In this episode, hosts Tano Santos and Michael Mauboussin welcome Django Davidson, Partner and Portfolio Manager at Hosking Partners, for a discussion of the capital cycle approach to investing. Django shares how his unconventional upbringing, experience covering banks during the Global Financial Crisis, and early exposure to Warren Buffett's letters shaped his investment philosophy. The conversation explores the origins of the capital cycle framework, how investors can identify industries experiencing excessive capital formation or capital scarcity, and why patience and long-term capital are essential to capturing opportunities. They also examine current AI investment trends, the evolution of the semiconductor industry, Japan's corporate reforms, and several real-world investment case studies, including Micron Technology and Saga. The discussion concludes with reflections on industrial resilience, supply chains, and book recommendations—and much more!

Key Topics:

● Django's upbringing, education, and path into investing (2:08)

● Lessons from covering banks during the Global Financial Crisis (3:50)

● Discovering Warren Buffett's letters and their influence on his investment philosophy (5:33)

● Investing during periods of crisis and the importance of trust in financial systems (7:23)

● The origins and foundations of the capital cycle framework (12:58)

● Using the capital cycle as a lens for contrarian investing (16:28)

● Long-term capital and identifying multi-bagger opportunities (19:59)

● Japan's corporate reforms and improving returns on capital (23:30)

● Timing challenges, diversification, and capital cycle investing (28:07)

● AI, semiconductor investment, and today's technology spending boom (32:15)

● Google, AI economics, and capital deployment considerations (40:30)

● Micron Technology and the evolution of the memory semiconductor industry (42:08)

● The Saga investment case study and opportunities in overlooked businesses (44:35)

● Demographics, aging consumers, and serving older customers effectively (49:59)

● Supply chain resilience and industrial capacity in Western economies (51:53)

● Django's book recommendations (54:05)

● And much more!

Mentioned in this Episode:

● Hosking Partners

● Deutsche Bank

● TCI Fund Management

● Micron Technology

● Google

● Meta Platforms

● Oracle Corporation

● OpenAI

● Anthropic

● Walmart

● First Quantum Minerals

● Saga plc

● The Material World

● The Bolter

Thanks for Listening!

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