Letter to our co-investors 2Q22

Dear co-investor,

During the second quarter of the year, the dynamics that we have been discussing in previous quarterly letters have not changed. The damaging effects of the energy transition (exacerbated by the Russian invasion of Ukraine), the Chinese economic crisis and high inflation (with its consequent tightening of monetary policies) have continued. This cocktail has led the world’s major stock markets, as well as fixed-income assets, to record one of the worst first half-years in their history. Despite this, our portfolios have continued to weather this difficult environment. Our Horos Value Internacional fund fell -2.0% over the quarter, compared to a -10.2% decline of its benchmark. Horos Value Iberia, on the other hand, was down by -1.0% over the period, compared to -1.1% in its benchmark index.

As usual, I would like to take this opportunity to update our longer-term performance. Since the inception of Horos (May 21, 2018), Horos Value Internacional has returned 19.8%, below the 39.3% gain of its benchmark, while Horos Value Iberia has returned 7.1%, outperforming the 0.6% return of its index. Moreover, since 2012, the returns of this management team stand at 193% for the international strategy and 168% for the Iberian strategy, compared to 187% and 69% of their benchmark indices, respectively.

The sources of uncertainty are many and of significant magnitude. For this reason, it is vital to work with great management teams that can make the most appropriate decisions for their shareholders at all times. We will therefore devote this quarter’s letter to explaining the keys to good capital allocation.