General Market Thoughts and the Case for Change at HUMM with Jeremy Raper

Episode Summary

Executive Summary: Jeremy Raper discusses why he stopped public stock writing after years of publishing, arguing it had begun to distort his process and push him toward ideas that fit an audience rather than his edge. He then surveys opportunities in Japan and the UK before detailing his activism at Australian lender Hum Group, where he is leading a board-replacement campaign ahead of a February 19 EGM.

Main Topics: Why Jeremy stopped public stock writing (Priority: 5/5): He explains that writing originally sharpened his thinking, but over time the pressure of serving an audience and subscribers began to distort his idea generation and pull him away from his most successful niche. Investment writing as a discipline and edge filter (Priority: 4/5): Raper and Walker discuss how writing forces clearer thesis formation, exposes gaps in logic, and can improve investing outcomes by testing whether an idea is truly coherent on paper. Japan’s evolving event-driven opportunity set (Priority: 5/5): Raper says Japan still offers strong opportunities, but the low-hanging fruit in larger caps is partly played out; the best remaining value is in smaller regional companies that have not yet fully adapted to governance reforms. UK market cheapness versus weak governance (Priority: 4/5): He argues UK stocks are statistically cheap but often suffer from governance failures, especially in minority takeout situations where cash-plus-rollover structures can disadvantage shareholders. Hum Group activism and board renewal campaign (Priority: 5/5): The bulk of the episode focuses on Raper’s campaign to replace Hum Group’s board after what he describes as a badly managed chairman-led process involving a low-ball bid, weak governance, and a missed opportunity for fair value. Corporate governance and disclosure failures (Priority: 5/5): Raper outlines alleged governance breaches at Hum Group, including lack of a standstill, failure to disclose voting changes promptly, and allowing conflicted chairman influence over board decisions.

Key Arguments: Public writing helped Raper refine ideas, but over time it began to distort his process by incentivizing ideas that were easier to publish rather than those that best matched his investing edge. His best historical edge is in undercovered, misunderstood, deep-value, smaller or medium-cap event situations, and he moved back toward that after stopping the blog. Japan’s larger-cap activism trade is later-stage, but smaller regional Japanese companies remain underappreciated and less influenced by governance reform. The UK is cheap on paper, but poor governance and loopholes in minority takeout structures can destroy expected value for outside investors. At Hum Group, the chairman’s bid, lack of standstill, and subsequent trading activity indicate conflicted behavior and a board that failed to protect minority shareholders. Replacing the board could unlock dividends, capital returns, a strategic review, and a re-rating based on better governance and alignment. Raper argues that shareholder activism is only useful if investors actually vote; otherwise, buying the stock is not enough to influence outcomes.

Data Points: Time writing publicly: 12-13 years - Raper says he has written in the public domain on and off for more than a decade. First public article: 2013 or 2014 - He recalls his first Seeking Alpha article dating back to this period. Stopped full-time blog writing: Mid-2025 (speaker also references April/May 2026 in transcript) - He says he stopped writing the blog full-time after a long period of public output. Hum Group market cap: ~AUD 325 million - He describes Hum Group as a smallish Australian listed non-bank lender. Hum Group chairman stake: Just under 30% - Used to explain the company’s quasi-controlled structure. Activist concert stake: About 9% - Raper and another shareholder together own roughly this amount. Raper personal stake in Hum Group: AUD 20 million - He emphasizes strong personal conviction and financial exposure. Hum Group bid price: 58 cents per share - Chairman’s initial low-ball bid for the company. Pre-bid trading price: Mid-to-high 40 cents range - The offer was only modestly above the undisturbed price. Third-party bid price: 77 cents per share - A separate bidder emerged at a much higher level than the chairman’s offer. Chairman’s market buying after disclosure: 50 million shares - Raper says the chairman bought about 3% of the company over two days. Chairman market buy percentage: 3% - Approximate stake added in the market after the third-party proposal became public. Commercial business loss rate: Under 2% of AR - Raper cites this as evidence that the commercial segment is strong and performing well. Unrestricted cash balance: AUD 125 million - Hum Group had substantial cash at the time of the chairman’s bid. Corporate debt: AUD 60 million - Used to frame the company’s net cash and capital return capacity. Mezzanine repayment: AUD 57-58 million - The company chose to repay a debt-like instrument rather than distribute equivalent cash to shareholders. Market cap at chairman bid: AUD 250 million - He uses this to argue the company could have supported a high dividend yield if cash were returned. Potential dividend yield if cash returned: ~25% - Illustrative yield if earnings had been paid out at the time of the bid. Fairness/valuation reference: 5x PE and a discount to tangible assets - Raper says the offer was too low relative to earnings and asset backing. EGM date: February 19 - The extraordinary general meeting to vote on board renewal.

Pivotal Quotes: "I found that over time, instead of focusing on what I developed a clear edge and a clear winning strategy, ... I was gravitating towards ideas in style and size that were largely divergent from where I was making the most money." — Jeremy Raper: Explaining why he stopped public writing and returned to his core investing niche. "The reality is, the vast majority of snowball equity owners cannot hold a delisted security." — Jeremy Raper: Describing why rollover offers in takeouts can be coercive even if presented as voluntary. "If you cannot trust management to look after your interests as shareholders... the only possible outcome to this situation, if you're a minority shareholder, is one day he will wake up and try to steal your shares." — Jeremy Raper: His central critique of Hum Group’s chairman and board behavior.

Implications: The episode highlights how process discipline can matter more than visibility, why Japan and the UK require highly specific setups, and how activism can be a direct way to correct governance failures when valuation alone is not enough.