B (3:40)

Definitely, definitely at the start of my career. But more, more kind of relevantly the, you know, the start of my life. You know, there's a great literature on, you know, how much of contrarian thinking is nature and nurture. And I think on, on the nature side, having, as I did, a pretty unconventional childhood. Like my dad was a musician. He was in a two tone band, played with the selector, the Specials. My mom was very young when she had me, she was 19. She then became an academic. She's now teaching at Bristol University. But a very left wing approach to life which I, you know, have, have taken a different side on. Had grandfather who was an engineer. I had all of these. It was a very, it was a sort of positively unconventional background rather than a negatively unconventional background with all of the stresses and strains that, you know, you would associate with that. So from a very early time in my life, James, I got to kind of think about things from first principles. You know, I was exposed to all of these diverse experiences and that was, that was really, in retrospect, that was a real privilege of my childhood. It wasn't kind of economically privileged, but from an intellectual perspective it was. My mum always tells this quip about. She was. Early 1980s, the miners strike. She was raising money, money for the, for the miners who, you know, are on strike and need to feed their families and so on. And we were at one of these stalls, you know, these sort of socialist worker type stalls with pamphlets, you know, talking about the plight of the miners. And sort of nice old boy came up to me, you know, wearing sandals with a beard and. And I sort of asked him straight off, who do you support, the miners or the police? And he said, oh, of course I support the miners, that's why I'm here. And my mom said, I replied, said I don't. I support the police. So I think very early on I had this kind of contrarian go against the grain approach to, to life and, you know, was kind of comfortable with the friction that that builds. It's not, you know, it's, it's not socially easy being a contrarian. There's a lot of social friction that comes with being a contrarian. So you have to be quite resilient, you have to be quite adaptable, you have to kind of not really mind getting into debates. Psychologists have this phrase which is the low agreeableness of contrarians. You know, we're difficult to be around because, you know, we'll often have an opposing view or a different view or often these views can be wrong. There is something, I think going back to the original point here, there's something about nurture which helps contrarian thinking. And I think there's probably something in just innately being born with, with a brain chemistry like that. So I did have this unusual childhood. In retrospect, it was incredibly positive. It allowed me to do a lot of independent thinking, exposed me to a lot of different ideas. And I think that, you know, not, not everyone has that a lot of people are brought up in much more conventional backgrounds, a much more conformist and much more stable and that breeds a different kind of approach to thinking. Course in the investment world, you know, we, we see that come through in the sorts of investing that's very popular and the modes of investing are very easy to understand and market. Whereas the contrarian mode of investing is, is in a different category.

A (7:10)

Yeah, the, to, you know, divergent opinion, just having the, the latitude to, you know, think critically about whatever the, whatever the particular, whether it's a, whether it's an investment topic that you're looking at, whether it's just something just outside of business and finance, whatever it might be, but it's just having, having an open mind really and being willing to maybe challenge orthodox opinions that maybe some people have. Because what's interesting with contrarianism is that I, I've, I looked and read something just towards the latter part of last year where the dedicated short selling hedge funds in the industry are under enormous pressure right now and that it's become even harder to be a short, a pure short seller because that's inherently contrarian as well. You've got to have real gumption to be a contrarian. I think.

B (8:14)

Yes, the, the propensity to challenge others is not uniform across society. This goes back to this point about you have to have a brain that has this sort of low agreeableness makeup. But contrarians are a very important part of a societal ecosystem of which investing is, you know, is one example of that is how do you progress? You need, you need people to challenge orthodoxy with heterodox ideas in order to move forward. You know, we all thought the world was flat at one point. And you know, contrarians like this is a, this is a quip from Jeremy. Contrarians provide a sort of intellectual insurance Policy. Yeah, because they challenge the received wisdom. And you know, you only. I mean, an obvious point to make would be there is a sort of received wisdom about the existing structure of the market, the trends of the last 10 years. It talks about ad nauseam. I don't want to particularly go into them, but it's very important for people who steward other people's money to be cognizant of the. The divergent views on, for example, a highly concentrated indices or series of indices that are focused on a very small handful of companies in very small sector of the economy. You need your. To go back to Jeremy's what you need your intellectual insurance policy on that. And so one of the things that is challenging about being a contrarian is that you have to embrace friction. The idea. Contrarian ideas necessarily are. Create friction because they go against orthodoxy. And that takes a certain type of personality, but also a certain type of firm. You know, generally organizations of human beings prefer conformity because conformity is the basis for stability.

A (10:16)

Yeah.

B (10:17)

The army would be a great example of the need for conformity in order to create this stable, functioning group of human beings who will go and defend a nation. And most investment firms, broadly speaking, you know, have a, have a similar institutional imperative. What's different about Hosking Partners sort of skipping, skipping through the gears is we thought long and hard and for Jeremy, this is the product of 40 years in this industry. We thought long and hard about structuring something that allows contrarian thinking to flourish, which, the point being that contrarian drinking doesn't really flourish in many crevices of the investment world. In fact, one of the things I find most depressing about working in this industry, I enjoy my job, but there are, you know, it's not wholesale. One of the key sort of stains on the industry is if you look at the extraordinary tax that the industry places on, for example, human ingenuity. Every year there's an apocryphal story about every year for five years, all of the engineers at Cambridge went and became derivatives traders or went to work in the financial world.

A (11:42)

Yeah.

B (11:43)

So take the uk, this incredible science university. These brilliant engineers, instead of going off and building, you know, small scale nuclear reactors or, you know, pushing society forward, they all then, you know, became derivatives traders and got paid, paid lots of money. So the financial world takes. And, and that's at one end. And of course it takes loads of graduates from all over the world, lots of very bright, energetic people who have a lot to offer the world are sucked into finance because it pays well, so it has this enormous intellectual tax and of course the economic tax, as we all know, is the skimming business model charging people 1% to buy them a bunch of bonds and Unilever shares. It's pretty significant, this intellectual and financial tax. And yet despite this massive take on society, the number of new ideas that are generated in the finance world is pretty limited. You know, we can probably, between you and I, we could come up with 10 books that have really moved the discipline on. I'm thinking about value investing now, but I'm sure it's not that different in other areas. You know, value investing, you start with, you know, securities analysis and you go down, there are, you know, a dozen books, let's say, that are really important and move the discipline on. And one of the things that, you know, gives me some sense of purpose as I wake up and get on the train every morning to work is that, is that Jeremy with capital account, which distilled the capital cycle as contrarian framework for investing, really did move the discipline on that idea. This idea that it's returns on capital that drive share prices rather than quarterly earnings or various other sort of short term metrics, that really was a step forward in our understanding of how, of how we should approach long term investing. And that I think that to tie this together, that contrarian self developed framework by Jeremy, deployed at Marathon, taken on by us at OSCE Partners, is a real contribution to the investment debate. And it could only really come about because of the framework for contrarian thinking and of course the contrarian thinkers themselves that have been put in place by Marathon, by Jeremy, by the team here.

A (14:11)

Yeah. And there are, I don't know what the number would be, but the number of contrarian managers just even just in the uk. I mean, I don't, I don't know if you know the number, but I'm sure there aren't many of them.

B (14:26)

And, and less, less now than 10 years ago. James, given the highly concentrated.

A (14:32)

Yeah.

B (14:33)

Market of Driven by US Technology shares.

A (14:35)

Yeah, yeah, yeah. Well, this is the thing.

B (14:37)

So you know, we've seen 10 years ago and invest in those, in those stocks.

A (14:42)

Exactly. I'm just putting my light back on. I was gonna go because when you referred earlier to Peter Thiel. So with all the group think that we've seen, we've seen the magnificent seven, just, you know, the last 12, 24 months, that's all people are talking about. It's like seven stocks dominating returns in the U.S. that's not good. That's not good for any Diversified portfolio or any particular, you know, savvy investor that needs to be more creative thinking than that. But I just want to go briefly to what Peter Teal was also getting at. I think recently. I'm just looking, but because I saw a podcast that he did where he was talking about the lack of scientific progress over the last 50 years and that there has been a stagnation that hasn't been a r. What There hasn't really been that enormous burst of innovation, innovative thinking necessarily in science. A lot of it has been more to do with, with combating skepticism. So he's quite, I think I'm right in saying that he's not overly impressed with how far we've come, as, in fact, this was a good example as well. We think about the way that we travel. So 40 years ago, you know, we had Concord, you know, fantastic, get to New York in three hours. Now, today, today, 2025, the way we travel has not improved at all. In fact, it's probably worse than it was 40 years ago with what we have to go through. You know, the logistics now of getting through airports and the delays. We haven't had a massive breakthrough. So I just, I'm just continuing your thoughts there on that creative thinking and that, that awareness, that willingness to be willing to look at the world in a different way and come up with big ideas.

B (16:46)

Yeah, I mean, I, I, I could maybe pick hairs with the transport point, but your broader point about the lack of progress, I think, is an indictment on Western higher education. And this, I think, feeds in a little bit into the, into the sort of ideas I was raising, which is that these institutions are very conformist. They price stability, tenure, all of the things that we know to be enemies of progress. You know, just the sheer cost of going to these places now is so large that the incentive for the students is to go get good jobs to pay off the debt. The incentive for the academics is to sort of play some academic advancement game. The original, if you go back to periods of huge human technological progress, it was often not specialists in one area, but people who are multidisciplinary in their multidisciplinary. They were sort of scholars in a broad sense, rather than specialists in one particular academic niche. And the sort of industrialization of higher education, I think is a villain in, in that particular story. I think it's relevant for investing too, because there is an orthodoxy around particular types of investing. They're comfortable. There's a comfortable orthodoxy around passive investing, is a comfortable orthodoxy around a number of investment styles. There is an orthodoxy around, you mentioned it, diversification, which is that diversification is bad. It's closet. Closet indexing. What you want is highly concentrated managers. We take the other side of that. We think there's huge advantage in being diversified.

A (18:37)

Right.

B (18:37)

We can talk about that if you like. But there are those same orthodoxies that you see in the world of higher education. The stagnation, the lack of breakthroughs there. I think there's a very similar kind of copy book that could be thrown at the investing world. In order to be contrarian and go against some of those norms, you not only need the sort of individuals who can do that, and I've sort of got, you know, the nature, nurture, contrarian instinct to do that, but you also need the framework to do that. You. It's, you know, it's been pretty difficult right now to set up a, you know, contrarian global value fund. I'm not sure you get many backers. Be much easier to start a sort of global champions fund. Yeah, that would, that would be easier to describe. You know, Terry Smith with his brilliant, you know, buy good companies. It's popped out of my head, you know, don't buy good companies, don't overpay, do nothing. You know, very, very simple, terrifically distilled investment philosophy that has kind of been copied, broadly speaking, by hundreds of other people. That's a very easy thing to market. It's very orthodox. It's similar to lots of other things out there. So you're not taking a. It's much harder to do the kind of weird and wonderful global investing that we do. I'm off to Sri Lanka in a couple of weeks to visit some very lowly valued companies trading at fractions of replacement costs where there are mergers within their particular industry. The currency in Sri Lanka has fallen about 70% from peak. So you've got a low currency, low valuations, merges. But Sri Lanka's tiny is 25 million people. The total stock market has a value of about $15 billion. It's very difficult to put that in a Terry Smith fund or any. I don't need to pick on Terry Smith. I think he's a. He's a great thinker, but, you know, to put that in a copycat Terry Smith fund, let's say, which has got a sort of 60 stock, global champion approach to investing.

A (20:43)

Yes. Which goes to the structure that you refer to as a. So in that respect, I want to come to. I really ought to. I tell you what, let me come to how Django, you Even met Jeremy and ended up, we should tell the audience how Hoskin Partners were, were formed and what the, what the genesis of that was. So what you, I think it's fair to say again having a contrarian mindset.

B (21:09)

Sure.

A (21:10)

That served you very well. You know, working in the equity research team at Deutscher. You then went over to Algebras Investments. Now how did you meet Jeremy and how did that then translate into becoming one of the founders of Hosking Partners?

B (21:29)

So you might or might not remember, but for a long time during the 2000s early 20s marathon, which Jeremy founded in 1986, Bummer Pizza Hut in Cambridge Circus Marathon would put out their sort of quarterly investment pieces. They call them girs. They just put them up on their website and they were very thoughtful long form pieces that would describe a capital cycle within a particular industry, a particular bubble or blow off that they were witnessing and were steering away from. And it was from reading these pieces that I got a taste for the, the way that Marathon, Jeremy and the Capital Cycle, which is Jeremy's great contribution to, to the industry, how they thought and I managed to get an introduction to Jeremy and this is you know, one of these great sort of pieces of luck and just the point that he was leaving Marathon and setting up something new. So it was just an incredibly fortuitous bit of timing, a bit like I always sort of joked to myself, I was a bit like Ringo Starr. You know the Beatles had formed. Was it Pete Best, the drummer? Yeah, yeah, gone off in a half. I was the Ringo star, you know, right time, right place. But I had, I had done my reading beforehand and was, was really excited to, to, to join Jeremy and for a variety of reasons. Jeremy moved to Dublin. Couldn't work with the prior Marathon team because of non competes. So I moved out to Dublin with Jeremy and we spent nearly three years in a gorgeous Georgian townhouse, four story which he bought brilliantly in typical Jeremy contrarian fashion just after the financial crash, the Irish crash in 2013. And it was just, you know, again talk about luck. I think people kind of underplay how important luck is in their career. You know I got an amazing kind of PhD in capital cycle investing from Jeremy but, but more broadly, you know, really was kind of take, you know, I've sort of graduated I think from being a, a kind of precocious equity analyst with a specialism in financials. That was my, my background into a generalist and, and that really is, I mean I don't want to get too highfalutin but it for from, from, from my own kind of brain. It was a transmorgification, you know, having been the caterpillar in the, in the banks world to being a sort of butterfly. Being able to look at this canvas of the world and literally go anywhere remit that we have. Yeah, he's very adamant on this. This global remit allows you James, to see contrast. Rather than comparing Lloyd's to Natwest, you can compare, compare a Sri Lankan cement company at 20% of replacement cost to a Mexican cement company trading at 2 times replacement cost. And that ability to invest globally, to compare globally to go where the fish are rather than where the fishermen are is a huge source of competitive advantage. And for those of us with contrarian brain chemistry, it allows us to completely ignore areas of the market we think are overvalued over, hyped, over capitalized, over capitalized, attracting in capital, often at very high valuations and allows us to look at bits of the world where there are low valuations, where capital is being removed from industries through bankruptcies, capacity closures, capital investment. And that really is our, our kind of, our kind of core driver of what we do using this global go anywhere remit to deploy this contrarianism, to deploy this capital cycle. And that's really what builds these quite diversified portfolios because in Sri Lanka we've got five companies in various mining investments where we see really interesting capital cycles, we might have another five to 10 companies. So what this approach does James, is build quite big portfolios which again is not flavor of the day. This is a contrarian view we have that you do get great, you, you out performance by being able to go to places that other funds cannot reach. What's the height the fund that reaches.

A (26:13)

Parts of the world.

B (26:14)

Parts of the world that others cannot reach. Yeah, thank you.

A (26:16)

That's right.

B (26:17)

Saving me butchering that. Yeah, bad copy.

A (26:20)

Yeah, yeah, yeah, yeah, yeah. That's, that's fascinating. And that's an amazing freedom really to have the globe, you know, have the world as your, as your investment canvas. I mean that really is, you know, that is very, very liberating as a portfolio manager. And can we go into a little bit more because you painted a nice picture just then about you go to where the fish are rather than where the fishermen are. So can you just expand a bit more on the Jeremy's capital cycle philosophy and maybe provide another example perhaps from the portfolio for how you execute on these ideas?

B (27:05)

Sure. So maybe just a quick capital cycle reminder 101 your listeners. So the capital cycle is a very simple framework, a rubric for understanding an industry or a particular company. So you know, let's, let's just take the, let's use some ball bearing industry analogy. You know, if there are lots of ball bearing companies making lots of ball bearings and the value of ball bearing companies rises, you're going to see more capital come into an already crowded market. And often what happens in these capital cycles is that equity and debt are raised at high valuations. So you see capital come in at a high valuation. Why does that happen? Because if I'm running a ball bearing company and I can raise equity at say I could raise $3 of equity, that would, sorry, I could raise $1 of equity at a valuation three times that that it would cost to deploy that into capex. Of course my incentive is to raise more equity. If I'm valued at three times replacement cost, I should raise more money and build more capacity because I'm paid to do it by the stock market. So these capital cycles can suck in a lot of capital at the wrong point and they lead to a misallocation of capital. Great recent example would be the capital cycle in offshore wind, which saw a huge amount of offshore wind capacity added a high valuations. I think Austin got up to seven and a half times EV sales at just the point when returns were competed away. The regulatory environment changed and the world sort of fell out of love with offshore wind. So when you can raise capital at high valuations, the managers and the promoters of those businesses do that and the equity market pushes capital in at just the wrong time. And the same happens in reverse, James, when you see industries decline, valuations fall and the rational response from corporate managers and owners is to reduce the capital employed in those businesses. So take mining for example. If you are digging something out of the ground and it's costing you a dollar, but you can only sell it for 50 cents, you should stop digging it out on the ground. You should close down mining capacity and what this cycle is just a classic example of the cure for high prices being high prices and the cure for low prices being low prices. These industries are, capitalism is mean reverting, that is it's sort of essential tenant and markets over the long term are mean reverting. So that's the sort of core tenet of the capital cycle. It's this idea that it's returns on capital not that drive long term share prices. It isn't, you know, your total addressable market in year 10 or your ability to, you know, persuade people that you deserve a higher multiple than another company in your industry for various reasons. It's the underlying return on invested capital that the shareholders in this business receive. In negative capital cycles, those that are sucking in capital at high valuations, that return on capital is going to fall. And in positive capital cycles at the bottom, when capital is being rationed, when supply is being curtailed with capacity being reduced, the return on capital should rise. And so what we're trying to do is look for it or stay away from industries where the capital cycle dynamics are unattractive and invest in industries where the capital cycle dynamics are attractive.

A (30:54)

Yeah, and would that be any particular? I mean we've referred to, you refer to wind farms just a moment ago, but also if we look at industrials, commodities mining, is that, is that an attractive. How do you see that particular space right now?

B (31:12)

Mining is an example I like to use when describing the capital cycle because it's very vivid. These are commodities, they have mean reverting pricing characteristics. And I'm going to give you an example now of the pgm, so platinum metals, which is a classic capital cycle. So seven years ago there were eight major PGM miners. There are now basically four and a half. The industry has seen significant consolidation, but what it hasn't done over that period is invest in new supply. The supply curve for PGMs, which peaked at around 11 million ounces a year, is falling each year going, going forward, we need masses of new investment. The calculation I did and put up a blog note on this for anyone who's interested, is that over the last 10 years the industry has underspent by about $18 billion. Which is to say that if, if it had put Capex at a replacement cost level, that is to keep the ounces in the ground flat, it would have spent $18 billion. It would have needed to have spent 18 billion, it didn't spend that. And what's interesting is that the market cap of the platinum sector at the minute these are all South African companies, is about $18 billion. So you can see the scale of challenge. The amount of capital that would be required to get this industry growing again to keep the ounces flat would be like every single company in this industry doing a one for one rights issue. That ain't gonna happen, right? Ain't gonna happen For a number of reasons, not least the fact these are South African listed companies. There is very little appetite for major capital investment in South Africa. When I was down there late last year, I asked a government minister when was the last time anyone spent $18 billion on anything in South Africa. And he said, no, never. You know, that that level of capital is not going to be made up anytime soon. And so why we find PGMs so exciting is this huge, huge capital underinvestment which is leading to this fall in supply. Supply comes down pretty rapidly in PGMs and demand. Well, we don't know what demand is going to do. The primary use for PGMs platinum and palladium is in autocatalysts in internal combustion engine cars. So there's a very big bearish narrative around the orthodox view that we're going to very quickly move to full EVs. Now obviously, being a contrarian, I'm skeptical of that view. I think maybe it's going to take us a lot longer to get full EV penetration than people think. Probably plug in hybrids will be a big kind of stop gap for that. And plug in hybrids happen to use more, not less, PGMs than internal combustion engine cars.

A (34:05)

Interesting.

B (34:05)

It could be that this view that oh, we're not going to need any more PGMs because everyone's going to move to EVs. It could be that we actually have a sort of 20 year period when we actually need more PGMs because we need to plug in hybrids to get us over the hump in all of the infrastructure that's required to do a sort of full EV transition. So the capital cycle in PGMs is really compelling. We've underspent by 18 billion. The market caps are very low. This companies aren't adding supply. The demand outlook. Well, I don't know. We have a saying here that supply is measurable and demand is storytelling. You know, we can measure supply pretty well and get it approximately right. Demand, who knows, you know, you want to hear a story about demand, Turn on CNN and there'll be some dude, you know, chatting away about what inflation is going to do in China or what have you. That's not, that's not our game. So here we have a really good supply story and some, you know, some, some interesting debate around demand. So final thing on platinum, which your listeners might find interesting. For the last hundred years there's been a one for one relationship between the price of gold and the price of platinum. So gold sort of there or thereabouts, sort of close to $3,000 and platinum is close to $1,000. If you take an average over the last 12 months. If the 100 year relationship were to, you know, to hold going forward, the platinum price could treble, which would be a bonanza for these very lowly Valued platinum mining companies that are obviously highly geared to any recovery in the price. So I think not much downside because of the protection you have over falling supply and potentially very significant upside if the story around EVs is delayed.

A (35:56)

Yeah, yes, you're really looking for these very compelling, as you say, under, allocated, under capitalized opportunities. Mining is a great example and where you've seen maybe that consolidation play over, over a period of time and at the same time, what I'm interested in, because it's very, the PGMs point, it's really interesting when you talk about hybrids because when you look broadly at EVs and that industry, and again, who knows, as you say, from a demand point of view, who really knows where this is going to go? I, I agree with you. I think it's going to take a lot longer to get there. But then you look at that industry and it's, you know, we're seeing it in the US and huge demand for, for like the, the lithium and the, the cobalt, you know, for the, all these battery production plants. And how do you, how do you, how do you see that side of it as well? You know, in that that's more at the sort of front end of the curve because these are elements that are being used for the batteries. Do you know, do you see that as becoming a too much of a hot sort of over capitalized part of this market then?

B (37:18)

Absolutely, James. So the flip side of the PGM capital cycle is the negative capital cycle in a lot of battery metals. So for the past decade we've seen masses of capital allocated to lithium projects and the supply of lithium has overwhelmed the capacity to process it and the underlying demand for batteries. And that is despite an extraordinary level of state support for battery evs in China. You know, China is now breaking all expectations on the number of EVs sold. Yet despite that, the lithium price is still in the doldrums and a lot of lithium projects look like they're going to be spectacular destroyers of capital. So one of the things the capital cycle does, James, is it gives you a bubble avoidance mechanism.

A (38:10)

Yeah.

B (38:11)

You look at the characteristics, the hype, the multiples of capital that are being raised in relation to the capital, the valuation of the capital being raised versus the valuation of capital in the ground in areas like lithium, cobalt and so on, and you say, hey, this doesn't look good. And it forces you to move your gaze to more interesting areas where capital is being deployed. And nearly always, James, the former, the sexy areas have the high valuations and the latter, the areas where there's bad news, where there's uncertainty, where there's a lot of hair on the investment case, you get low valuations. You know, uncertainty is the friend of low prices. And so as a natural contrarian, the capital cycle gives you these guardrails. You know, I am a natural triangle. You tell me to go left, I'll go right. That doesn't really work very well in investing. You can't just be contrarian, you want to be contrarian and. Right. And so what the capital cycle does is give you these guardrails to prevent an instinctive contrarian just going against the brain. For the sake of it.

A (39:18)

For the sake of it.

B (39:19)

Yeah, so. So it really is a very useful way to give yourself some. To give yourself some guard rails. And I could, I could even sort of morph it into general life frameworks if I got three boys and if they were graduating from university now, the kind of lithium capital cycle in kind of graduate employment would be private equity. Right. Private equity's done really well. It's booming. It's where all the glamour is and you've got all these, you know, extraordinarily well paid private equity executives. And a capital cycle framework would say, well, hey, don't look at that, that, that looks really over height, you know, yes, the salaries are very high. But how long is this industry going to carry on ruling the roost when they can't sell their companies because, you know, no one wants to buy these companies that have been passed around and then they're being IPO'd at very high valuations. The capital side thing will say, well, maybe you should look at areas where there's relatively, been relatively little investment, where there's a need for new talent. But no one's going into these industries where you could take a contrarian approach. And actually that would, I would say today that would be areas of heavy industry, of mining, areas involved in material extraction. These are areas that, particularly in the west, as we look to kind of build up our own supply chains in this, there is going to have to be decades long investment in. And of course, good old uk, we're always the sort of worst at these trends. The Cranbourne School of Mines, which educated so many of the miners who basically built out the materials that have built vast chunks of the modern world, that of course is closed due to lack of lack of student demand. So if you can find yourself a good mining course, probably not going to find one in the uk, but a good materials course or a good Geology course. I think that'd be a terrific thing to get into. Now as a young person.

A (41:16)

I actually, I don't, I would never normally refer to myself on podcasts, but I did actually do geology and I did hydrogeology. So that feels quite on trend now. But maybe I'm, maybe I was. I've kind of missed the boat on that one now. But I mean it was a super interesting degree. It was fascinating. And, and yeah, I think, you know, that whole sort of resource management and hydrogeology, water management. I kind of WISH I was 18 again, you know, don't we all?

B (41:46)

I wish I was. Not necessarily for hydrogeology reasons, James.

A (41:51)

No, no, but it's, it's very, it's. Again, it's a great point you make about. Look, let's just not go with the flow, you know, I'm talking about here. If you're, you know, giving advice to your, to your children and don't, don't just follow the herd. Don't believe the hype. As Public Enemy said back in the, back in the 1980s, where the fish.

B (42:11)

Are not where the fishermen are. You know, when there is, generally speaking in life, it is better to have less competition than more.

A (42:19)

Exactly.

B (42:20)

In investing, it is better to have less competition than more. It is great to see your competitors going bankrupt, closing down capacity. It is not good when your competitors are adding capacity. Yeah, raising capital. You know, one of the fascinating things, and I say this as someone on the sidelines watching this extraordinary hyper scalar cloud deployment, is that the level of. We put these companies on pedestals. We think that they are all seeing and all knowing and in many instances, because of the nature of their products, they really are superhuman in terms of the ability of Google to know what we're thinking before we're thinking of it. But they're also run by human beings who are subject to these sorts of FOMO like capital allocation decisions that have, that have topped every bubble. And there's a great quip from Sergey Brin that he would rather go bankrupt than lose out on the AI race. And I mean, you know, if I was Sergey Brin maybe I would think like that, but I'm not as an investor in Google, that, that's, that's very nervous to hear, you know, even in, in these supposedly tech industries that the critics of the capital cycle would say, oh, it doesn't apply to, you know, does. Doesn't apply to this industry. Well, that comment from, from Google really is an insight into why the capital cycle is actually an insight into Human behavior, right? And the interaction between corporate allocators of capital, the stock market competitors. It's a matrix of human behavior that forces capital. High valuations, fomo, it can lead to very significant and long lasting capital misallocation. The best example I have of this because I've been reading a biography of George Hudson who was known as the UK Railway King. He was like the Elon musk of like 1850s UK, okay. And George Hudson's massive railway promoter who, you know, made a fortune and lost it all. And one of the interesting charts in this book is, it shows, there's a chart which shows number of railway journeys in the UK and you know, just goes, goes like this from 1850 all the way through to 1920. So more and more people use the trades. It was an amazing bit of technology. Everybody started to go on holiday, see their parents move around the country. Terrific. Complete mass adoption and overlaying that are the returns from the railway companies which were, many of them were highly promotional and involved this sort of paid in stock which effectively leveraged the returns. The chart of usage goes like this and the share price returns do that. So you don't even know. Even after 70 years, by 1920, you still haven't made your money back in nominal terms, let alone real. So that is a reminder, albeit, you know, a historical one. You can have great technological rollouts, but if you over build, if there's too much capacity, if you invest at the wrong valuation, if you project forward and these people who are very sensible heads of these companies, but are also like all human beings, subject to FOMO and overbuilding and desire to win, that can lead to massive capital misallocation even when the technology is completely society changing.

A (45:51)

That's amazing. Do you know, I'm mindful this is really quickly on just on that, I'll just reference it briefly because I was having a conversation earlier with a friend, we were just talking about the bike industry, you know, road bikes. And just the fact that we've seen a complete, the floor has collapsed in that industry. Right. Because during COVID a lot of the big bike companies massively, massively over invested in inventory and they're all going bank, they're all going bust. Well, I'm exaggerating the point. The, the has just evaporated and they're left with an awful lot of inventory that they can't get rid of. And you're seeing, you're seeing huge, you know, implications because of that. And it's, it's a slightly similar, I mean maybe I'm Sort of over egging the pudding a bit, but you know what I mean, it's when you get over excited fomo we've got to charge in because everyone else is doing it. So we've got to do it. And then before you know it, you're kind of left with oh my gosh, you know, look at, look at the returns on the, on our equity. This is, this doesn't look good.

B (47:07)

I think that's a great point, James. And it goes to highlight this idea that there is, let's tie this all together. A contrarian who is comfortable with social friction, who is not to go back to Peter Till talked out of his or her heterodox ideas can resist the temptation to be sucked in to a boom where in a more, you know, in a more conformist environment, you would, you would not resist this. You would not call, you know, the Emperor's New Clothes fable, you would not call it out.

A (47:50)

Yeah, yeah, that's.

B (47:51)

And so the market, in order to operate efficiently, needs contrarian thinkers.

A (47:57)

Yeah.

B (47:57)

It's an important part of the ecosystem. And of course the last 10 years have been very tough time for contrarian thinkers. In fact there's been one, you know, it's been a one way bet to passive to particular areas of the market, particular geographies. We all know the story, I'm not going to worry about them. But my expectation is, as always happens, you know, the, the market will, will, will start to mean reverse and the contrarians will, will have their day.

A (48:28)

Yeah, yeah, yeah. I, I really do, I really do believe that. I know I mentioned this, the short sellers earlier and your point about Jeremy, you know, the contrarians, the insurance policy of the market and that.

B (48:42)

Intellectual insurance.

A (48:44)

Intellectual insurance. Yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah.

B (48:48)

It's not just you need, you need that. This is why the capital cycle is so important because it gives you a lattice worker for framework in which to apply contrarian thinking within a market context.

A (48:58)

Yeah, yeah, yeah. It's fascinating and I think it's, it's really important that, that we continue to have organizations, investment firms like, like Hosking Partners that are willing to challenge the orthodoxy, willing to promote. It must be fascinating in your boardroom when you're all sat around, you know, brainstorming ideas. I mean it must be pretty fascinating hearing you all come up with your, your next best idea. I mean it must be quite, quite a, quite a dynamic environment there for you.

B (49:32)

Well, one of the great challenges of running a contrarian investment led firm which our senior partner, James Batting has the. Has. Has the honor of doing is you have to get these contrarian investors. There's four of us, we've all got different views, we're all contrarians. We'll sign up to the capital cycle, but we're not all identical. And of course, this goes back to this point about the. You know, to be a contrarian, you have to be comfortable with friction. You have to challenge other people's ideas. So one of the challenges for James is to create, and he does a very good job of it, to create this environment where these contrarian ideas can percolate throughout the investors and get into the portfolio. And that's probably a different podcast, but maybe you should ask him on to explain how he does it.

A (50:23)

Yeah, well, I should, I should. I just want to finish by just letting everyone know. By the way, Django, that for anyone that wants to hear more about how you and the team think and you have your own podcast, it's the Capital Cyclists Podcast. You want to explain what that is?

B (50:42)

Where can they find us? Does what it says on the Tin Ron Seal. Yeah, quick. Try Wood Stain. Like it's, It's. It's a podcast that talks about our investment approach, investment ideas. Come and have a listen and you.

A (50:57)

Can find that for everyone listening under the Insights section website, or you can.

B (51:03)

Sign up on Spotify or wherever you.

A (51:05)

Get your podcasts and all other. Yeah, that's. Or whatever your favorite mechanism. But that's brilliant. Thanks so much for. It's been a fascinating. I really, really enjoyed this, Django. I think it's great to hear really original thinking. Great way to kick off the new year. And, you know, I wish you all the very best for 2025, you and the team, and I'm sure you're going to have plenty of great ideas to pursue and it's been a real pleasure. Thanks so much for joining today.

B (51:38)

Thanks for having me on, James. Thanks.