Every investor is aware of the industry’s greats, names such as Warren Buffett, Ray Dalio, Seth Klarman, and Carl Icahn.
Most may even be aware of other highly successful fund managers such as Chase Coleman, Glenn Greenberg, and Lee Ainslie. But there are a whole range of overlooked fund managers out there who’ve been able to achieve similar if not better returns than their billionaire peers.
One of these fund managers is Norbert Lou. If you’ve not heard of Lou before, he’s the founder and portfolio manager of Punch Card Management. From inception to September 30, 2011, he generated a return of 14.5% annually buy holding just a handful of core stocks.
If you’re interested in learning more about Norbert Lou and Punch Card, one of my previous articles on the manager can be found here.
Recently, I’ve also stumbled across the letters from another under-the-radar fund called the Nomad Investment Partnership.
Run by Nicholas Sleep and Qais Zakaria between 2001 and 2013, the partnership yielded a total return of 921.1% after performance fees for investors during this period. That works out at 18.4% per annum.
If readers want to review the letters themselves, they can do so at this link.
I thought I’d highlight one small section from the firm’s mid-year 2013 letter, which gives a good idea of the managers view of the world:
Our portfolio inaction continues and we are delighted to report that purchase and sale transactions have all but ground to a halt. Our expectation is that this is a considerable source of value added! At the time of our initial investments in Nomad’s investee businesses, the firms were, on average, around fifteen years old. Take out the two grandparents (Berkshire Hathaway and Costco) and the average falls to twelve years. It is hard to know how this compares to businesses at large (what is the average age of a listed company?), but we do know that the average time S&P500 constituent stocks have been included in that index is twenty-five years. One could guestimate that those firms might have been say, twenty years old on inclusion? At any rate, the statistic helps to illustrate how youthful Nomad’s firms are. The runway ahead for our businesses may be very long indeed. Inaction on our part is counter-cultural and deliberate, and is easier said than done. Really. For those used to a more industry-standard level of trading activity, we hope to update you in real time on our level of inaction through our planned “Nomad Inactivity App.”, available only in the Amazon App. store, of course. As Berkshire Hathaway Vice-Chairman, Charlie Munger, says, you make your real money sitting on your assets!