azvalor Asset Management is a Madrid deep-value boutique founded in 2015 by Álvaro Guzmán de Lázaro and Fernando Bernad, formerly the core of Bestinver's investment team in the Graham tradition. It is known for contrarian concentration in unloved cyclical assets — gold and silver miners, oil services, uranium — buying into panic and exiting once value is realized. Its flagship international fund is about 70% of firm AUM and has more than tripled since inception a decade ago; letters were quarterly from 2016-2022 and semiannual since 2023.
This report from investment firm Azvalor reviews their first quarter of 2021. After a tough 2020, their funds rebounded strongly—up 113% in one case—but they believe stocks are still cheap and will keep outperforming. They recently bought companies like Grifols (a plasma drug leader), Arch Resources (a coal miner), and several gold miners, all at low prices. They sold stocks that had risen too much, like steelmaker Arcelor Mittal and hotel chain Meliá. The key takeaway for regular investors: buying undervalued assets during market panic and holding patiently can pay off. Worth reading for a clear example of 'buy low, sell high' in action.
In its first-quarter 2021 investor report, Azvalor noted that despite the impact of the pandemic, the company successfully held its sixth annual investor conference online. The core view is that the companies in the current portfolio are of solid quality, capable of withstanding market volatility, a
This chapter is the opening section of Azvalor’s first-quarter 2021 investor letter. It primarily reviews the sixth annual investor conference and provides an overview of the fund portfolio’s overall performance and investment confidence after weathering the “perfect storm” of 2020. The report emphasizes that, despite the pandemic forcing the conference online, the team remains committed to maintaining high transparency and accountability to investors.
The author’s core investment thesis is that the companies in the current portfolio are of solid quality, having proven their ability to withstand extreme market conditions and demonstrating strong return potential after the severe test of 2020. The report argues that, based on the current highly attractive valuation levels (relative to the broader equity index), fund returns will continue to outperform the market in the coming years, consistent with the author’s historical investment experience.
Counter-intuitive/Contrarian Judgments:
| Company/Asset | Role and Key Data | Bullish/Bearish |
|---|---|---|
| Grifols (Preferred Shares) | Added to the Iberian portfolio; purchase price at 11x estimated normalized earnings for 2022; family-owned, global leader in plasma-derived medicines | Bullish (valuation highly attractive, high industry barriers) |
| Arch Resources | Added to the International portfolio; purchase price corresponds to $133 per ton of metallurgical coal; the author estimates the industry needs $150/ton to achieve a 10% after-tax return | Bullish (believes stock value exceeds purchase price by more than double) |
| Gold Fields | Re-purchased at a price one-third lower than the selling price a few months ago | Bullish (recent decline in gold mining stocks offers opportunity) |
| Kinross Gold | New purchase; based on spot gold prices, free cash flow yield reaches 14% | Bullish (tracked for over 7 years, price highly attractive) |
| Endeavour Mining | New purchase; based on spot gold prices, valuation below 10x estimated profits | Bullish |
| Arcelor Mittal, Acerinox, Bankinter, Indra | All sold, as potential returns diminished after significant share price increases | Bearish (profit-taking) |
| Golar LNG, Meliá | All sold; Meliá sold at €7/share, up over 130% from the purchase price of €3/share | Bearish (potential returns lower than other alternatives) |
| Uranium Royalty, Serco, Valaris, Diamond Offshore | All sold, with positions each below 20 basis points | Bearish (small positions, rotated out) |
| International Seaways, Cabot Oil & Gas, Borr Drilling, Petrofac | Target prices lowered, but still high upside potential | Maintain bullish (valuations remain attractive) |
This section serves as the concluding part of Azvalor’s first-quarter investor letter, primarily expressing gratitude to investors and reaffirming the availability of the investor relations team. Additionally, the report includes a footnote to clarify the calculation methodology for the portfolio’s upside potential.
This section contains no core investment thesis; it is merely a courteous closing and an explanation of the valuation methodology.
No specific companies or assets are mentioned.
This section offers no investment implications. Investors may skip this part and focus on substantive content in the earlier sections of the report, such as portfolio performance, new holdings, and valuation analysis.