Letter to our co-investors 2Q20

Letter to our co-investors 2Q20

27 June of 2020

Dear co-investor,

We finished a quarter marked, once again, by the huge impact that covid-19 has had on our lives. A quarter in which we can at least hope that the worst is over. I would like to give everyone who has been affected much encouragement and, of course, thank all of our investors for their trust and patience in this challenging environment.

At the market level, after the sharp falls in February and March, the world’s stock markets rebounded strongly, which has contributed to cutting the YTD 2020 losses. Our portfolios have not been immune to this recovery, with Horos Value Internacional posting a 16.0% return in the quarter in line with the 16.5% rise of its benchmark index, and Horos Value Iberia returning 14.1%, above the 8.5% of its benchmark index.

Despite this rise in the NAVs, our funds’ upside potential remains close to all-time highs.1 We are well aware that trusting these potentials implies trusting our way of doing things at Horos. That is why I think it is essential to devote this quarterly letter to a more in-depth look at how we analyse companies. In particular, we will study the role of narratives in our investment theses and the upside potential we obtain for our portfolios.

We continue to strongly believe that these are extraordinary times to invest in our funds. We do not have any crystal ball, nor do we have control over the performance of our portfolios (at least in the short term). But what is clear to us is that, if the work we are doing is correct, these high potentials will eventually turn into healthy and sustainable returns over time.

Yours sincerely,

ı———ı
Javier Ruiz, CFA
Chief Investment Officer
Horos Asset Management

Additionally, you can access June factsheets for Horos Value Iberia, Horos Value Internacional and Horos Internacional PP, where you can see more in detail our top 10 positions for each fund.


Letter to our co-investors 1Q20

Letter to our co-investors 1Q20

14 April of 2020

Dear co-investor,

We finished what has been one of the most challenging quarters we have ever experienced, both professionally and, of course, personally. Therefore, I would like to start by thanking you for your great trust in our work and wishing you all the best in these tough times.

I would also like, if I may, to express my congratulations and gratitude to the rest of the members of the Horos team, for the great effort they are making, so that our service and work can continue to be carried out as normally as possible. You can count on our dedication and rigor to be the same as always.

This quarter has been characterised by a sharp market downturn, as a result of investors’ panic and increased demand for liquidity, in the face of economic uncertainty due to the coronavirus pandemic. Thus, Horos Value Iberia fell by -35.1% compared to -27.6% of its benchmark index. On the other hand, Horos Value Internacional was down by -30.2% compared to -19.6% of its benchmark index.

In this quarterly letter, I would like to try to do my part to explain the severity of the market crash. But, most importantly, in an exercise in transparency that goes beyond previous letters, I will devote the bulk of this letter to discussing, in great detail, the changes we have made to our portfolios in order to mitigate potential risks and increase their upside potential to all-time highs.

We are convinced that we have an outstanding investment opportunity ahead of us. We are also proud to be able to say that in March, one of the worst months for the stock market on record, we had net inflows from our co-investors.

 

Yours sincerely,

ı———ı
Javier Ruiz, CFA
Chief Investment Officer
Horos Asset Management

Additionally, you can access March factsheets for Horos Value Iberia, Horos Value Internacional and Horos Internacional PP, where you can see more in detail our top 10 positions for each fund.


Letter to our co-investors 4Q19

Letter to our co-investors 4Q19

3 February of 2019

Dear co-investor,

We end a year that has been marked, as you know, by (very) high volatility in equity markets, caused by global political and economic uncertainties. As we have stressed in previous letters, this environment has led investors to seek out companies with more stable businesses or those that are currently more popular. The result is that these companies are becoming more and more expensive relative to smaller or more cyclical businesses.

This trend has slightly reversed in the last quarter of 2019, giving a boost to those who, like us, invest in stocks with a high margin of safety and which are precisely the least popular in this context of uncertainty. Perhaps the progress made in the trade negotiations between the United States and China, or the likely Brexit outcome in the United Kingdom, explains this recent change in investors’ sentiment.

However, valuation divergences are still very pronounced, and we remain convinced that our portfolio is best suited to generate attractive and sustainable returns over the long term, as evidenced by its high upside potential. We are aware that it is sometimes difficult to deal with this volatility. That is why we are very grateful for your confidence. We are sure that patience will eventually pay off.

My best wishes for 2020.

Yours sincerely,

ı———ı
Javier Ruiz, CFA
Chief Investment Officer
Horos Asset Management

Additionally, you can access December factsheets for Horos Value Iberia, Horos Value Internacional and Horos Internacional PP, where you can see more in detail our top 10 positions for each fund.