How to Profit When Cycles Turn – Django Davidson on Capital Cycle Investing

About this episode

What evidence do you use when weighing up an investing decision? In this masterclass on capital cycle investing, Wilf sits down with Django Davidson, founding partner and portfolio manager at Hosking Partners – an $8 billion global investment firm focused on the capital cycle approach, an investing philosophy which has led their firm to significant outperformance in recent years. Django breaks down their methodology; how high profits actually attract devastating competition, and in contrast why low returns on capital can provide fantastic entry points to stocks. The key is knowing how to spot the turning points before the crowd catches on.  Moving beyond Wall Street's obsession with demand forecasts and growth narratives, Django shares why true contrarian outperformance relies on measuring supply, tracking replacement costs, and understanding industry consolidation. He explains why the era of zero interest rates was an aberration and how the return of a real cost of capital has revived two powerful forces: mean reversion and creative destruction.  Wilf and Django discuss Hosking’s early investment in memory chip stocks – Micron, Samsung, SK Hynix – and how the capital cycle i