Dear co-investor,

In the second quarter, the positive performance that started in November 2020, with the announcement of the launch of coronavirus vaccines, continued. In this “new” environment, value investing has performed well, proving that patience and short-term losses are often essential ingredients for reaping the rewards over the long term. Our funds, of course, attest to this. Horos Value Internacional gained 6.3% over the quarter, compared to 6.4% in its benchmark index, while Horos Value Iberia returned 4.8%, beating the 4.2% rise of its benchmark. Since inception of the Horos funds (May 21, 2018), Horos Value Internacional has returned 13.1% and Horos Value Iberia 3.2%. Since 2012, the international portfolio has gained 177%, while the Iberian portfolio 160%, compared to gains of 200% and 66% in their benchmark indices, respectively.

As we have just pointed out, value investing often goes through periods, of varying lengths, when it seems to stop working. We do not have to go very far to find one of these moments. However, this underperformance is needed for us to be able to obtain attractive returns in the years ahead. Although it may sound paradoxical or inconsistent, it will often be necessary to lose in order to be able to (aspire to) gain more, taking advantage of what is known as intertemporal arbitrage. Given the relevance of this idea, we will devote this quarterly letter to explaining what it consists of and how we can make the most of it.

Thank you for your confidence.

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.

Dear co-investor,

In the first quarter, the trend that began with the announcement of the successful launch of the COVID-19 vaccines in November 2020 continued, characterized by the outperformance of companies with more cyclical businesses, as well as those of smaller size and less liquidity. In this “new” market environment, our funds have had an excellent performance, getting close to or even exceeding their all-time highs. Horos Value Internacional gained 21.5% over the quarter, compared to 8.9% in its benchmark index. In the same period, Horos Value Iberia returned 13.0%, beating the 5.4% rise of its benchmark. Since inception of the Horos funds (May 21, 2018), Horos Value Internacional has returned 6.4%, while Horos Value Iberia -1.6%. Since 2012, the international portfolio has gained 160% and the Iberian portfolio 146%, compared to 182% and 59% in its benchmark indices, respectively.

On the other hand, next May Horos will celebrate its third anniversary, and we can certainly not say that it has been a bed of roses for those of us who are part of this family. In these years we have lived through a period of great political and economic uncertainty (Trump, China, brexit…), in addition to the worst pandemic that humanity has suffered in the last century. A period that, as we have explained throughout our communications, has severely hindered our investment philosophy, with the specialized press announcing the death of value investing. To navigate these turbulent waters, it has taken a lot of patience, calmness and conviction in our work. Personally, the Stoic philosophy, to which I regularly refer, has been a great compass to guide me. I will devote part of this quarterly letter to describing some of its (surprising?) similarities with the value investing philosophy.

Thank you for your confidence.

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.

Dear co-investor,
Finally, a very difficult year for everyone has come to an end. I can add little to the encouragement and gratitude for your trust that we have shown you in our previous letters. May the arrival of the vaccine be the turning point we all wish for our lives.

Indeed, that turning point seems to have already come to the financial markets, with equity indexes experiencing a strong recovery in the last months of the year. This time it was the most cyclical and smaller, less liquid companies that outperformed. Thus, Horos Value Internacional returned 26.3% in the quarter, compared to 11.9% in its benchmark index. On the other hand, Horos Value Iberia posted a return of 27.9%, outperforming the 22.8% rise of its benchmark.

However, we continue to believe that the companies we own in our portfolio, mostly cyclical and smaller companies, have a high upside potential. As you know, our exposure to the commodities sector is a significant feature of our funds. It is therefore very important that you understand how we analyze this industry and select the companies in which we invest. This is what we will be devoting the bulk of this last letter of 2020 to, including an account of our investment mistake in offshore drilling companies. As we always say, in order to improve our investment process, we must detect the mistakes we make and learn what decisions/reasons led us to make them, in order to reduce the chances of these situations occurring again.

My best wishes for 2021.

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.

Dear co-investor,

We finished another quarter affected, to a greater or lesser extent, by the evolution of the pandemic and the decisions made by our governments. It is difficult to get used to this “new normal” situation, but the Horos family sends you all its encouragement and support for these difficult times.

At the market level, after last quarter’s recovery, markets have once again entered a dynamic in which large companies with more predictable earnings are favored by the investment community, to the detriment of smaller companies and those with
more cyclical businesses. Horos Value Internacional has not been immune to this dichotomy of performance, posting a -4.7% return in the quarter, compared to 3.6% of benchmark index. On the other hand, Horos Value Iberia returned -0.8%, outperforming the -6.3% of its benchmark index.

This dynamic, which we already highlighted last year, has even been exacerbated by the uncertainty we are experiencing today, as well as the policies enacted by central banks and governments around the world. At Horos we are convinced that we are not going to play a game in which the risk taken does not compensate for the potential reward of certain investment. We also understand that the current dynamics are not helping our investment style. However, we still prefer to invest where the opportunities exist, without being carried away by the irrational investment flow that feeds on the gains of the same type of companies, making them more and more expensive. History has shown, time and again, that valuations ALWAYS determine the returns we can expect as investors. This time, it will be no different. This is what we will dedicate this letter to.

Yours sincerely,

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

Additionally, you can access september 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.

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.

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.

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.

Dear co-investor,

We finish the third quarter of 2019, a period of continuity with respect to previous quarters, in which investors’ money continues to flow towards certainty, at any price, and flees from the most illiquid and/or cyclical companies, despite the attractiveness of their valuation.

This situation is causing an unsatisfactory relative (and absolute) return on our portfolios in the short term, but nevertheless contributes to generating great opportunities for appreciation in the long-term. At Horos it is clear to us that we must flee from the “fashionable”, as comfortable as it may seem to follow them, because our main objective as managers (and co-investors) of our funds is to maximise returns (in the long term) while minimising the risk we incur.

Periods like the present should not make us despair, nor call into question an investment process built with this sole objective in mind. From the fruits we are sowing (our potentials are at historical highs) we will reap the rewards.

As always, I would like to take this opportunity to thank you, on behalf of the entire Horos team, for your trust.

Yours sincerely,

ı——-—ı

Javier Ruiz, CFA
CIO
Horos Asset Management

Additionally, you can access September 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.

Finally, we would like to thank you, as always, for placing your trust in this management team and in the Horos Asset Management project