Summary
Horos is an asset management firm that knows the benefits of value investing over the long term.
We invest in companies that we consider, after analyzing them, to have a value higher than the price they ask for within the stock market.
In our search for companies with potential and with the aim of minimizing errors, we rule out companies that are highly indebted, poorly managed, and that present a high regulatory.
The theoretical potential of the fund for the next three years is around 142%, which gives an idea of how attractive the current time is for investing in Horos.
alvarez/E+ via Getty Images Dear co-investor,
The year 2021 was one of the best for managers who practice value investing, mainly due to the strong recovery of companies with cyclical businesses, which had been heavily penalized by the investment community in recent years. In the case of the Horos team, 2021 has possibly been our best year as investment professionals. Evidence of this, although always anecdotal, is that Horos Value Iberia was the top-performing fund of its category, with a return of 26.5% compared to 12.3% in its benchmark index. Horos Value Internacional also posted an outstanding return of 37.6% for the year, beating the 27.5% gains of its benchmark.
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 20.6%, below the 60.4% gain of its benchmark, while Horos Value Iberia has returned 10.2%, outperforming the 1.3% gain of its index. Moreover, since 2012, returns stand at 195% for the international strategy and 176% for the Iberian strategy, compared to 230% and 71% in their benchmark indices, respectively. 1
Despite this strong performance in 2021, the new year presents new challenges and sources of uncertainty for investors to prepare for. Certainly, one of them is the energy crisis that many economies are experiencing. In this letter, I will try to explain why this is happening and how we can protect ourselves against it.
Thank you for your confidence. Yours sincerely,
Javier Ruiz, CFA
Chief Investment Officer Horos Asset Management Executive summary
Prediction is very difficult, especially if it’s about the future.
— Niels Bohr
At the end of last year, what may be the first of many future energy crises was unleashed, especially if our governments (and society as a whole) do not take action. The accelerated and disorderly energy transition, conditioned and driven by the so- called green agenda, is causing serious global bottlenecks in the fossil fuel markets, while at the same time increasing the geopolitical risks associated with this process. Thermal coal, natural gas and oil are experiencing severe strains as a result of underinvestment to increase or maintain their productive capacity. Whether we like it or not, we need fossil fuels to satisfy our energy needs and, if investment in these sectors is not reactivated, we will have to get used to more erratic and higher electricity prices. We will devote the first part of this latest quarterly letter of 2021 to explaining this.
In addition, we will discuss the most significant changes that we have made to our portfolios. Among others, we can highlight that at Horos Value Internacional we exited our positions in Yellow Cake, MBIA and Teekay LNG, following the takeover bid received from Stonepeak. On the other hand, we initiated three new stakes in the quarter; namely, the Chinese real estate services company Aoyuan Healthy Life Group, the thermal coal producer Geo Energy Resources and the natural gas and oil exploration and production company Spartan Delta. At Horos Value Iberia, there were no new additions or exits during the period, only the usual portfolio rebalancing changes. The dream of predicting chaos
Chaos was the law of nature; Order was the dream of man.
— Henry Adams
One of the most recurring questions that Alejandro, Miguel or I are asked is what we expect from the stock market for the year or, directly, which company we recommend that will have an outstanding performance in the following months. The most common answer that comes to mind at such situations is that we do not have a crystal ball or, if I am a little less patient than usual that day, that if I knew it, I would not have to get up every morning to work. These answers are often surprising because most people live under the belief that financial markets can be predicted and that, therefore, […]
source Horos Asset Management Quarterly Letter To Our Co-Investors January 2022
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