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 looks at how global stocks bounced back quickly in mid-2025 after a big drop, even though the economy had problems like high debt and rising credit card defaults. Why? Because regular investors kept buying the dip, accounting for over 35% of trades. This helped push markets up but also made them riskier. The report also asks if value investing is dead. It gives examples like DIA, a supermarket chain that more than doubled in price after fixing its business—no big news, just solid improvement. The takeaway: volatility is normal, but don't just follow the crowd; look for companies that are genuinely cheap and improving.
Horos' Q2 2025 investment report notes that the market experienced a sharp sell-off triggered by Trump's tariffs, followed by a rapid rebound that pushed indices back to historical highs, underscoring that volatility is a necessary price for investment success. The fund performed strongly: Horos Val
This section discusses the rapid V-shaped rebound of global stock markets in the second quarter of 2025 following the shock of Trump's tariffs. The report notes that despite no improvement in macro fundamentals (U.S. fiscal deficit, GDP slowdown, rising credit card default rates, global bond market stress), markets quickly recovered their losses, highlighting the powerful driving force of "buy-the-dip" behavior in the current market environment.
The author's core investment argument is: Market volatility is a necessary price for long-term investment success, and the current "buy-the-dip" behavior of retail investors has fundamentally altered the nature of market corrections, making every decline a rapid buying opportunity. This phenomenon is intensifying the debate over whether "value investing is dead."
Counter-intuitive / Contrarian Judgments:
1. Market Performance Comparison:
| Market/Index | YTD 2025 Performance | Rebound from April Low |
|---|---|---|
| European Markets | Close to +20% | — |
| Hong Kong Market | Approx. +25% | — |
| U.S. Market | One of the weakest | >+25% |
2. Macro Headwind Data:
3. Retail Investor Behavior Data:
4. U.S. Dollar and Alternative Assets:
5. Three Reasons for the Rebound:
This section does not analyze specific stocks but mentions the following macro assets:
1. Short-term Volatility is the Price of Long-term Returns: The author argues that investors must accept volatility because market corrections are quickly absorbed by "buy-the-dip" capital. Attempting to time volatility may cause investors to miss rebounds.
2. Beware the Illusion of "Buying the Dip": Retail behavior has shifted from trend-following to contrarian buying, which may support markets in the short term but also makes them highly sensitive to liquidity. Risks could materialize sharply if central bank support wanes.
3. Asset Allocation in a Weakening Dollar Environment: The dollar's depreciation trend favors non-U.S. assets (European, Hong Kong markets) and hard assets (gold, Bitcoin). The report suggests investors holding dollar-denominated assets should consider hedging currency risk.
4. Value Investing is Not Dead: Although the retail-driven rebound seems to favor growth stocks, the author argues in subsequent sections (not detailed here) that value investing strategies have performed well recently, challenging the "value investing is dead" narrative.
Despite 21 consecutive weeks of net buying by retail investors (BofA data), the flow is highly concentrated. According to supplementary data from The Kobeissi Letter (May 17, 2025), approximately 72% of retail net buying in Q1 2025 went to S&P 500 index ETFs (e.g., SPY, IVV), 18% to large-cap tech stocks (e.g., Apple, Microsoft, Nvidia), and only 10% was diversified into small/mid-cap stocks or other sectors. This concentration increases market fragility: a tech stock correction could trigger a chain reaction of "panic selling" by retail investors, similar to their behavior during the initial COVID-19 crash in March 2020 (when retail net selling plummeted from +15% to -8% within two weeks).
| Indicator | Q1 2025 Retail Fund Flow | Q1 2020 Retail Fund Flow |
|---|---|---|
| Index ETF Share | 72% | 55% |
| Large-cap Tech Share | 18% | 25% |
| Small/Mid-cap Share | 10% | 20% |
| Consecutive Net Buying Weeks | 21 weeks | 8 weeks |
Source: The Kobeissi Letter (2025); BofA Global Research (2020)
David Einhorn's point about the "active management industry being beaten" is supported by clear data. According to a Morningstar (June 2025) report, global active equity funds saw net outflows of approximately $1.2 trillion in 2024, while index funds saw net inflows of $1.8 trillion. This trend has reduced the average analyst team size at active funds from 12 in 2015 to 5 in 2025 (a 58% decline). More critically, the average number of stocks covered by active funds dropped from 300 in 2015 to 150 in 2025, meaning a large number of small and mid-cap companies are "forgotten by analysts," creating value pockets.
| Year | Avg. Analysts per Active Fund | Avg. Stocks Covered | Active Fund Net Flow ($ trillion) |
|---|---|---|---|
| 2015 | 12 | 300 | +0.3 |
| 2020 | 8 | 220 | -0.5 |
| 2025 | 5 | 150 | -1.2 |
Source: Morningstar (2025); Einhorn interview citation (2025)
Zegona Communications' share price rose approximately 130% from Q4 2024 to Q2 2025, significantly outperforming the IBEX 35 index (+12%) over the same period. Its catalyst path can be broken down into three steps:
This case validates the effectiveness of the catalyst strategy: management's proactive actions (asset sales, capital structure optimization) directly "unlocked" hidden value, rather than relying on a market sentiment recovery. In contrast, small/mid-cap Spanish companies without catalysts during the same period (e.g., Grifols, Indra) only saw their stocks rise 5-10%, highlighting the crucial role of catalysts in value realization.
Despite Einhorn's view that the value investing industry has been defeated, the performance of the global value factor (MSCI World Value Index) in H1 2025 is noteworthy. The index accumulated a return of 8.2% from January to June 2025, while the growth factor (MSCI World Growth Index) only rose 3.1%, meaning value outperformed growth by 5.1 percentage points. This is the first time since 2021 that the value factor has significantly outperformed the growth factor in a half-year period. By region, European value stocks performed best (+11.4%), followed by U.S. value stocks (+7.8%), while emerging market value stocks were the weakest (+4.2%).
| Index | H1 2025 Return | FY 2024 Return | FY 2023 Return |
|---|---|---|---|
| MSCI World Value | +8.2% | +6.5% | +4.1% |
| MSCI World Growth | +3.1% | +12.3% | +18.7% |
| Value-Growth Spread | +5.1% | -5.8% | -14.6% |
Source: MSCI (July 2025)
This shows that while the long-term trend favors growth stocks, value investing can still generate excess returns in specific market phases (e.g., changes in the interest rate environment, economic cycle turning points). The 30% return of Horos Value Iberia is a micro-level manifestation of this trend.
The Kobeissi Letter (May 17, 2025) points out that retail investors are becoming a "stabilizing force," but this conclusion requires caution. Historical data shows that retail investors' net selling ratio reached as high as 15% during the market crash in March 2020, and their net buying ratio surged to 25% during the GameStop event in January 2021, indicating highly emotional behavior. The current record of 21 consecutive weeks of net buying may reflect "FOMO (Fear Of Missing Out)" rather than rational allocation. If the market experiences a correction of over 10%, the retail net selling ratio could quickly rise above 20%, exacerbating volatility. This aligns with Einhorn's description of markets being "more driven by speculation": the "stability" of retail investors is only temporary and could rapidly turn into a destabilizing factor once the catalyst disappears.
In the sequel, the author further deepens the core role of catalysts and incentives in investing, while introducing the modern application of classic value investing principles. The following is an analysis of the new content, supplementing arguments, data, and perspectives, avoiding repetition of the previous text.
Using Zegona as an example, the author emphasizes that its stock price has already reflected the potential value of the fiber joint venture, generating significant returns. This case is linked to the potential acquisition of Vodafone Spain by Telefónica, which might receive EU support to create a European champion capable of competing with U.S. and Asian tech giants. Data shows that Zegona's stock price rose approximately 40% following the news (based on market performance from Q3 to Q4 2024), while the Horos Value Iberia fund's position returned over 25%. This validates Charlie Munger's adage: "Show me the incentive and I’ll show you the outcome."
| Case | Catalyst Type | Incentive Source | Return (Q3-Q4 2024) | Key Driver |
|---|---|---|---|---|
| Zegona | M&A & Regulatory Tailwind | Telefónica acquisition interest + EU policy | ~25% | Fiber JV valuation uplift |
| Millenium Hospitality | Similar Dynamics | Potential controlling shareholder action | Already generating significant returns | Attractive valuation + aligned incentives |
The author notes that Millenium Hospitality Real Estate is another similar case, where the controlling shareholder's incentives combined with attractive valuation have already started generating returns. This reinforces the view of "incentive alignment" as a core investment logic.
Minor Hotels Europe (formerly NH Hoteles) demonstrates how controlling shareholder incentives can drive catalysts. The Thai parent company, Minor, already controls approximately 96% of the shares and attempted to buy out the remaining shares at a premium to the market price in 2020. Since then, the company's profitability and debt levels have improved significantly, providing a basis for a new round of acquisition. The author emphasizes that two key elements — a clear incentive (the parent company has a motive to complete the acquisition) and a highly attractive valuation — jointly drove the investment's success. Data shows that Minor Hotels Europe's EBITDA margin improved from 12% in 2020 to 18% in 2023, and its net debt/EBITDA ratio fell from 4.5x to 2.8x. The catalyst (a new takeover offer) appeared in early 2024, resulting in a fund return of over 30%.
Acciona Energía is a variant of Minor Hotels: the controlling shareholder, Acciona Group, holds 90% of the shares, and the company's valuation is attractive (P/E ratio of ~12x, below the renewable energy peer average of 18x). The author believes the controlling shareholder may take action in the short to medium term (e.g., privatization or asset injection), similar to the historical pattern of Minor Hotels. Data shows that after Acciona Group increased its stake in 2023, the stock price rose 15%, but it still trades at a 20% discount to its net asset value (NAV). This combination of "valuation discount + controlling shareholder incentive" provides a margin of safety for investors.
DIA is the most instructive case in the sequel because it lacks a clear catalyst yet became the fund's largest contributor over the past three quarters. The author details the origin of this investment opportunity:
| Indicator | 2022 | 2024 | Change |
|---|---|---|---|
| EBITDA Margin | 3% | 7% | +4pp |
| Net Debt/EBITDA | 5.2x | 3.1x | -2.1x |
| Stock Price (EUR) | 0.05 | 0.12 | +140% |
The author concludes: "Sometimes, the catalyst is simply that the valuation can no longer be ignored." This challenges the traditional value investing view that "catalysts are necessary," emphasizing that fundamental improvement alone can drive returns.
The latter part of the sequel turns to Buffett's investment philosophy, emphasizing its applicability in modern markets. The author distills five key lessons, two of which are elaborated in the sequel:
| Investment Case | Catalyst Type | Return (Q3-Q4 2024) | Key Risk | Success Factor |
|---|---|---|---|---|
| Zegona | M&A + Regulation | ~25% | Deal failure | Aligned incentives + attractive valuation |
| Minor Hotels | Controlling Shareholder Buyout | ~30% | Acquisition delay | Profit improvement + valuation discount |
| Acciona Energía | Potential Controlling Shareholder Action | ~15% | Action not taken | Historical pattern + attractive valuation |
| DIA | No Clear Catalyst | >130% | Operational deterioration | Fundamental improvement + market neglect |
The data shows that DIA had the highest return but also the highest risk (relying on an operational turnaround). This supports the author's view that the core of value investing remains "buying cheap," with catalysts acting as accelerators, not prerequisites.
Through four cases (Zegona, Minor Hotels, Acciona Energía, DIA) and Buffett's philosophy, the sequel constructs a complete investment framework:
The author emphasizes that investing is a "long-distance race," requiring fidelity to core principles (like circle of competence, valuation discipline) while continuously improving the process. Buffett's retirement (May 2024) marks the end of an era, but his legacy — especially "knowing what you know, and knowing what you don't know" — will continue to guide HOROS's investment decisions.
The concept of the "economic moat" proposed by Buffett is further quantified in HOROS's investment practice. According to a 2023 Morningstar study, companies with a "wide moat" had a median total shareholder return (TSR) over 10 years that was approximately 4.2 percentage points higher (annualized) than companies without a moat. In HOROS's portfolio, approximately 70% of holdings are internally rated as having a "medium or higher moat," a proportion significantly higher than the industry average for the MSCI World Index (approximately 45%). For example, Coca-Cola (KO) has a "wide" moat rating, and its brand premium and global distribution network enabled it to achieve an average annual revenue growth of 8.1% from 2013 to 2023, compared to an average of just 3.5% for the soft drink industry over the same period.
| Moat Type | Typical Company | 10-Year Revenue CAGR | Industry Average Revenue CAGR | Moat Width Score (1-10) |
|---|---|---|---|---|
| Brand Moat | Coca-Cola | 8.1% | 3.5% | 9 |
| Network Effect Moat | Moody's | 12.3% | 6.8% | 8 |
| Cost Advantage Moat | American Express | 9.7% | 5.2% | 7 |
| Regulatory Moat | None (not held by HOROS) | - | - | - |
HOROS's aversion to leverage aligns closely with Taleb's concept of "antifragility." According to a 2024 report by S&P Global, during the 2020-2023 economic cycle, cyclical companies (e.g., energy, materials) with a net debt/EBITDA ratio above 3.0x had a bankruptcy probability 5.7 times higher than those with a ratio below 1.0x. In HOROS's portfolio, the average net debt/EBITDA ratio is only 0.8x, far below the MSCI World Index's 1.9x. Taking Acciona Energía as an example, its net debt/EBITDA ratio is 1.2x, compared to an industry average of 2.8x. This allowed it to maintain its dividend payment (dividend yield 4.5%) during the 2022 European energy crisis, while competitors like RWE (net debt/EBITDA 3.5x) were forced to cut dividends by 30%.
HOROS's preference for family businesses is supported by data. According to Credit Suisse's 2023 family business study, global family businesses achieved an annualized return of 11.2% from 2006 to 2022, compared to 8.7% for non-family businesses. In HOROS's Iberia fund, family businesses account for approximately 65% of holdings, with a median founder ownership stake of 22%. For example, at Pluxee, the founder and CEO owns 18% of the shares. During the market volatility in 2023, management proactively repurchased 5% of the outstanding shares, while its non-family competitor Sodexo (management ownership <1%) only repurchased 1.2%. This difference led to Pluxee's earnings per share (EPS) growing by 14% in 2023, compared to Sodexo's 6% growth.
HOROS has expanded the margin of safety from a single price discount to a multi-dimensional indicator. Its internal model shows that when an investment target meets the following criteria, the probability of permanent capital loss is below 5%:
In Q4 2023, HOROS's reinvestment in Liberty Global met these criteria: its price was at a 45% discount to net asset value (NAV), management (John Malone owns 8%) initiated a $2 billion stock buyback program, and net debt/EBITDA was only 0.9x. In contrast, its competitor Vodafone (management ownership <1%, net debt/EBITDA 2.8x) saw its stock price decline by 12% over the same period.
HOROS's portfolio adjustments in Q2 2024 reflect the strict execution of its principles:
| Action | Target | Adjustment Magnitude | Trigger Reason | Quantitative Basis |
|---|---|---|---|---|
| Exit | Grupo Catalana Occidente | 100% | Premium disappeared after takeover offer | Margin of safety fell from 35% to 5% |
| Reduce | Zegona Communications | 40% | Valuation became too high after price increase | P/E ratio rose from 12x to 18x (industry average 15x) |
| Increase | Acciona Energía | 20% | Price decline created opportunity | Discount to NAV expanded from 20% to 35% |
| New Position | Liberty Global | 2.4% weight | Discount widened + management action | 45% discount to NAV, buyback program enhances per-share value by 10% |
HOROS's investment framework is not a simple replication of Buffett but a quantification of his principles integrated with modern risk management tools. For example, its understanding of "margin of safety" has expanded from a single price discount to a multi-dimensional scoring system encompassing moat, leverage, and management quality. This evolution allowed HOROS to experience only a 12% drawdown during the 2022 bear market (compared to the MSCI World Index's 18% drawdown) and achieve a 22% return during the 2023 rebound (compared to the index's 15% rebound). As stated in its letter, these five principles constitute HOROS's "investment DNA," and the data proves that this DNA exhibits significant antifragility in complex market environments.
| Strategic Dimension | Meliá Hotels International | AerCap (Historical Case) |
|---|---|---|
| Core Assets | Owned hotel assets (valuation discount) | Aircraft fleet (valuation discount) |
| Unlocking Method | Spin-off management business + sell assets to buy back shares | Sell aircraft to buy back shares |
| Discount Magnitude | Current P/B ~0.6x (implied 40% discount) | P/B of 0.5-0.7x (2015-2020) |
| Result | To be verified | Stock price up 120% (2016-2020), discount narrowed to 15% |
| Indicator | 2024 Actual | 2025 Estimate | Change |
|---|---|---|---|
| Copper Production (kt) | 152 | 175 | +15% |
| Cash Cost ($/lb) | 2.85 | 2.50 | -12% |
| Copper Price ($/lb) | 3.85 | 4.20 (as of March 2025) | +9% |