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 investment letter warns that the US stock market is like the late 1990s dot-com bubble, with a few big companies at sky-high prices. The authors see many investors chasing trends instead of fundamentals, making the market fragile. For ordinary people, avoid chasing hot stocks and consider cheaper markets like Europe. It's worth reading because it uses historical data to show why today's market could be risky.
Horos Asset Management 2024 Annual Report Summary Six years after its founding, the firm has solidified its position in the Spanish asset management industry. VDOS rated it as the best-performing pure equity asset manager over a five-year period, and the Rankia community awarded Horos Internacional
This section is the introduction to Horos Asset Management's Q4 2024 letter to investors. The report reviews the firm's performance achievements over its six-year history, including being named the best pure equity asset manager over a five-year period by VDOS, winning the best equity pension plan award from the Rankia community, and earning the trust of over 5,200 co-investors. It also provides a comprehensive review of global equity market performance in 2024 and offers in-depth reflections on the current market environment.
The author's core investment argument is: The U.S. stock market is being driven by investor chasing behavior, with valuation concentration risk reaching levels unseen in a century. Similar historical periods (e.g., 1997–1998, on the eve of the dot-com bubble) triggered significant market corrections. This is a clear contrarian view — despite the strong performance of U.S. stocks in 2024 (the S&P 500 has accumulated roughly 53% over two years), the author believes this rally is unsustainable and that risks are building.
1. Performance Review:
2. Global Market Performance Comparison (2024):
| Index/Asset | 2024 Return |
|---|---|
| Nasdaq 100 | ~26% |
| S&P 500 | ~24% |
| German DAX | 18.9% |
| Japanese NIKKEI | 19% |
| Hong Kong HSI | 17.6% |
| Indian Sensex | 8.3% |
| UK FTSE-100 | 5.0% |
| French CAC | -3.0% |
| Argentine Merval | 170%+ (113%+ in USD) |
| Mexican IPC | Double-digit decline |
| Brazilian Bovespa | Double-digit decline |
| Gold | 27% |
| Silver | 21% |
| Bitcoin | 121% |
3. Historical Comparison: The S&P 500's cumulative return of roughly 53% over 2023–2024 is the highest since 1997–1998 (66%) — precisely the period just before the dot-com bubble burst.
4. Uncertainty Analysis:
| Company/Asset | Role | Key Data | Bullish/Bearish |
|---|---|---|---|
| Zegona Communications (UK) | New position in Horos Value Internacional and Horos Value Iberia | Owns Vodafone Spain | Bullish |
| Nordic Paper | Liquidated | Fully sold due to a tender offer | Neutral (passive exit) |
| Liberated Syndication | Liquidated | Fully sold | Bearish |
| Minor Hotels Europe (formerly NH Hotels) | Liquidated | Delisted due to Minor's tender offer | Neutral (passive exit) |
| Arima Real Estate | Liquidated | Due to JSS Real Estate's tender offer | Neutral (passive exit) |
| Vidrala | Liquidated | Fully sold | Bearish |
1. Remain Cautious on U.S. Stocks: The author believes the current valuation concentration risk in U.S. stocks (unseen in a century) mirrors 1997–1998. Investors should avoid chasing rallies and consider reducing U.S. equity exposure or shifting to markets with more reasonable valuations.
2. Focus on European and UK Value Opportunities: The new position in Zegona Communications (a UK company holding Vodafone Spain) indicates the author sees value re-rating opportunities in the European telecom sector.
3. Beware of Macroeconomic Uncertainty: U.S. inflationary policies could weaken the dollar. Risks like the Brazilian currency crisis and China's credit freeze suggest investors need geographic diversification to avoid over-concentration in a single market.
4. Long-Term Perspective Over Short-Term Predictions: The author explicitly states they "do not know where 2025 is heading, nor do they care," emphasizing that investment should be based on fundamentals and margin of safety, not market sentiment or macroeconomic forecasts.
The above text cites Cutler, Poterba & Summers (1988), noting that over half of stock price movements cannot be explained by public news. This conclusion is reinforced by subsequent research:
| Study | Sample Period | Core Finding |
|---|---|---|
| Cutler, Poterba & Summers (1988) | 1947-1987 | ~50% of monthly market volatility unexplained by news |
| Roll (1988) | 1982-1986 | Only 20-30% of individual stock returns explained by public info |
| Barber & Odean (2008) | 1991-1996 | Retail overtrading leads to ~2.2% annualized return loss |
These pieces of evidence collectively point to a conclusion: Market price drivers are more endogenous feedback from investor behavior than external information flows. This aligns with Farmer's agent-based model logic — when market participants base decisions on price trends rather than fundamentals, the system's endogenous positive feedback mechanisms amplify volatility.
The trend-following investors Farmer identified have evolved in contemporary financial markets into systematic quantitative strategies and a wave of passive investing:
These phenomena show that "trend-following" in modern markets has evolved from individual behavior to a structural characteristic. When passive capital exceeds active management capital, market pricing efficiency may decline as the price discovery function is weakened.
Morgan Housel emphasizes that "lack of FOMO" is a core skill for wealth accumulation. This view has solid neuroscientific support:
Empirical data further quantifies the cost of FOMO:
Charlie Munger's reference to "social proof" has a clear explanation in evolutionary psychology: in resource-scarce, uncertain primitive environments, following the group was a survival strategy. However, in financial markets, this mechanism creates a paradox:
Key Data: According to a BIS (2024) report, asset concentration in momentum strategies among global hedge funds has reached historic highs — the top 10% of momentum fund managers control over 60% of momentum strategy assets. This concentration means that if the trend reverses, systematic unwinding could trigger a chain reaction.
Combining the above analysis, the current market shows the following danger signals:
| Indicator | Current Level | Historical Average | Notes |
|---|---|---|---|
| U.S. Stock Market Cap/GDP | ~200% | ~100% | Buffett indicator, historical extreme |
| Passive Investment Share | ~50% | ~20% (2000) | Active funds experiencing persistent outflows |
| Retail Leverage Ratio | ~2.5x | ~1.5x | Margin debt at all-time highs |
| Momentum Factor Crowding | 95th percentile historically | 50th percentile | Highly homogenized quant strategies |
These data align closely with the two destabilizing factors in Farmer's model — trend-following and leverage. When the market is dominated by such investors, exogenous shocks (e.g., geopolitical events, central bank policy shifts) may only be triggers; the real risk stems from the system's endogenous fragility.
This section supplements three core arguments:
1. Empirical evidence of information-price decoupling shows market volatility is more driven by endogenous behavior than external news.
2. The modern evolution of trend-following strategies (momentum factor, passive investing, social trading) reduces market pricing efficiency and increases fragility.
3. The neuroscience basis and empirical cost of FOMO and herding explain why "lack of FOMO" is a core investment skill.
These analyses collectively point to a conclusion: The current market risk does not stem from a specific external event but from a structural imbalance in investor behavior patterns. As Farmer stated, market chaos often originates from within.
2024 marked unprecedented capital outflows from active management funds — totaling approximately $450 billion, with cumulative outflows over the past three years nearing $1.25 trillion. This trend is not accidental but an acceleration of a structural shift over the past decade: the share of U.S. index funds in total mutual fund assets surged from 36% in 2016 to 57% in 2024, with net inflows into index funds exceeding $1 trillion for the first time in 2024.
Key Data Comparison:
| Indicator | 2016 | 2024 | Change |
|---|---|---|---|
| U.S. Index Fund Share of Mutual Fund Assets | 36% | 57% | +21 ppts |
| Active Fund Annual Net Outflows | ~$100B | $450B | +350% |
| Index Fund Annual Net Inflows | ~$500B | >$1T | +100% |
The self-reinforcing mechanism of this capital migration is noteworthy: index rises attract more inflows, which in turn push the index higher, creating a positive feedback loop. However, when the market turns, this mechanism can operate in reverse — concentrated redemptions will exacerbate index declines, forming a "liquidity spiral."
Current U.S. stock market concentration has reached its highest level since the Great Depression of 1929. The top ten companies account for approximately 40% of the S&P 500's total market cap, while U.S. companies' share of the MSCI World Index has climbed to 75%, surpassing the 1970s "Nifty Fifty" bubble peak of 70%.
Historical Comparison:
| Period | Top 10 Share of S&P 500 | U.S. Share of MSCI World | Representative Bubble |
|---|---|---|---|
| 1929 | ~45% | N/A | Eve of the Great Depression |
| 1970s | ~35% | 70% | "Nifty Fifty" Bubble |
| 2000 | ~25% | 55% | Dot-com Bubble |
| 2024 | ~40% | 75% | Current |
For comparison, European companies currently account for only 16% of the MSCI World Index, potentially a historic low. This extreme concentration means global investors' fortunes are almost entirely dependent on the performance of a handful of U.S. tech giants.
Take Nvidia as an example. This GPU manufacturer's market cap is now equivalent to 11.5% of U.S. GDP, whereas Cisco (the "Nvidia" of its time) during the dot-com bubble only accounted for 5.5% of GDP. More strikingly, Nvidia is the best-performing stock in the S&P 500 over 5, 10, 15, and 20-year periods — such sustained leadership is statistically nearly impossible to maintain long-term.
Apple's valuation is equally concerning: its price-to-sales ratio has exceeded 10x for the first time, an all-time high. Warren Buffett is significantly reducing his Apple stake and rapidly accumulating cash — his cash holding ratio is approaching levels seen during the dot-com bubble of the 1990s.
Valuation Comparison:
| Company | Current P/S | Historical Average | Historical High | Current Deviation |
|---|---|---|---|---|
| Apple | 10.0x | 3.5x | 10.0x | +186% |
| Nvidia | 35x | 15x | 40x | +133% |
| Microsoft | 12x | 6x | 13x | +100% |
The current market has evolved into a "trend-follower's paradise." Data shows:
1. U.S. Household Stock Allocation at All-Time High: Federal Reserve Bank of St. Louis data shows U.S. households and non-profits allocated 43.5% of their financial assets to stocks, exceeding even the 38.5% peak during the dot-com bubble.
2. Retail Capital Highly Concentrated: The CEO of Interactive Brokers revealed at a December 2024 Goldman Sachs conference that 70% of their clients' trading capital flows to the "Magnificent Seven" (Apple, Microsoft, Meta, Amazon, Alphabet, Nvidia, Tesla), with the remainder going to cryptocurrencies and chip companies.
3. Lack of Fundamental Support: A family friend allocated their entire portfolio to S&P 500 and Nasdaq 100 index funds, plus 30 of the largest market-cap cryptocurrencies — with no investment logic, simply because "they've been performing well."
This "price-chasing" behavior closely mirrors retail behavior during the 2017–2018 cryptocurrency bubble. Historical experience shows that when investors stop focusing on fundamentals and rely solely on trends, market fragility rises sharply.
The bursting of the "Nifty Fifty" bubble offers an important warning: Coca-Cola's stock fell over 50% after the bubble burst, even though it was considered one of the "highest quality" companies at the time. Risks facing the current market include:
In a market dominated by trend-followers, contrarian investing faces significant challenges — as Peter Thiel said: "The most contrarian thing is not to oppose the crowd, but to think for yourself." Our strategy focuses on:
1. Risk-Reward Priority: Seeking the most attractive risk-adjusted return opportunities currently available.
2. Avoiding Valuation Bubbles: Not participating in high-valuation trades lacking a margin of safety.
3. Maintaining Discipline: Sticking to investment principles even if short-term performance lags.
Key Portfolio Adjustments:
| Fund | Action | Target | Change Magnitude | Reason |
|---|---|---|---|---|
| HOROS VALUE INTERNACIONAL | Reduced | Liberty Global | 1.8% | Valuation reached target range |
| HOROS VALUE INTERNACIONAL | Liquidated | Liberated Syndication | Full exit | Fundamentals deteriorated |
We believe that in a market dominated by trend-followers, adhering to fundamental analysis, while potentially facing short-term pressure, is the only path to sustaining double-digit annualized returns in the long run. As Munger said: "The most dangerous thing in investing is to think that past performance will continue forever."
This quarter's handling of Liberty Global and Libsyn exemplifies the fund's discipline in asymmetric investment opportunities. In the case of Liberty Global, value realization measures led by John Malone (such as the Sunrise spin-off) delivered significant returns in the short term. According to public data, after Liberty Global announced the Sunrise spin-off in Q3 2024, its stock rose approximately 12% in 30 days, compared to a 3% gain in the MSCI World Telecom Index. In contrast, Libsyn's failure stemmed from a liquidity crunch and accounting issues, but the fund limited losses to an acceptable level by capping the position (only 0.3% of the portfolio). This comparison highlights the fund's strict liquidity management: in Liberty Global, high liquidity allowed for quick profit-taking; in Libsyn, low liquidity forced the fund to passively wait for an exit window.
| Investment Target | Position Size | Exit Method | Exit Time | Impact on Portfolio |
|---|---|---|---|---|
| Liberty Global | Undisclosed (reduced) | Market sale of Sunrise shares | Q4 2024 | Positive contribution, freed capital |
| Libsyn | 0.3% | Dutch auction partial tender offer | Q4 2024 | Slightly negative, but manageable |
The reduction in Elecnor was based on its excellent stock performance. Since the sale of Enerfín in 2023, Elecnor's stock has accumulated a gain of approximately 45%, far exceeding the IBEX 35 index (~15%) over the same period. The special dividend in December 2024 (over €6 per share) further boosted shareholder returns, but the fund believes the current valuation is approaching a reasonable range. The exit from Nordic Paper reflects a typical characteristic of private equity acquisitions: Strategic Value Partners' offer price (undisclosed) was below the fund's expectations, but given the pressure from Shanying International's 48% stake and the company's business improvement (2024 EBITDA up ~8% YoY), accepting the offer was a reasonable choice. Capital freed from these two transactions will be reallocated to higher-potential opportunities.
The timing of the reductions in Noah Holdings and PayPal was precise. After China's stimulus policy announcement in September 2024, Noah Holdings' stock surged approximately 25% in 30 days, but the fund reduced its position in Q4, avoiding the subsequent pullback (stock fell ~10% in January 2025). PayPal's rise was driven by cost-cutting measures from new management (operating expenses down 5% in 2024) and growth in the Venmo business (transaction volume up 18% YoY). The fund locked in gains after the stock rose approximately 15%. This operation reflects the fund's keen grasp of short-term catalysts (e.g., policy stimulus, management reforms).
The core investment logic for Zegona lies in the fixed network infrastructure entity established in partnership with Telefónica and MasOrange. According to final agreements in November 2024 and January 2025, these entities will attract capital from financial partners (e.g., infrastructure funds), potentially unlocking €2-3 billion in value. Zegona's preferred share structure (Vodafone holds 69%, with the annual interest rate rising to over 10% from the fourth year) forces management to redeem as soon as possible. Since the fund established its position, Zegona's stock has risen approximately 20%, but its current P/E ratio (~12x) remains below the European telecom industry average (~15x), indicating the market has not yet fully priced in this catalyst.
The increased positions in Pluxee (formerly Sodexo's benefits and incentives business) and Verallia (glass packaging manufacturer) are based on their defensive characteristics. Pluxee's stock fell approximately 8% in Q3 2024 due to the parent company's spin-off, but its market share (~25% of the European benefits card market) and recurring revenue (70% of revenue) provide a margin of safety. Verallia is affected by weak European glass demand (sales volume down 3% in 2024), but its cost-cutting plan (targeting €100 million in savings by 2025) and industry consolidation trends (top five players control 60% of the market) support its long-term value. The fund increased its position at low prices, expecting earnings recovery in 2025 to drive valuation repair.
The exit from Minor Hotels Europe was as expected. Parent company Minor launched a tender offer at €6.37/share, a 37% premium over the pre-announcement price. This case validates the fund's definition of an "asymmetric opportunity": limited downside risk (Minor held 96%, making privatization highly certain) and an upside catalyst realized in the short term. The exit from Arima Real Estate reflects the downturn in the Spanish real estate market (commercial property transaction volume down 15% in 2024), with JSS Real Estate's offer providing a liquidity exit. Both transactions generated positive returns, but the Minor case more typically embodies the fund's core strategy.
The exit from Vidrala was based on relative value comparison. Although Vidrala's stock rose approximately 10% in 2024 (benefiting from stable European glass packaging demand), its valuation (P/E ~18x) was above its historical average (15x). The fund reallocated capital to targets with higher return potential, such as Zegona, demonstrating the ability to dynamically adjust the portfolio. This decision is consistent with the logic behind reducing Elecnor: taking profits when valuations are reasonable and moving to more attractive opportunities.
As the primary destination for capital freed from previous sales, Zegona Communications' investment logic is detailed in the Horos Value Internacional section. It is worth supplementing that Zegona's business model focuses on consolidation and value creation in the European telecom industry, with core strategies including:
Key Data Comparison (Based on 2023 Industry Reports):
| Indicator | Zegona Communications | European Telecom Industry Average |
|---|---|---|
| EV/EBITDA | 6.2x | 8.5x |
| Net Debt/EBITDA | 2.1x | 3.4x |
| Free Cash Flow Yield | 8.7% | 5.3% |
Zegona's valuation discount (EV/EBITDA 27% below industry average) and lower leverage provide a margin of safety. Additionally, its free cash flow yield is 64% above the industry average, indicating superior operational efficiency compared to peers.
The rationale for increasing the position in Alantra Partners (5.9% holding), a boutique investment bank focused on M&A advisory, asset management, and alternative investments, includes:
Risk Note: Approximately 40% of Alantra's revenue comes from European markets. If the eurozone economy deepens into recession, M&A activity could slow further. However, the company has reduced its reliance on transaction volume through business diversification (e.g., wealth management and direct lending).
Dia (4.6% holding), a Spanish discount supermarket chain, presents an investment opportunity based on:
Comparison Data (vs. Spanish peers Mercadona and Carrefour):
| Indicator | Dia | Mercadona | Carrefour (Spain) |
|---|---|---|---|
| Gross Margin | 22.3% | 25.1% | 24.8% |
| Same-Store Sales Growth | 1.2% | 3.5% | 2.1% |
| Number of Stores (Spain) | 2,300 | 1,600 | 1,100 |
Dia's gross margin is lower than peers, but through its dense store network (most stores in Spain) and low-price strategy, it is well-positioned to attract price-sensitive consumers in an inflationary environment. If same-store sales growth can rise above 2%, its profitability will improve significantly.
The allocation to FINANCIALS (13%) and CONSUMER STAPLES (9%) reflects the following synergistic logic:
The increased positions in Alantra Partners and Dia are based on a judgment of a European economic soft landing, a recovery in M&A activity, and the defensive attributes of consumer staples. The allocation to Zegona Communications reflects a bet on value restoration in the telecom sector. All three targets possess catalysts of low valuation, operational improvement, and industry consolidation, but close attention must be paid to interest rate trends and changes in consumer confidence.