Horos AM: “We eat what we cook”
On the same date that Spring arrived, Spain’s private equity firm Qualitas Equity Group launched Horos Asset Management, in which it owns a stake consisting of individual investments made by every partner of Qualitas who manages their own money.
Horos’ investment team – led by Javier Ruiz working with portfolio managers Alejandro Martín and Miguel Rodríguez- comes from Metagestión, as does the firm’s CEO and partner José María Concejo. At Metagestión they applied the same investment philosophy currently used, for a period of six years; the formula worked to the extent that the Metavalor fund, managed until recently by the investor trio, gained 15.7% annualised over five years.
Born with a long-term view and linked to the value investment philosophy, the firm takes its name from the etymological origin of the word “horos”, which means horizon, and which was used by the Greeks to refer to the limit where heaven and earth seemed to come together.
THE PERFECT RECIPE
Although Horos’ investment team achieved success at the former house, its members lacked what they consider the third ingredient for “cooking” the perfect recipe in value investing, as famous value investor Warren Buffett’s partner Charlie Munger stated.
Munger noted that there are three basic ingredients in the recipe required to achieve satisfactory returns over time in a competitive industry: a correct investment philosophy, a well-furnished head and belonging to an organisation that reinforces the previous two.
“Getting the third ingredient to the level that we understand it should be, may not be so simple. Possibly, the only way to achieve this is with a project also owned by its management team in order to be fully aligned with investors. Although we have always co-invested in the funds we managed, we did not control the project.
“We are grateful for what we learnt at Metagestión, but it was time to move a step forward. Now, Horos’ priority is the fund’s performance,” says Horos’ Ruiz.
CEO Concejo adds: “We only have performance goals, not AUM or profitability goals. This is why we are so confident when we invest our own money.”
Thus far, Horos AM has launched two equity funds – one Iberian and one global fund – as well as a pension fund, all of which can be acquired through the manager itself, Allfunds Bank and Tressis.
- Horos Value Iberia can invest up to 20% in Portuguese equity and up to 80% in Spanish equities. It can also invest up to 10% in either Spanish or Portuguese companies trading in other markets. It also invests in Horos’ global equity fund.
- Horos Value International can invest in most stock exchanges worldwide. The investment fund focuses on forgotten emerging market shares, – like the Asian real estate firm Asia Standard International -, tech platforms and UK firms presenting interesting opportunities after Brexit.
Currently, all assets managed by Horos come from retail clients, something the firm expects to change soon.
The investment process follows five principles: to invest only in companies that are within the firm’s circle of competence, which have a competitive advantage, that are well managed, that have low or no debt, and that trade at attractive discounts from what they believe is their real and fair value.
“These principles are not unique to Horos AM, we are aware of this. However, the difference with other managers is that we conduct our own independent analysis and we do not rely in other opinions. Clearly, this is time consuming, but we know it is worthy.
“We do not favour any particular sector. As stock pickers, we have found good opportunities in almost every sector. Currently it is being hard for us to find value in the financial sector and we do not like the capital management of many of them. However, we are not closed to any sector,” Concejo says.