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

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 investing framework drew them into the space a decade ago, but is also leading them to sell today as a key warning sign – enterprise value to replacement cost – flashes red.

They also cover  why acute supply shortages in copper and platinum make both metals a core holding for Hosking; why his “Death Of The Brand” thesis a decade ago predicted Nike’s current fall from grace; and why the company’s biggest country bet is on Japan, which they feel is at the start of a long upswing.

Recorded 12th October 2026

0:00 Intro

3:25 Capital Cycle Investing

5:58 US capital returns declining

10:30 How to spot turn in cycle

14:05 Unconstrained globally

20:00 Focus on supply

24:30 Semis – time to sell

27:18 Buy Chemicals

29:30 Long time horizons

31:25 Buy Platinum

33:53 Buy Copper

36:20 Less constructive Gold

38:11 Buy Japan

41:00 What Nike got wrong

45:10 Rising yields

47:50 Contrarian…and right 

Watch the full episode on The Master Investor Podcast YouTube channel

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Sponsored by BNY Investments, Interactive Brokers - ibkr.com/masterinvestor, The World Gold Council and London Stock Exchange Group (LSEG). 

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