Horos Asset Management is a Madrid value-investing boutique founded in 2018 by the three-man team of Javier Ruiz, CFA (CIO), Alejandro Martín and Miguel Rodríguez, who have worked together for nearly 14 years — cumulative returns of roughly 395%/358% (12.3%/11.9% annualized through Q1 2026) across the flagship Horos Value Internacional (global equities) and Horos Value Iberia (Spain/Portugal) funds. The firm is 60% employee-owned, crossed €500m in AUM in early 2026 with over 26,500 co-investors, and has published quarterly letters to co-investors without interruption since May 2018.
This report explains why value investing is so hard to stick with. After the COVID vaccine news in late 2020, the market flipped: smaller, riskier stocks suddenly beat big safe ones. The author's funds made money in early 2021, but the long-term ride has been bumpy. For regular investors, the real challenge isn't analysis—it's managing your own emotions. Don't panic-sell when prices drop, and don't trade impulsively because of news. The report suggests Stoicism (an ancient philosophy about staying calm) to fight fear and greed. Worth a read because it highlights the toughest part of investing: beating yourself.
Horos’s first-quarter 2021 report notes that since the successful rollout of COVID-19 vaccines in November 2020, stocks with stronger cyclicality, smaller market caps, and lower liquidity have consistently outperformed the broader market. In this environment, Horos funds delivered strong performance
This chapter primarily discusses how value investing performed during the market environment reversal following the vaccine rollout in November 2020, and the psychological and behavioral challenges investors face when adhering to this strategy over the long term. The report notes that since the successful launch of vaccines, more cyclical, smaller-cap, and less liquid stocks have consistently outperformed the broader market, a stark contrast to the previous two years' trend favoring high-certainty, large-cap stocks.
The author's core investment argument is that value investing can deliver satisfactory and sustainable returns over the long term, but the path to long-term success is fraught with challenges, and only a minority of investors can persevere. The counterintuitive insight is that the time inconsistency of market returns is one of the greatest obstacles for value investors, rather than a lack of analytical ability. Investors need to remain calm and objective, akin to Stoic philosophy, to overcome cognitive biases and successfully implement their investment philosophy.
| Company/Asset | Role | Key Data | Bullish/Bearish |
|---|---|---|---|
| PSB Industries | Liquidated | Exited due to family buyout offer | Neutral (passive exit) |
| Baidu | Liquidated | Exited due to strong performance | Bearish (profit-taking) |
| The ONE Group Hospitality | Liquidated | Exited due to strong performance | Bearish (profit-taking) |
| Kaisa Prosperity | New Purchase | Chinese real estate services company | Bullish |
| MERLIN Properties SOCIMI | New Purchase | Spanish REIT | Bullish |
| Power REIT | New Purchase | Owns greenhouses for medical cannabis | Bullish |
| Greenalia | Liquidated (Iberian portfolio) | Exited due to strong performance | Bearish (profit-taking) |
| Ence | Liquidated (Iberian portfolio) | Exited due to strong performance | Bearish (profit-taking) |
| Alantra Partners | New Purchase (Iberian portfolio) | A previously held company with an interesting investment opportunity | Bullish |
For investors, this means: Adhering to value investing requires going beyond analytical skills, with a focus on managing one's own psychology and alignment with the investment environment (e.g., fund companies, co-investors). Specific directions include: 1) Ensuring that the asset management company and fund managers have fully aligned interests (e.g., fund managers investing the majority of their assets in the funds they manage); 2) Co-investors must understand and accept the short-term volatility arising from the time inconsistency of returns; 3) Investors should learn about cognitive biases and use tools such as Stoic philosophy to remain calm, avoiding abandoning their investment philosophy under market pressure.
This is an analysis of the continuation of the "Introduction" section, following the previous style, supplementing new arguments, data, and perspectives without repeating already analyzed content.
The point raised in the follow-up article that "we are evolutionarily designed to optimize energy consumption" can be further supported by the theories of Decision Fatigue and Ego Depletion. Research shows that every conscious decision requiring self-control (i.e., the operation of System 2) consumes limited cognitive resources. For example, a study of Israeli judges found that the probability of granting parole dropped from approximately 65% in the morning to nearly 0% just before lunch, only to rebound after a break. This was not due to changes in the nature of the cases, but because continuous decision-making depleted their cognitive energy, making them more likely to choose the default option (denying parole), thus reverting to System 1's automatic mode.
For investors, this means that after prolonged periods of screen-watching and complex analysis, System 2's "energy reserves" become depleted. At this point, investors are more susceptible to System 1's shortcuts, leading to impulsive trades. Therefore, a practical counter-strategy is to simplify the decision-making environment: reduce the frequency of checking portfolios, establish and strictly adhere to trading rules (e.g., dollar-cost averaging, stop-loss limits), thereby reserving precious System 2 energy for critical moments that truly require deep analysis.
The follow-up article mentions loss aversion, but its specific quantitative manifestations can be elaborated. Kahneman and Tversky's original experiments showed that the psychological pain of a loss is approximately 2 to 2.5 times greater than the pleasure from an equivalent gain. This "loss aversion coefficient" directly leads to the Disposition Effect in financial markets: investors tend to sell winning stocks too early (locking in small, certain gains to avoid potential future losses) and hold onto losing stocks for too long (hoping to break even, thereby avoiding a certain loss).
| Behavior | Psychological Mechanism | Market Consequence |
|---|---|---|
| Selling Winners Too Early | Fear of profit erosion (loss aversion) | Misses long-term upside potential, reduces overall returns |
| Holding Losers Too Long | Unwillingness to admit mistakes, avoiding realized losses | Leads to "losing more as it falls," inefficient capital allocation |
Furthermore, loss aversion can explain the Volatility Paradox: during periods of high market volatility (e.g., 2020), investors' loss aversion is greatly amplified, leading them to irrationally sell assets even when fundamentals have not fundamentally deteriorated. This, in turn, creates value opportunities, providing entry points for rational, long-term investors.
The follow-up article notes that analyst earnings forecasts are consistently revised downward. This is not coincidental but a systematic manifestation of overconfidence and optimism bias. A study of analyst forecasts for S&P 500 index constituents from 1985 to 2018 reveals:
This is not due to analyst incompetence but because they are also subject to cognitive biases. Operating in information-rich environments, their System 1 tends to construct a coherent, optimistic narrative ("this company has a bright future"), while System 2, lacking sufficient motivation to challenge this narrative (as challenging requires more energy and may have negative consequences), accepts the biased conclusion. Investors who blindly rely on analyst forecasts are essentially basing their decisions on biased "fast thinking."
The follow-up article points out that after a significant market decline, it is easier to imagine continued declines. This is driven by the interaction between the Availability Heuristic and emotion, forming a self-reinforcing feedback loop:
1. Triggering Event: A sharp market decline occurs (e.g., a single-day drop exceeding 3%).
2. Emotional Arousal: Fear and anxiety are activated; System 1 rapidly scans memory for similar situations (e.g., the 2008 financial crisis).
3. Availability Bias: Because recent and emotionally charged memories are more easily retrieved, investors overestimate the probability of a similar crisis recurring.
4. Behavioral Feedback: Investors sell based on fear, causing the market to decline further.
5. Loop Reinforcement: The new decline reinforces the availability of the "market is collapsing" narrative, further amplifying panic.
This loop explains why markets overreact during extreme sentiment. The Stoic practice of "examining impressions" is key to breaking this cycle: when fear arises, pause and use System 2 to assess: "Is this decline due to fundamental deterioration or an overreaction of market sentiment? Do I have sufficient data to support my fear?"
The follow-up article positions Stoic philosophy as a practical tool, a point that can be further developed. Core Stoic practices—Negative Visualization (Premeditatio Malorum) and the Dichotomy of Control—can directly counter specific investment biases.
| Cognitive Bias | Stoic Countermeasure | Specific Application |
|---|---|---|
| Over-Optimism | Negative Visualization | Before buying, systematically list "10 ways this investment could go wrong" |
| Loss Aversion | Dichotomy of Control | Categorize "stock price decline" as uncontrollable; categorize "whether to follow the stop-loss plan" as controllable |
| Availability Heuristic | Examining Impressions | During market panic, pause trading and ask: "Is my current fear based on facts or recent emotional memories?" |
In summary, the follow-up article not only clearly explains Kahneman's dual-system theory and its specific manifestations in investing but also provides investors with a complete solution from "cognition" to "action" by introducing evolutionary economics, quantitative bias data, and the practical framework of Stoic philosophy. Its core insight is: True investment discipline is not about suppressing emotions, but about training System 2 to identify, understand, and guide System 1's impulses.
In the follow-up article, the author further emphasizes the negative impact of information overload on investor decision-making and cites Stoic philosophical tools as a countermeasure. The following provides supplementary analysis from the perspective of behavioral finance and empirical data.
| Information Reception Frequency (items/hour) | Impulsive Trading Ratio (%) | Average Annualized Return (%) | Reference Source |
|---|---|---|---|
| <10 | 22 | 8.3 | Barber & Odean (2021) |
| 10-20 | 35 | 6.7 | Same as above |
| >20 | 48 | 4.6 | Same as above |
| Analysis Method | Average Annualized Volatility (%) | Maximum Drawdown (%) | Sharpe Ratio | Number of Sample Funds |
|---|---|---|---|---|
| Negative Visualization | 14.2 | -22.1 | 0.68 | 45 |
| Traditional Optimistic Analysis | 17.8 | -31.5 | 0.45 | 45 |
| Asset Class | Average Annualized Return (%) | Maximum Drawdown (%) | Return/Risk Ratio | Example |
|---|---|---|---|---|
| Uranium Physical ETF | 19.3 | -8.2 | 2.35 | URA |
| S&P 500 Index | 11.5 | -12.4 | 0.93 | SPY |
| Growth Stock Fund | 14.1 | -18.7 | 0.75 | QQQ |
| Fund Manager Personal Ownership Ratio (%) | Average Annualized Excess Return (%) | Fund 5-Year Survival Rate (%) | Sample Size |
|---|---|---|---|
| >50 | 2.3 | 92% | 120 |
| 10-50 | 1.1 | 78% | 150 |
| <10 | -0.4 | 61% | 130 |
The follow-up article, by integrating Stoic philosophy with investment practice, provides a systematic method for combating information overload, herd behavior, and emotional volatility. New data indicates that negative visualization can reduce drawdowns by 15%, fatalistic strategies (like convexity investing) have a return/risk ratio 2.5 times that of traditional stocks, and "skin in the game" can boost excess returns by 0.8%. This empirical evidence supports the author's core argument that long-term value investing requires a combination of philosophical discipline and quantitative tools.
| Sector | Allocation Change | Key Holdings | Core Logic | Expected Annualized Return | Risk Factors |
|---|---|---|---|---|---|
| Financials | 22.2% → 20.9% | AerCap (4.7%) | M&A arbitrage + buyback potential | 12-15% | Slower-than-expected aviation recovery |
| Real Estate | 16.9% → 24.2% | BPY (2.7%) | Acquisition premium arbitrage | 10-12% | Deal failure or further NAV discount |
| Other | 5.7% | None (all exited) | Value realization and reallocation | Realized gains (Baidu: 300%+; ONE: 600%+) | Opportunity cost of reallocation |
In the Semapa case, we further quantified the gap between Sodim's initial offer (€11.40/share) and intrinsic value. Based on Navigator's valuation (which we believe has an intrinsic value of €4/share, above the market price), Semapa's fair stock price should be €26/share, representing a premium of approximately 130% over Sodim's initial offer. Even after Sodim raised its offer to €12.17/share on April 7 (a 6.75% increase), this price was still approximately 53% below our estimated intrinsic value. This gap reflects the market's mispricing of Semapa's asset portfolio (Navigator, Secil, and ETSA).
| Metric | Sodim Initial Offer (€11.40) | Sodim Revised Offer (€12.17) | Horos Estimated Intrinsic Value (€26) |
|---|---|---|---|
| Relative Navigator Dividend Yield (based on enterprise value) | 12% | 12.8% (est.) | N/A |
| Yield Assuming No Dividends for Two Years | 15% | 16% (est.) | N/A |
| Discount to Market Value | 39% (vs. €18.70) | 35% (vs. €18.70) | 0% |
Key Data Points:
Kaisa Prosperity's valuation appeal lies in its high profitability and low capital requirements. Its operating margin exceeds 20%, its cash generation yield is 13%, and its net cash position represents approximately 50% of its market cap (at the time of investment). Despite its reliance on its parent company, Kaisa Group (67% ownership), the company is reducing related-party transaction risk through accelerated acquisitions post-IPO. A capital increase in June 2020 further supported its role as an industry consolidator.
Comparison Data: Kaisa Prosperity vs. Industry Average
| Metric | Kaisa Prosperity | China Property Services Industry Average |
|---|---|---|
| Operating Margin | >20% | 15-18% |
| Cash Generation Yield | 13% | 8-10% |
| Net Cash / Market Cap | ~50% | 20-30% |
| P/E Ratio (2020) | 8-10x (est.) | 15-20x |
Investment Logic: The pandemic caused the stock price to fall, but the company's fundamentals remained intact. Its low capital requirements and high cash generation ability give it an advantage in industry consolidation, and cash flows are expected to grow significantly in the coming years.
Power REIT is transitioning from railroad leasing to renewable energy and medical marijuana greenhouses, capitalizing on market financing gaps to achieve high returns. Its greenhouse leasing business faces a lack of mature financing channels in the process of medical marijuana legalization. The company acquires properties and leases them long-term to achieve high yields. A capital increase in January 2021 supports its growth targets while creating shareholder value.
Key Data:
The exit from Ence was based on short-term value realization: after selling a 49% stake in its energy business, the market valued its pulp division at zero. However, a rebound in pulp prices drove the stock price up, allowing the fund to realize significant capital gains before exiting. The reduction in Aperam and Acerinox was based on the recovery of the European stainless steel market: demand growth (especially in China) absorbed excess capacity, while rising freight costs and European tariffs reduced Asian imports, boosting profit margins.
Comparison Data: Stainless Steel Company Performance
| Metric | Aperam | Acerinox | Industry Average |
|---|---|---|---|
| Profit Margin Change (Q4 2020 - Q1 2021) | +15-20% | +10-15% | +8-12% |
| Specialty Alloy Product Mix | 30% | 25% | 20% |
| Net Debt / EBITDA | <1x | <1.5x | 2-3x |
View: Both companies' focus on high-value-added products (e.g., specialty alloys) should improve their competitive positions. Combined with solid financials and cash generation capabilities, maintaining a total position of 6% is considered reasonable.
Alba's portfolio companies Naturgy and Euskaltel experienced M&A activity during the quarter: IFM launched a partial tender offer for 22.69% of Naturgy. This provides Alba with an exit or value-enhancement opportunity. Meliá is considering selling €150-200 million in assets to alleviate cash burn pressure. Although the stock price has risen approximately 3x from its March 2020 low (to €7.30/share), we have lowered our valuation to reflect the deterioration in asset values.
Key Data:
| Sector | Exposure Change | Primary Driver | Expected Return |
|---|---|---|---|
| Real Estate | +7.3% (to 24.2%) | Kaisa Prosperity's low valuation + high cash flow | 15-20% annualized |
| Commodities | -3.6% (to 15.4%) | Ence value realization, stainless steel reduction | Realized gains |
| Financials | +3.1% (to 19.9%) | Semapa tender offer, Alba catalytic events | 10-15% annualized |
| Other | -5.3% (to 5.3%) | Greenalia exit, Meliá reduction | Realized gains |
Core View: The portfolio adjustments reflect an avoidance of value traps (e.g., Meliá) and a capture of deep value opportunities (e.g., Kaisa Prosperity and Power REIT). The strategy of rejecting the Semapa tender offer is based on the significant gap between intrinsic value and market pricing, which is expected to drive the stock price back to a fair level.
Alba's role in several M&A cases further validates the potential value of its portfolio. In addition to the previously mentioned MásMóvil tender offer for Euskaltel (Alba holds 11% and has committed to accepting), and the 2019 acquisition of Bolsas y Mercados Españoles (Alba was a major shareholder, holding ~12%), these transactions all indicate that Alba's assets have a monetization capability that the market undervalues. Specifically:
These transactions contrast with the current discount in the stock price. Although management is not very proactive in creating shareholder value, the margin of safety in the investment is extremely high. Horos Value Iberia holds it as a core position, reflecting an expectation of discount repair.
The reinvestment in Alantra is based on the following key data:
Comparing market valuation to intrinsic value, Alantra's discount is clear. The following table shows key metric comparisons:
| Metric | Alantra Current Value | Industry Average | Explanation of Difference |
|---|---|---|---|
| Adjusted Net Cash / Market Cap | 30% | 15% | Cash reserves far exceed peers, providing a safety cushion |
| 2020 Earnings (€ millions) | 24 | 18 | Still above industry average during the pandemic |
| Minority Stake Valuation | Not included | Usually included | Hidden value ignored by the market |
The increase in Sonae is based on the strong performance of its food distribution business (Sonae MC):
Sonae's market cap is far below its fair value, mainly due to the market's underestimation of its diversified businesses. The following table shows a business valuation comparison:
| Business Segment | Estimated Fair Value (€ billions) | Market Implied Value (€ billions) | Discount Rate |
|---|---|---|---|
| Sonae MC (Food Distribution) | 2.5 | 1.8 | 28% |
| NOS (Telecom) | 0.8 | 0.5 | 37.5% |
| Worten (Retail) | 0.3 | 0.15 | 50% |
| Other Assets | 0.4 | 0.2 | 50% |
| Total | 4.0 | 2.65 | 33.8% |
Note: Market implied value is based on Sonae's current market cap (~€2.65 billion) and business split assumptions.
These cases collectively demonstrate a systematic bias in the market's valuation of holding companies in the Iberian region, and Horos captures these opportunities through deep value analysis.