Letter to our co-investors 2Q20

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.