Diversified Support Services | Bull | TSX | Asset Conversion, holding company, Indian Operations, Marine Industry, NOLs, Private Equity Partnership, specialty chemicals, Sum-of-parts, value investing | Login |
| TICKER | COMMENTARY |
|---|---|
| JAZZ | Jazz Pharmaceuticals is a specialty pharma company that fits the investment pattern of high uncertainty with low risk. While it has several important products on the market, its biggest is the sleep franchise. Within it the first-generation drug, Xyrem, has gone off patent, and the company is transitioning patients to the improved version, Xywav. The latter is a low-sodium version which has lower cardiac risks but similar efficacy. I bought the stock at what I estimate to be well under 50% of my Base Case net present value which assumes some share loss for Xywav. |
| MD | We owned Pediatrix Medical Group in the past. Since we exited, the company has been going through a simplification and turnaround process that I have been following. The company has simplified its business to the core business of staffing NICU physicians and related specialists for hospitals. It has a strong competitive advantage in this niche with a very sticky business with high switching costs. We bought the stock slightly below 10x earnings, which I believe represents a good margin of safety for a competitively advantaged, moderately growing business. |
| QRTEA | I have been following Qurate since we exited our investment. Let me get the obvious out of the way: the business is clearly challenged and there is a not-insignificant risk of the equity being worth $0. At the recent price for the equity of around 50c, it is basically trading as a call option without a fixed expiration date. I estimate the upside to a successful turnaround to be about 15x from these levels. The market is implying a 90%+ chance of the business going zero, which my analysis suggests is much too high. |
| BAB.L | Babcock's stock slid lower during the quarter for no apparent reason. While I always allow for the possibility that the market knows something that I do not, in this case that seemed less likely given the solid progress on the turnaround that management has been making and its recently reiterated guidance. While the company was showing good fundamental progress, the price to value gap widened. With those facts in mind, I thought it appropriate to increase the position size from Small to Medium. |
| LILAK | LILAK has been a poor investment for the partnership. I had been too optimistic in believing in management's plans, which it has repeatedly come up short on over the years. Following the failure of the Chilean business, the trouble has now been centered on the company's Puerto Rico operations where it has been integrating its AT&T acquisition. I took a hard look at the position, which had been a Medium position size, during the quarter through the lens of the Mental Model Scorecard. LILAK had one of the lower scores, and despite the stock's cheapness no longer merited to be such a big position. |
| ALFAA.MX | In my last letter I profiled Alfa and explained why I made it a large position when the stock hit the recent lows of around 10 pesos. Since I last wrote to you, the company announced a rights offering designed to accelerate the spin-off process. The offering, in an amount of approximately $400M, will be used to reduce debt to levels sufficient for the remaining branded food business, Sigma, to maintain its investment-grade rating post-spin. The rights offering was successful with strong investor demand, and we were able to receive our full shares plus an additional oversubscription amount at a price of 10.75 pesos. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
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| Industry | Prev Quarter % | Current Quarter % | Change |
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| No industry data available | |||
