Long Term Value Podcast

#5 Nick Sleep

Episode Summary

In today’s episode, we will explore the life and legacy of Nick Sleep, the investor behind the fabled Nomad Investment Partnership (Returned 921.1% and over $2 billion dollars to shareholders).

Episode Notes

The first half of the podcast covers Sleep's early life and the creation and growth of the Nomad Partnership. The second half dives into the strategic philosophies and investing principles he employed to achieve exceptional long-term value.

Episode Transcription

Welcome to the long-term value podcast , I am your host, Matthew Cui

In today’s episode, we will explore the life and legacy of Nick Sleep, the investor behind the fabled Nomad Investment Partnership.

We'll dedicate the first half of the podcast to Sleep's early life and the creation and growth of the Nomad Partnership. In the second half, we'll dive into the strategic philosophies and investing principles he employed to achieve exceptional long-term value.

Now lets begin

Nick Sleep is known as the co-founder of the Nomad Investment Partnership, a fund legendary for its extraordinary long-term investment track record and influential investment philosophy, having returned 921.1% over its life time, outperforming the MSCI World Index by a factor of 9 and returning over $2 billion dollars to shareholders

🌱 Early Life and Background

Born in 1968 and raised in England, Sleep grew up in a middle-class environment that emphasized intellectual curiosity and reflection. Sleep initially pursued a traditional education path, studying geography at the University of Edinburgh, rather than economics or finance.

Prior to Nomad:

Upon graduating, Sleep began his career in finance working in a variety of analyst positions. This early experience provided him firsthand exposure to conventional institutional investing and the practices he increasingly became dissatisfied with over time.

This frustration with conventional industry norms—particularly the overemphasis on quarterly earnings, short-term returns, and transactional behavior, in addition to the lessons he picked up from “Zen and the art of motorcycle maintenance” by Robert Pirsig, sparked a fundamentally different approach to investing.

It was around this time he transitioned to a fund management role at Marathon Asset Management and where he got the opportunity to implement this strategy.

🚀 Launching the Nomad Investment Partnership (2001–2014)

In 2001, alongside his friend and business partner, Qais Zakaria, Sleep founded the Nomad Investment Partnership, aiming to embody a long-term value-oriented philosophy. Nomad’s mandate was intentionally distinct from mainstream fund management:

• In that They limited communications to investors to annual letters rather than quarterly reports, explicitly discouraging short-term thinking.
• They concentrated capital on only a small handful of businesses whose management teams displayed long-term strategic thinking.
• And They encouraged patiences among investors, requiring a multi-year investment horizon, preferring to be judged on a 5-year time scale rather than the traditional quarterly and annual

🔑 The Nomad Philosophy: Creating Long-Term Value

Nick’s fund philosophy can be captured in a simple but powerful concept: investing in companies focused on building lasting, sustainable competitive advantages, which he termed "scale economies shared."

Now What is "Scale Economies Shared"?
This concept describes companies that continuously pass along their cost savings gained from growth and increased scale back to their customers—rather than taking profit. This forms a virtuous flywheel that creates immense customer loyalty, sustainable market dominance, and long-term compounding value.

Scaled economies shared can be seen through their partnership holdings, most notably in Costco, Amazon and Berkshire Hathaway

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Now lets take a closer look into the philosophies and strategies Sleep employed to create long term value

1. Patience and Long-Term Orientation

• Sleep explicitly discouraged investors seeking short-term returns from joining Nomad, making clear that Nomad sought investors comfortable with multi-year horizons.
• This allowed Sleep to invest confidently in businesses with temporary short-term volatility, providing extraordinary long-term returns.

2. Intellectual Honesty and Humility

• Sleep displays humility and intellectual curiosity in his annual shareholder letters, regularly revisiting and publicly sharing mistakes while continuously refining his investment process.
• This transparent approach created trust, drawing in investors who valued thoughtful analysis and integrity

3. Disciplined Concentration

• Nomad held very few deeply researched and carefully selected stocks at a time (usually less than 10)
• Sleep firmly believed that superior long-term results come from holding a concentrated portfolio of exceptional businesses rather than broad diversification.

4. Unconventional Thinking

• Sleep consciously distanced Nomad from prevailing investment norms and short-term Wall Street thinking, preferring an independent, first principles approach
• This can be seen in the funds investment in Amazon in the early days, despite widespread skepticism due to its lack of profitability

5. Sharing Insights Openly (Annual Letters)

• Sleep’s annual investor letters served as a transparent and insightful guide for long-term investing principles, becoming infamous to long term value followers and investors

Now what was the result of his unique approach to investing? Over the course of its 13 year run, the nomad investment partnership compounded at over 20% per annum net of fees since inception, achieved a 921.1% return and outperforming the MSCI World Index by a factor of 9. This culminated in returning over $2 billion dollars to shareholders.

I hope you found this episode on Nick Sleep and his strategies and philosophies on long term value creation to be insightful and applicable

Take care and I’ll talk to you again soon