Jeremy Raper

Jeremy Raper stopped publishing because writing for a paying audience had begun to distort where he invested. His edge remained undercovered, misunderstood small- and mid-cap deep value, often with an event, but publishing pulled him toward ideas in styles and sizes divergent from where he believed he made the most money; after quitting, he felt “the lifting of a weight.” He still writes private memos, while conceding that fewer inbound ideas and relationships make the decision “not an unadulterated win.”

Japan’s large-cap activism trade may be in the sixth or seventh inning, but Raper thinks regional companies below roughly $500-700 million—and certainly below $1 billion—remain in the second or third. Tokyo Stock Exchange governance, ROE, and price-to-book pressure has only slowly reached family-run companies outside Tokyo. At 0.4-0.5x book, with net cash or borderline negative enterprise value, receiving only half the cash over four years could still produce a 60-70% return. Walker’s response: “Sign me up, baby.”

Walker’s key objection is that Japan’s remaining bargains may also be the companies hardest for activists to influence. A family trust dispersed across dozens of descendants can still control 25%, while cross-shareholdings and insider ownership can make a nominal 10% activist position ineffective. Raper conceded there will be recalcitrant holdouts—“probably all the ones I own”—but believes the direction of travel now outweighs the risk of slower realization.

The UK is statistically cheap, but Raper’s own record—perhaps one winner in ten, or two in 12-15 over three years—suggests governance can consume the discount. His emblematic case was Cambria Automobiles (CAMB): an inadequate management buyout paired cash with an ostensibly voluntary but practically unusable rollover into a delisted security. Investors were effectively asked to remain “handcuffed” to the team attempting to underpay them, while an independent expert could deem the arrangement “not fair, but reasonable.”

Raper and an aligned shareholder, together owning just over 9% of humm group, have called a February 19 EGM seeking board renewal. The six resolutions would remove three of four directors, including the nearly 30% shareholder-chairman; appoint Raper and another nominee; and protect against incumbent board appointments before the vote. Raper personally owns 5.7% and has put about A$20 million of his own money into the position: “I have the whole shebang in the game.”

Raper’s HUMM thesis is “good company, bad governance,” anchored by a commercial asset-finance business growing at double digits with loss rates below 2% of ANR. The consumer portfolio is mixed, but the company had not lost money in the GFC or COVID. Against tangible assets of A$0.76-0.77 per share and sector valuations around 10x earnings or at least tangible book, the chairman’s A$0.58 proposal represented roughly 5x earnings and 0.7x tangible assets.

The board’s handling of the chairman’s bid, rather than the bid alone, became Raper’s case for removal. It allowed almost five months of diligence without a standstill, market test, or capital-return alternative, then disclosed a credible third-party A$0.77 proposal only after shareholders filed to remove directors; the chairman subsequently bought roughly another 3%. Raper argues a renewed board could establish a dividend policy, distribute excess cash, conduct a strategic review, investigate the prior board’s conduct, and prevent minorities eventually being acquired at “a massive undervalue.”

🔗 Original source & video: General Market Thoughts and the Case for Change at Humm with Jeremy Raper