Nomad Letters to Partners 2001-2014

Author: Nick Sleep and Qais Zakaria Period: 2001-2014 (13 years) Source: IGY Foundation

Overview

The Nomad Letters to Partners are the complete collection of semi-annual investment letters from the Nomad Investment Partnership. These letters document Nick Sleep's investment journey from cigar butt investing to seeking near-permanent holdings, and his remarkable 20% annualized returns over 20 years.

Key Themes

The Evolution from Cigar Butts to Franchises

The letters chronicle a significant evolution in Sleep's investment thinking:

Early Years (2001-2005):

Focus on deeply discounted asset-heavy businesses
"Cigar butt" methodology: finding cheap businesses with hidden assets
Geographic diversification into Southeast Asia, Europe, and emerging markets

Later Years (2006-2014):

Shift toward businesses with sustainable franchises
Emphasis on long-term compounding
Willingness to hold nearly permanently

"Our journey from cigar butt investing to near permanent holdings."

The Power of Patience

Sleep emphasized genuine long-term thinking:

"Investors don't have to go changing their holdings with their underwear and, they really can make their money sitting on their assets!"

The letters were published only twice yearly, reflecting the conviction that short-term reporting is counterproductive.

Capital Allocation Excellence

A recurring topic is the importance of management capital allocation:

Preaching patience but practicing impatience on costs
Preferring companies that return capital to shareholders when unable to reinvest at high returns
Attractive businesses that reinvest at high returns for decades

Notable Investment Cases

International Speedway (2001)

Early investment in NASCAR motor racing circuits at half of replacement cost. The thesis centered on:

Media rights consolidation improving negotiating power
Broadcasting duopsony creating attractive terms
Management distributing windfall rather than over-expanding

Thai Newspapers (2001)

During the Asian Financial Crisis recovery, Nomad invested in:

Matichon: 9% dividend yield while waiting for advertising cycle
Cost-cutting dramatically improved cash flow despite declining revenues
Family-controlled with aligned interests

Berkshire Hathaway Style Compounding

Later years show increased interest in businesses capable of:

reinvesting at high returns indefinitely
compounding capital at 20%+ annually
Near-permanent holdings with minimal need for capital allocation decisions

The X-Amount Framework

Sleep introduced a philosophical framework for thinking about wealth:

X-Amount — The lifetime sum needed for security and comfort
Below X-Amount — Manage carefully for personal security
Above X-Amount — Has no real meaning to the individual
Charitable Reinvestment — The meaningful use of surplus wealth

"Once past X-amount, real meaning comes with reinvesting in society through charitable giving."

Published on a charitable foundation website, these letters may be unique in investment literature.

Performance

The letters document Nomad's remarkable track record:

~20% annualized returns over 20 years
Outperformance achieved through genuine long-term thinking
Lessons from both successes and mistakes

Related Concepts

nick-sleep — Author
compounding — Core principle
capital-allocation — Key topic
long-term-thinking — Methodology

Source

Nick Sleep and Qais Zakaria, Spring 2021. Published via IGY Foundation.