Calibrating Conviction: Cut the Clutter—How to Reduce Nominalizations in Investor Letters

Why nominalizations undercut investor letters

Investor letters must do two things at once: convey clear analysis and project calibrated conviction. Limited Partners (LPs) read under time pressure, skim for signal, and judge managers by how they frame risk and agency. Nominalizations—the habit of turning dynamic verbs or precise adjectives into abstract nouns—work against these goals. They lengthen sentences, blur who did what, and muffle your voice. When a letter says, “There was a deterioration in margins,” the sentence hides both the actor and the judgment. Who observed it? What caused it? How confident are you? The abstraction dilutes ownership and slows comprehension, which weakens credibility.

Nominalizations also invite vague hedging. Phrases like “the expectation is for normalization” sound prudent, but they bury assumptions. LPs want to see reasons, agents, and actions. Active verbs compress meaning: “We expect margins to normalize as freight costs fall.” Here, the verb “expect” signals accountable conviction, and the causal link (“as freight costs fall”) makes prudence concrete. The difference is not stylistic decoration; it’s operational clarity. In a competitive capital-raising environment, the managers who write with crisp agency and tight verbs help LPs quickly map thesis to risk, which improves perceived discipline and trustworthiness.

Finally, nominalizations obscure time and mechanism. Investor communications must trace sequences—what happened, what we did, what changes next. Abstract nouns flatten time into a static state (“a deceleration occurred”), while verbs stage motion (“growth slowed”). When your prose performs the analysis—showing forces and decisions—LPs can evaluate process quality, not just outcomes. That supports calibrated conviction: strong but evidence-based.

How to spot nominalizations quickly

You can train yourself to see nominalizations in seconds by using two complementary checks: suffix spotting and the verb-recoverability test.

• Suffix spotting: Many nominalizations end in familiar endings. Look for these:

  • -tion/-sion (decision, provision, erosion)
  • -ment (adjustment, management)
  • -ance/-ence (guidance, convergence)
  • -al (approval, withdrawal)
  • -ity (volatility, profitability) When you scan a paragraph, these endings pop visually. In investor letters, clusters of -tion words often signal a dense patch that readers find hard to parse.

• Verb-recoverability test: Ask, “Can I recover a cleaner verb from this noun?” If you can map analysis → analyze, decision → decide, assessment → assess, you likely have a nominalization. Then ask, “Who is (or was) the agent?” If the sentence hides the actor, you likely also have passive or agentless construction. That’s your cue to restore agency and motion.

Two caution flags: some abstract nouns are necessary (e.g., liquidity, volatility) because they name real, domain-specific concepts. The test is utility: does the noun name a concrete, needed concept, or is it a veiled verb that pads syntax and drains agency? If it’s the latter, convert it.

A simple conversion toolkit to de-nominalize

Cutting nominalizations does not mean eliminating nuance. It means restoring the sentence’s engine: a clear verb, a visible agent, and precise, economical modifiers. Use this three-part toolkit.

• Restore the verb: Replace the noun with its verb form. Instead of “made a decision,” write “decided.” Instead of “conducted an analysis,” write “analyzed.” This trims words and tightens rhythm.

• Name the agent: Say who acts. “A decision was made regarding position sizing” becomes “We reduced the position.” Naming the agent signals ownership—vital for credibility with LPs—while also clarifying process control.

• Tighten modifiers: Abstract stacks like “in light of the consideration of” can usually be replaced by one prepositional phrase or a short clause: “because,” “given,” “as,” or “after.” Precision beats padding. Where possible, use specific, observable drivers (input costs, unit economics, regulatory milestones) rather than umbrella nouns (“headwinds,” “uncertainty”) unless those are then unpacked with evidence.

Two practical moves help consistently:

• Prefer verbs that carry meaning on their own. “We performed an adjustment” is weaker than “We adjusted.”
• Use time markers to restore sequence: “After freight costs fell, margins expanded; we added.” Verbs plus time markers reconstruct causal logic.

Remember, the goal is balance: active verbs to show ownership, disciplined hedges to reflect uncertainty. Hedging should lean on evidence, not abstraction. Compare “there is potential for a deterioration” with “Margins could compress 50–100 bps if input prices rise; futures suggest that risk is receding.” The hedge now rides on data, not on a foggy noun.

The three-pass editing routine: Flag → Convert → Calibrate

A repeatable routine keeps letters consistent across drafts and authors. Run three quick passes on any paragraph.

• Pass 1: Flag

  • Scan for the suffixes (-tion, -ment, -ance/-ence, -al, -ity). Circle them quickly.
  • Underline passive or agentless phrasing. If you see “was conducted,” “there was,” or “it is our expectation,” flag it.
  • Note strings of prepositional phrases (“in connection with,” “with respect to”) and nested qualifiers that often accompany nominalizations.

• Pass 2: Convert

  • Replace each flagged nominalization with a strong verb. Start with the minimal change that improves clarity.
  • Insert the agent where missing. Usually “we” for your fund, “management” or a named actor for companies, and “the market” or specific participants for external forces.
  • Replace long prepositional stacks with precise connectors: because, so, after, although, while. This rebuilds logic and flow.
  • Keep necessary domain nouns, but make them do real work: “liquidity improved” is fine; if you keep “improvement in liquidity,” ensure it carries a measured, time-bound claim.

• Pass 3: Calibrate

  • Tone for US/UK LPs: Both audiences value clarity and modesty grounded in evidence. US LPs often accept slightly more direct claims if they are tightly sourced; UK LPs may prefer tempered phrasing. Either way, avoid bluster and avoid cotton-wool abstraction. Use verbs to show agency; use data to hedge.
  • Reader-centric structure: Lead with the action and its rationale. Put secondary context after the main clause. Use transitions (“As a result,” “However,” “Meanwhile”) to signpost changes. Resist noun-heavy topic sentences; instead, let a verb carry the paragraph’s core message.
  • Rhythm and length: Break long sentences that stack multiple nominalizations. Aim for a mix of sentence lengths, with the core claim in the shortest line. This helps skimmers capture the spine of your thesis.

A practical tip for calibration: When you hedge, say what would change your mind. “We would reduce if unit churn exceeds 2%” reads as prudent and accountable. It also prevents slide back into abstract caution nouns.

Applying the routine to a paragraph: what to watch for

When you edit a full paragraph, follow a predictable order.

• First sentence: Identify the paragraph’s promise. What action or insight should a skimming LP take away? If the sentence begins with “Our expectation is that there will be normalization,” rewrite it so the verb appears early and the agent is clear: “We expect margins to normalize in H2 as freight costs fall.” You have now placed action, timing, and cause in the opening, which aligns with skim-reading behavior.

• Middle sentences: These should carry causal links and evidence. Replace abstract containers like “the consideration of valuation” with concrete verbs and objects: “We valued the business on conservative unit economics.” Then connect evidence to decisions: “Because management cut promotional spend, we raised our estimate of sustainable margin.” Verbs plus because/so/after/while stitch logic without bloat.

• Final sentence: Close with the implication and next action, stated with calibrated conviction. Rather than “our intention is a continuation of monitoring,” use, “We will add on dislocations if the thesis holds; otherwise, we will exit on a break of X.” Active verbs, conditional triggers, and time frames combine confidence with prudence.

Tone matters across markets. For a mixed US/UK LP audience, keep claims specific and sourced (“Management guided to gross margin +150 bps; we expect +100 bps given freight lags”). The directness communicates competence, while the trim hedge (“we expect”) and the evidence guard against overstatement. Even when you must include legal or compliance phrasing, keep the analytic core in verbs and agents.

Transitions deserve attention. Nominalizations often mask transitions (“following the realization of synergies”). Prefer clean connectors: “After synergies appeared in Q2, we….” That small change speeds reading and preserves narrative momentum.

Finally, align paragraph structure with “reader first” logic: action, reason, implication. LPs can then map thesis components quickly, compare them with their own risk models, and decide whether your conviction is warranted.

Short practice mindset and self-check rubric

While you will build skill through repeated editing, you can self-check each paragraph against a mini-rubric to maintain standards.

• Agency and verbs

  • Do at least three key sentences feature explicit agents and strong verbs? If not, revise until the paragraph shows who acted, who observed, and who will act next.

• Hedge quality

  • Are hedges evidence-backed? Replace abstract caution nouns with conditional statements tied to data or triggers (“if churn >2%,” “if volume stays below 2019 levels”).

• Density and rhythm

  • Did you cut stacked prepositional phrases and replace them with simple connectors? If two or more appear in a sentence, consider a split.

• Domain nouns

  • Keep essential finance nouns (liquidity, volatility, duration) when they name real constructs. If a noun feels like a verb in disguise, convert it.

• Transitions and sequence

  • Do transitions show time and cause (after, because, while, therefore)? If the paragraph reads like a list of states, restore motion with verbs and time markers.

A practical workflow is to run the three-pass routine in under five minutes per page. First, skim and flag suffixes. Second, convert the worst offenders and insert agents. Third, calibrate tone and tighten transitions. Over time, you will write cleaner first drafts, because your ear will prefer verbs and your eye will spot drift into abstraction.

Why this discipline pays off

Clarity is not cosmetic in investor letters; it is a performance signal. Cutting nominalizations shortens sentences, strengthens agency, and sharpens risk framing. LPs can more quickly grasp what you did, why you did it, and what you will do next. That transparency supports calibrated conviction: you sound confident where evidence warrants, and you sound prudent where uncertainty remains—without hiding behind abstract nouns.

Moreover, the practice reduces revision cycles. Teams align faster when prose states actions plainly. Compliance reviews go smoother because claims are verifiable. And when markets turn, the same discipline lets you update letters swiftly: verbs and agents make it easy to show changes in real time.

In sum, treat nominalizations like friction. Remove the needless ones; keep the necessary domain terms. Restore verbs, name agents, tighten modifiers, and calibrate tone. The result is prose that moves with your thesis—fast, precise, and accountable—matching the expectations of US and UK LPs who value both conviction and prudence.