Chit Chat Stocks

Nick Sleep: How The Secretive Investor Crushed The Market With Concentrated Compounders

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Jun 26, 2024
Nick Sleep, the secretive investor known for crushing the market with concentrated compounders, discusses the importance of diversification, scale economies, robustness ratios, price-to-value ratios, capital allocation, patience, and holding winners on the Chit Chat Stocks podcast.
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ANECDOTE

Secretive Partnership, Big Returns

  • Nick Sleep and Zachariah ran Nomad from 2001 to 2014 and kept a very low public profile.
  • Their letters leaked during the pandemic and revealed roughly 20% annualized returns and large concentrated positions like Costco and Amazon.
INSIGHT

Scale Economies Shared Drives Growth

  • Scale-economy-share means firms pass efficiency gains to customers to grow traffic and sales density.
  • Costco kept strict low markups so expansion increased revenue per square foot and customer loyalty over time.
ANECDOTE

AirAsia: A Notable Mistake

  • Nomad invested in AirAsia expecting a Ryanair-like low-cost winner in Southeast Asia.
  • The investment failed, illustrating that even attractive unit-cost models can break due to industry cyclicality and execution risks.
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