Daniel Profile picture
Sep 26, 2021 13 tweets 5 min read Read on X
Nick Sleep’s Investing Approach based on his Nomad Letters from 2001-2014

13 Years of Nick Sleep’s Investment Philosophy summarized in 13 Tweets.

Here we Go 👇🏼
1. Long-Term Focus

Wall Street means noise. Quarterly estimates are the primary focus of most investors.

To succeed in investing, you need to ignore that noise.

Long-term investors focus on the destination, not the latest earnings report.
2. Patience

Investing requires patience.

Sometimes opportunities are scarce. It’s better not to invest than to lower your standards.

Agreeing with Seth Klarman, being always invested is not important to Nick Sleep.
3. Focus on the Business

Keeping a long-term focus also requires you to look at the individual business, not macroeconomics.

Like Howard Marks, Nick Sleep cares about the market's sentiment (Euphoria or Depression) , but investment decisions are not dependent on that.
What Nick Sleep looks for in a business?

- Price

We’ll see a change of opinions here later, but in his early investing career, Sleep focused on companies that he could buy for $0.50 on the $1.

- Moats

Every Investment needs a competitive advantage of some kind.
- Owner Oriented Managements

Managements, preferably founder-led, that focus on shareholder's long-term wealth.

- Efficiency

Is the business run efficient? Are there parts of the company that are more of a burden?
4. Investing Rules

Nick Sleep never uses leverage, shorts, or financial derivatives.

No investment is made without a thorough analysis, Fear of Missing Out never influences decisions.

Every investment has to offer a Margin of Safety.
5. Never Stop Learning / Evolving

Nick Sleep used to buy businesses for $0,50 on the dollar.
The classic cigar butt approach.

That changed over the years. He now focuses on Spawners.

Companies that operate in multiple businesses.
One business is the primary source of revenue and earnings.

Simultaneously, it invests in a number of small operations.
These operations are long shots.

Most of them will fail, but if one succeeds, the potential is huge.
Great investments offer those long shots for free.

You only pay for the primary business. Wall Street and investors ignore the small operations.

If you want to read more on Spawners, this might be of interest.
Summary:

- Ignore noise and focus on the long-term.

- Be patient; long-term value creation takes time.

- Invest in Spawner where you get the Upside Potential for free.

- Do not gamble with leverage, shorts, or derivatives.
Thanks for reading. I hope you learned something new today.

If you enjoyed this little Deep Dive into Nick Sleep’s investing approach, I would appreciate your support by

- Retweeting
- Liking
- Commenting

This Thread.

For more content about Investing, follow me @MnkeDaniel

• • •

Missing some Tweet in this thread? You can try to force a refresh
 

Keep Current with Daniel

Daniel Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @MnkeDaniel

Dec 10
Here are 5 Movies and Shows about the Stock Market and Money:

1. Dumb Money: The Gamestop Story

A movie about the Gamestop stock mania. Image
2. The Inside Job

A story about the 2008 financial Crisis. Image
3. Bad Banks

A show about the (German) Investment Banking Industry.

Including intrigues, financial deals, bank mergers, and bank fraud that endanger the entire system. Image
Read 6 tweets
Oct 12
Top Book Recommendations by 10 of the best Investors of all time:

1. Warren Buffett Image
2. Charlie Munger Image
3. Jim Simmons (Exception: Not his recommendations but books about his strategy) Image
Read 12 tweets
Oct 2
John C. Bogle changed the financial industry more than almost every other person.

He is known as the father of index investing.

He founded the Vanguard Group, which now manages $7.2 trillion.

Here are his 7 Investment Principles that made him create Index Funds: Image
1. Reversion to the Mean

Don’t think the past is prologue, it rarely is. Sometimes it’s anti-prologue.”

All extreme deviations from the mean will be short-term.

Over- and underperformance, eventually, they reverse to their mean. Image
2. Leverage Time in the Market

Great wealth is built by compounding.

Two things should be your primary focus.

1. Start as early as you can.
The longer you invest, the larger the leverage of time.

2. Never interrupt the process.
As Buffett said, never lose money. Image
Read 9 tweets
Oct 1
This is Howard Marks.

He is a billionaire investor and one of the most prestigious Value Investors out there.

He founded Oaktree Capital and grew it to over $170 billion in AUM.

I read every single Memo he ever wrote.

Here are his Top 9 Investing Rules: Image
1. Focus on Intrinsic Value

Price only tells you what people are willing to pay, not what a company is worth.

Intelligent Investing must be based on estimates of Intrinsic Value.

The higher the intrinsic value relative to the price, the bigger the opportunity.
2. Benefit from Cycles

Our economy, as well as the stock market, move in cycles.

Cycles tend to extrapolate in either direction. Either extreme pessimism or extreme confidence.

Use the extremes to your advantage.
Read 12 tweets
Sep 27
This is David Tepper.

He is worth over $20 billion and is the Founder and CEO of the Appaloosa Hedge Fund.

He has had tremendous returns of 20%+ annually for decades and is famous for delivering 120% returns in 2008.

Here are his Top 7 Investing Rules: Image
1. Stay Flexible in Your Strategy

One of Tepper’s strengths is his flexibility.

He adjusts his strategy based on changing market conditions.

Whether it's stocks, bonds, or distressed assets, he remains adaptable and is not married to one type of investment.
2. Focus on Risk-Reward Ratios

Tepper is known for weighing the risk-reward ratio meticulously.

He invests in opportunities where the potential upside significantly outweighs the downside, even if the situation looks bad at the time.
Read 9 tweets
Sep 7
Here's a comprehensive Collection of 14 Investors and their Investing Strategies and Rules:

1. Charlie Munger Image
2. Bill Ackman Image
3. Peter Lynch Image
Read 15 tweets

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Don't want to be a Premium member but still want to support us?

Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!

Ethereum

0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy

Bitcoin

3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us!

:(