Money of Mine

How Capital Cycles Create 100 Baggers (Django Davidson)

11 snips
Mar 27, 2026
Guest
Django Davidson
Django Davidson, portfolio manager at Hosking Partners who focuses on capital cycle investing for natural resources and mining. He explains the capital cycle lens, why supply is measurable while demand is storytelling, and how underinvestment and contrarian discipline create outsized returns. He also dives into PGMs, diamonds, uranium, and why many miners trade below replacement cost.
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INSIGHT

Supply Is Measurable Demand Is Storytelling

  • Capital cycles shift focus from demand stories to measurable supply and returns on capital.
  • Django explains how market booms attract capital at high valuations, then starve investment when valuations collapse, amplifying mean reversion.
ADVICE

Buy Where Returns On Capital Are Improving

  • Do favour investments where returns on capital are rising or capital employed is being reduced rather than chasing headline earnings growth.
  • Django stresses low valuations and slow averaging into contrarian positions as practical guardrails.
ADVICE

Be Contrarian Within Capital Cycle Guardrails

  • Avoid being contrarian without guardrails; use capital cycle characteristics to screen opportunities.
  • Django recommends larger, diversified portfolios to average into early cycle positions and reduce single‑bet risk.
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