Yet Another Value Podcast - General Market Thoughts and the Case for Change at HUMM with Jeremy Raper

Episode Date: January 21, 2026

YAVP hall of famer Jeremy Raper returns to cover a wide range of topics—from Jeremy’s decision to shut down his investment blog to his perspective on underappreciated international markets like Japan and the UK. The episode culminates with an in-depth discussion on Jeremy’s high-stakes activist campaign at HUM Group, a non-bank Australian lender. Jeremy explains why he's pushing for a board overhaul and outlines governance red flags he believes shareholders shouldn't ignore.__________________________________________________________[00:00:00] Podcast and guest introduction[00:02:24] Jeremy reflects on his writing journey[00:05:21] Why Jeremy stopped his pay blog[00:08:58] Loss of inbound connections[00:12:29] State of Japanese event market[00:17:55] Deep value still thrives in Japan[00:19:09] Concerns with UK governance culture[00:25:49] Overview of HUM Group situation[00:30:29] Rejecting undervalued chairman offer[00:36:53] AGM governance failure issues[00:42:43] Call to vote and next stepsLinks:Yet Another Value Blog - https://www.yetanothervalueblog.com See our legal disclaimer here: https://www.yetanothervalueblog.com/p/legal-and-disclaimerProduction and editing by The Podcast Consultant - https://thepodcastconsultant.com/

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podcast into two episodes, so we'll be releasing the second episode later. But for this piece of the podcast, Jeremy and I are going to talk about a bunch of stuff. We're going to just toss around stuff on the markets, what he's been up to. It's been a while since it's been on. Just really a great catch-up. We have a lot of fun. And then at the end, we're going to talk about what he's doing at Hum Group in Australia, where he's been making a lot of headlines. And I think that was the question most people asked. So a lot going on there. He's going to walk you through the full thing. I think, I guarantee you're going to enjoy this episode. You know, enjoy this episode or your money back. Please see a disclaimer at the end of the episode because we're talking to international

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All right, hello, and welcome to the Yet Another Value Podcast. I'm your host, Andrew Walker. With me today, I'm excited to tap on the man, the myth, the legend, my friend Jeremy Rayford. Jeremy, how's it going? Hey, buddy, I'm good. Thanks for having me. And congratulations on your second arrival.

It's great news. So I hope everything is going well. I know you have two. Maybe I'll have to get some pointers for how to survive and invest while doing too, because right now it's tough. But let's hop into it in one second. Just remind everyone, quick disclaimer. Nothing on this podcast is investing advice.

Always true. Because we're talking to Jeremy and Jeremy's down under, we're going to be navigating across the world. So any domestic listeners should remember that carries extra risk, extra tax, all that sort of stuff, not investing advice. Financial advisor, full disclaimer at the end of the podcast. podcast. Jeremy, it's been a while since we caught up. Uh, and yeah, let's just, we're recording this early January, 2006. Let's just start. What's going on in the world of Jeremy

Raper? How are things over there? What's on your mind? Things are good. Things are good. I mean, look, I don't actually know when we last did a pod. So I feel like there might be a lot to catch up on. I guess the major changes that have happened in the last kind of 12, 18 months are so I obviously, I stopped writing the blog full time in mid, mid, 26, April, May, 26. So it's been a good eight, nine month period since I stopped writing the blog. I miss it. I miss it every couple months. I miss it. It's kind of you. No, but I think I articulated at the time why I stopped. Some people might be interested in hearing about that. So I've been writing in the public domain on and off for the better part of, you know, 12, 13 years.

I think the first article I published was on Seeking Alpha back in, I want to say 2013 or 2014. And I kind of extended my output online since then. And so the original reason I started writing and the reason why I then evolved that into a formal blog where I would talk about specific stocks and eventually to a paid blog was, you know, obviously I enjoyed writing and it was helpful to my investment process. That was the main reason initially why I started was not actually because I wanted to be known or become a personality, nothing like that. I simply found writing helpful in developing and fine-tuning the investment process, because it's kind of imposing an external discipline on an idea.

And so, you know, I'm probably the first to say that, but yeah. There's a quote. So I completely agree. And I'm actually working on a post. Now people are going to think you came up with it. But I can show, there's a quote from Warren Buffett in one of his, it might have been 2000 or even the 90s, the shareholder meeting. And they're like, hey, why are you writing?

He's like, look, sometimes I don't even know what I'm thinking until I start actually putting the thoughts on a page. And to me, I say it all the time, like, I've told people, my returns are better when I write something than when I don't write something. Because when I write something, a lot of times there will be a question, like I'll write a paragraph and there'll be a question that's obvious at the end. And in my head, when I had it in my head, I thought it was answered. But when you put it on paper, you're like, oh, no, this question has not been addressed. And you can keep pulling that thread, but I'm completely with you. Sorry to ramble.

I'd love to continue your story. No, no, I mean, so I also found something similar, right? if you cannot coherently and cogently develop and explain an investment thesis, now, that doesn't mean it has to be short, but if you cannot coherently and cogently develop an investment thesis on paper, is it really a good investment thesis? Is it really a workable investment idea? And so sometimes it is, sometimes it is. And obviously there are times where I thought I had developed a cogent investment thesis on paper and did I didn't work. Similarly, there were times where I didn't and I had investments that did work. But for the most part, I found it overall,

highly additive to my investment process. Also back then, I was trying to develop what I would call an intellectual track record, meaning, look, I didn't have a lot of money back then, and I didn't have a formal track record as a PM, but I aspired to one day run money professionally. And so I thought if I didn't have a formal PM track, but I had an intellectual track, then I could somehow parlay that at some point into raising substantial outside funds. That actually didn't turn out to be true at all. But then 10, 12 years on from that, having developed a certain style, a certain amount of credibility

and having accumulated enough savings to be able to just invest as I saw fit, the calculus around specifically publishing for other people to read became quite different. So, you know, I still write memos for myself and I still write maybe not as extensive or long-form stuff for myself. So I still try to derive a lot of that original benefit. it, but the calculus around specifically seeking out investment ideas for the purposes of writing them up for an audience and then increasingly for a paying audience, I found recently it started to distort my investment process.

Now, this obviously wasn't a recent, or I would rather, this wasn't a quick discovery. This happened over a period of time and, you know, you and I talked offline about this a good six, nine months before I made the ultimate decision, you'll probably recall. But I found that over time, instead of focusing on what I developed a clear edge and a clear winning strategy in, which was, you know, undercover, misunderstood, deep value, smaller or medium market cap situations, often going through an event situation. Instead of focusing specifically on that niche, because a lot of those are of limited liquidity, right? So they would have been able to be actionable by someone like me investing at the time seven figures or even eight figures, but not nine figures, right? And so because I was writing for essentially writing for a wider audience at that point, having developed a 10, 12 year audience, I was gravitating towards ideas in style and size that were largely divergent from where I was making the most money. Now, there were some big exceptions.

Okay. So this is why it took me quite a while to get to the end of that journey because I had some of my biggest successes on some very large capitalization stocks like, you know, Twitter and a few other events situations in the U.S. over the years. But nevertheless, the trend was by early 2025 or early to mid-20205, the trend was unavoidable in that direction. So I thought that, look, I no longer, I didn't need the money. I just be honest, I didn't need the money from the subs. I felt the pressure more than I enjoyed the output of the writing for an audience. And it had begun to objectively distort my process. So I thought, you know what? Move on from that. So that was a big change. And then I noticed almost like the lifting of a weight going back to my roots in a way that I was free from that pressure

and things really picked up. Yeah, go on. Has, like, I get a lot of inbounds from my public writing and public persona to the extent. Has the, have the amount of inbounds changed since you stopped that? Now, you still have your Twitter presence and especially we're going to talk about home. But has the amount of in-bounds changed? Like, one of the reasons I've kept doing it, actually a main reason I've kept doing it is the relationship I've developed with a lot of these people, especially on the premium side, like those are your, you know, those are your biggest fans. They're the people who choose to pay.

One of the reasons I've kept in it when I've thought back and forth is I've just developed such a friendship and connection. I hate to like have my friends pay, I guess. But like, it's honestly people I never would have connected with except for the side. So has that changed at all? Definitely. It's gone down a fair bit. So that's a drawback.

This is not an unadulterated win. There are drawbacks. There are pros and cons. So look, the decision is different for everyone in a handle the situation. I should also mention one other thing I forgot, which is highly relevant to the decision. I had gravitated away from doing more US stuff. So when I first started, I know what you're going to say. Let's not even talk about that piece, actually.

We don't need to put that in the book. No, no, no, no. That's what I was going to say. I'm just saying the US event environment had become, I think, either more competitive or more volatile or more difficult or some combination of all three. There's obviously also a proliferation of other substacks and writers. So the writing environment had become more competitive. So the ideas we're getting, let's say, in the US in particular,

like someone, I think it was yellow brick investing, which is a site, I don't follow closely, but they've emerged in the last 12 months. They collate a bunch of pictures from online writers. And he just did this snapshot of all the ideas on his site. And something like 85% of the U.S. stocks, 80% of the U.S. stocks. and there was not one single idea on there from Australia or Japan.

I'm not here to evangelize for Australia markets or Japanese markets. I happen to be in Asia, whether I'm in Australia or Thailand or Japan or whatever, if you're in the Asian Times Zone, you can do all the Asian markets. But just by way of example, when you have a situation where all these online stubsacks are attacking Western Europe and the United States, and there wasn't one single pitch from Japan, for example, I mean, that's kind of an argument in and of itself. So, you know, I did find that focusing less on the U.S. stock, also lent itself to kind of, you know, not losing quite as much, let's say,

from giving up that interactivity of that network or a lot of that interactivity with the client base and with that broader network. But I do miss it. I'm glad you made that point. I thought you were going to say something else. I know you know what I thought you were going to say, but I'm glad to be that point. You know, the other thing, it's really interesting because Australia, I would agree with you, though I do think I'm seeing a lot of substacks that are increasingly writing up all Australian stocks, maybe following in your footsteps. Japan, I feel like I disagree because I feel like there's like 15 different

subsets. Now, maybe they are more along the deep value, like, hey, here's yet another Japanese stock trading for negative EV versus the event side. So maybe that's where the differences, but I do think Japan is really picked over. Let me ask you, Japan, I believe our last podcast, we talked about it, you and I've talked about it a lot offline. The market for events in Japan, I mean, if we were reporting, this four years ago, the Japanese market would have been cheaper, but I think there would have

been less than goes for it. Japanese market is obviously not the US market where if you trade negative EV, somebody's going to come in with an axe and force you to return, but there's been some progression. How are you viewing the Japanese event market today? Just in general, nothing specific, obviously. Yeah, yeah. Look, the opportunity set such as it is in Japan is still very good. A lot of KKR long-term money or P. Bain capital long-term money says we're still in the second or thirding. I think that's not right.

I think for the larger cap securities or even the larger mid-cap securities, but probably in the sixth or the seventh inning, realistically, on the pure event, low-hanging fruit extraction, P. activism side. Now, of course, those who are raising multibillion-dollar funds will take umbrage with that comment. But I think that's a reasonably fair judgment. I think, on the other hand, at the smaller end of the pond, so anything, and by the way, Japan is obviously a hugely diffuse market.

So the smaller end of the pond there is not sub 100 million necessarily. It's probably sub a billion or so. Definitely sub five, 700 million, right? So there's a multiple hundred company subset within that bucket. There is still a huge amount of opportunity, right? So basically what happened is when Arbonomics first began in the early 20 teams, you had this steady progression. And really things only kicked into a high. high year once the TSE, the Tokyo Stock Exchange, reorganized their sub-segments to promote

listings, premium and standard listings where premium listings are dependent upon things like massive corporate governance reform. Now, part of that is having certain number of women on the board, certain number of independents on the board, but a lot of it is tied directly to return on equity minimums and achieving certain levels of price-to-book ratio, et cetera. So trying to embed a management where there's at least semi-conscious of the cost of their equity capital. And that only began hardcore, I want to say, four years ago. And then in the last four years, there have been a number of developments, obviously the governance code, the stewardship code, and then these discrete, this discrete PB and ROE-related targets that have been promulgated in the last,

you know, really the last three years. So now that's, that was, you know, let's call it four years ago and then with increasing vigor from then. But that's really just trickled down from the top and it's hardly made it way to the lower end of the pond. So, you know, I, I've been public about my views that you don't really want to go to Tokyo-based companies that are $5 billion companies where OASIS is already on the register. I mean, actually, I'm going to contradict exactly what I just said. If you had invested in every single disclosed activist target above a certain market cap, $1 billion, 24 months ago and 12 months ago, you would have generated an astounding amount of alpha.

So that would have been an excellent strategy. But it's my fervent view that going forward, there's a lot more. more money to be made now in where the puck is going to be than where the puck currently is. So that means looking at companies where they're still not playing ball with the new regime. They are probably based outside of Tokyo, meaning a long way from the center of political and economic power, where they are typically run by family operators, if not family owner operators. They're based in some backwater in regional Japan, if not third or fourth cities, so Nagoya

or Osaka or something like that. And they're just more conservative and slower moving. And I think that's where the, let's quote it, the lowest hanging fruit remains. And on that basis, I think the opportunity set is probably in the third inning, the second or the third inning. Just with the U.S. framework, I'll just apply it. A lot of, as you mentioned, backwater, they're smaller and they do have like, I'm taking the U.S. basis, but applying in Japan. The ones that aren't in the Tokyo main, they're smaller and the family has more control. So while I hear you, like the valuations there have not kind of floated up with.

the rest of the boats. I do worry you're stepping in there. And like the nice thing about billion-dollar Japanese conglomerates, a billion plus is there wasn't a lot of insider ownership. So, yes, they were misaligned, but you could go in by 10% and really affect change. A lot of these, they might have like a weird web of organization a little bit higher inside our ownership. So you go in and you say, I bought 10%. And they say, well, we've got a family trust that's been here 100 years, 50 different grandkids and all of them own 50 basis points. so, but that adds up to 25% go pound sand.

We own enough that you can't do anything. Have you run into that or is that, am I simplifying too much? No, no, no. It's definitely still a problem and it's hard to speak in absolute terms because of course you still have recalcitrant companies that have webs of cross shareholdings and they will not play ball. But in the main, I've seen enough in the last 12 to 24 months to suggest that the direction of travel is clear.

Of course, there will still be, you know, holdouts. they'll still be tougher situations. Probably all the ones I own will be the tougher situations. But in the main, the direction of travel is your friend. In the main, that's where the opportunity set is largest, I believe. And again, you know, if you're buying stuff at spot four of books, spot five a book, and it's massively net cash and it's borderline negative EV, then even if it, you know, again, deep value 101, right, even if it takes four years instead of two years.

and even if you get half the cash instead of all the cash, you'll still do very nicely. Sure, you might not double your money in three years. You might only get a 60, 70% return over four years. But you might not do that well either. But again, we were talking risk versus rewards. So if the downside is simply that you have a okay return rather than an exceptional return whilst risking no capital,

essentially by buying something below net cash or whatever it is, sign me up, baby. sign me up. No, I do hear you, though. You know, this was the pitch for Japan in 2012, 2014, 2016. Like, I do think the interesting thing is the, as you said, the larger boats have started to been lifted. And maybe some of the smaller boats haven't been lifted. But once the larger boats start getting lifted, like, you know, the tide has started

to rise. And eventually, like, you've seen the path. And it just kind of trickles down. It's really hard once the larger boats start to get lifted for the smaller boats. Let me ask about one more market. And then I want to turn. to group and then we'll turn to the second thing we're going to talk about. One more important.

You mentioned a lot of the subsects focused on Western Europe, and I do hear you, though. I mean, I've sent you emails. The UK market in particular, I've joked, I've had people on the podcast. I've joked about a few times. It's an emerging market. It's an inefficient market, in my opinion. Do you think when you're talking about, hey, the Western markets are picked over, would you apply that to the UK market?

Or do you think, do you think I'm wrong when I say, hey, I find. it pretty inefficient. I think there's a lot of cheap stuff there. Or do you think, hey, it's actually been pretty picked over. Andrew, let's go spend some time in Vietnam, Thailand. I mean, I'll spend time there anywhere, but I'm talking stock market, not the, not in person. Okay, it's definitely undervalued. UK stocks are definitely cheap on typical valuation metrics or statistical, you know, valuation norms. The problem I have in the UK is twofold. One is a little bit of my own personal experience there. I don't think I've made money on a UK stock. I don't know. I think it might be one for 10 in the last three years or two for 15, some of that, two for 12. I mean,

it's pretty bad. So, so I have a personal, you know, at some point, either I don't quite understand what's going on or my sense for that market is just somehow off. And I think it relates to this idea that while it is incredibly statistically cheap, the in government's framework is not robust enough, or I should rather say, in situations that I've been involved in, often at the small cap end of the pond, event situations, takeout situations, majority, minority takeout situations. The governance framework has been so poor as to allow pretty bad behavior, frankly, that has ultimately been destructive of shareholder values such that even in the ones where I've won, I haven't won. So just to give you a couple of example, an example that should be familiar to a lot

of value investors on your channel. Cambria Automotive, CAMB, was taken out in a management buyout about, I want to say, four years ago, maybe it was three years ago. And it was a very, very close vote. But they used a trick in convincing the shareholders to sell, they used a trick that you often see in some markets, but you don't often see in the U.S. because the government structure is just better there. And also it's a trick you see in some other markets, but particularly I've noticed in the

UK, and it's really put a dampener on my view. of the UK, and that is they offer a cash consideration for a takeout, and it's wildly insufficient, okay? And if it was the cash consideration only, either the FCA would step in or the fairness opinion would not be able to be granted. So the vast majority of majority minority takeouts, the independent expert will give a fairness opinion. They have to say something like, this is fair and reasonable to minorities, or this is not fair, but it's reasonable to minorities. And you can really finesse that, obviously, you know, these independent expert opinions are bought and paid for, but up to a certain limit, right?

So this was the case when we did Hunter Douglas back in the day, right? You have a fairness opinion. Fairness opinion says it's worth 65. Fair value is 150. I mean, it's just not going to fly. But if the true- R-A capital, they published this great tech and they've been on a lot of boards for biotech mergers.

And they were saying, hey, sometimes you'll get a fairness opinion that says, hey, it's fair to sell at 40, right? And then you'll get a topping bit at 60. And then they'll come in with a fairness opinion that says, hey, it's fair to sell at 60. and you'd be like, wait, you just signed off on 40, and now it's 60? I mean, look, Hunter Douglas signed off on 60, 65. We complained, I complained.

They raised it to 80, 80 something. In the time they raised it from 65 to 80, the value of the equity, it had started at 120, and it went from 120 to 160. Within six months, they sold to a third party at 165. I mean, the same board that signed off, the same board that signed off on a 60 euro bid, six months later signed off on a third party transaction or 170 or whatever. or what. So, I mean, it happens a lot, but specifically the workaround they've found in the

UK or that seems to be used by highly opportunistic management teams is they offer a cash consideration. Then they offer a rollover option on those who don't want to take the cash consideration. Then they pitch it to the shareholders saying, listen, no one's forcing you to take the cash. You want to stay? Stay with us. Roll forward. And, you know, I got involved in a couple of flights in Australia around 4C listing. The reality is the vast majority of small equity owners cannot hold a delisted security. The terms I've seen are so onerous and like you just don't know what you're getting. It's designed to, you know, it's designed that no one to do it. Of course, of course it is. But even if the, even if they set up a velvet feather bed for you to jump into and just hang out there

for three years in some cushy vehicle, like this, it's so wholly unattractive to be. be locked up with a management team that just screwed you that oftentimes has related party transactions going on in the background between your investment. I mean, that almost always the case where they're willing to rip you off to an extent that you complain about something like this. There's further related party transactions, right? So you're essentially being handcuffed into an agreement with someone that's already tried to F you or is screwing you essentially and being asked that and then being told by the independent expert that, okay, it might not be fair, but it's reasonable because they've offered you the option not to sell your shares because the the regulatory

rule the rule of law often in these situations is that you know these kind of majority minority coercion tactics are only not allowed if the regulator deems that you're being forced coerced to sell your shares at an undervalue technically at the letter of the law if they offer a roll over option even a highly can i swear on this podcast or not even even a shitty a fundamentally shitty role over offer, then that technically is not coercive, right? And so for whatever reason, the UK I've seen three or four of these go through. And the Canberra situation was particularly risable because we were, I know, less than one percent away from killing the deal. And if you'd killed the deal, they then who reported a bumper, bumper next 12, 18 months to cash just went straight up. So, I mean,

sure, he might not have rebid, but he would have had to pay a massive dividend or something to get the cash out, right? So it was particularly on. on the nose, but they've been three or four after that such that I just, well, what's my recourse, right? What is my recourse if I'm trying to improve a transaction or kill a transaction when the regulator's willing to roll over in the face of this loophole? That's my key push. It's a great.

I know a few where the company went private and then, you know, two months later, they sell a division that nobody even, like a startup division that no one even realized they had and they sell it for 50% of the EV or something, you know? And it's like it was literally valued by all shareholders at zero. They go private and they take it out and then they're free run. Okay. Look, we've got a lot to talk about. I want to do one more and then we'll do the second.

You've been very active, very public. I mean, the most things we got questions on was HOM and Australia, you've been very active. There's an upcoming vote. I'd love for you have been on this for nine months. I'd say I can't remember the exact time. But maybe you could just quickly summarize, you know, for people who haven't been following the whole thing. what's happened there, how you got involved in what the game plan is there? Well, I don't know how I'm going to summarize this quickly.

Maybe keep it very broad strokes. Okay, so look, it's all public information. I have a personally, I own about a 5.7% position in Hum Group. Hum Group is a non-bank financial lender listed on the Australian Stock Exchange. The market cap is about 325 million US, excuse me, Australian dollars. So it's a smallish company. as many followers will know, it's a quasi-controlled company. The chairman owns just under 30% of the company.

And the reason we've called, I along with another shareholder in concert, we own, call it 9, maybe just over 9% of the company. And we've called an extraordinary general meeting to propose full board renewal at the company. This meeting will be held on Feb 19th. So about a month, we're recording this on the 15th of Jan. So about a month and change. at that EGM will be proposing six resolutions. Three of them are removal of current directors, including the chairman.

So the current board has four people. We're proposing to remove three. And we're proposing to add two, including myself, myself and another gentleman to add to the board. And then the sixth resolution is essentially a protection resolution to protect us from the incumbent board adding additional directors between now and the date of the meeting. So essentially,

I'm asking all shareholders to support my call for board renewal, because this is a company that's been woefully, woefully mismanaged under the stewardship of the chair. I should say mismanaged at the board level, not the operational level. This is one of those good company, bad governance situations where the underlying business is actually doing fine, the operational executives whilst new,

due to chronic turnover as a result of the chair's mismanagement, has been doing fine, and the business is doing well, okay to well. well. And the CEO of the company is not on the board. None of the boards are executives. All the boards are either titularly independent, but not really, or are non-independent but non-executive, meaning the chair. So essentially what I'm proposing is simply to fix the governance culture and the alignment of the board, which has demonstrated itself to be captive to the whims of the chairman. And if we do that, then I'm hopeful it will lead to a re-rating in the stock, which obviously I think is very

very cheap. I mean, I put 20 million, your Aussie dollars in my own money that, you know, I earn in the market into this stock. So, you know, you could say, uh, I have skin in the game. More realistically, I have the whole shebang in the game. Okay. So I have, I have a significant personal investment that I bought. Okay, slightly below market prices, but not meaningfully different from the market prices. Uh, so, so I'm pot committed on this. Um, so what's been going on at So big picture, this is a non-backed financial lender. They have two segments. One is called commercial.

One is called consumer. A bit of a good co-bad co-s split there. I mean, there's a very simplistic overview, but essentially commercial is a jewel. It's one of the largest and most successful growing asset-backed finance businesses in Australia. The consumer business is a bit more of a hodgepodge of different things. They have a cards business in New Zealand. They have a cards business in Australia. They have a cards business in the UK and.

Ireland. Some of these are all in various stages of maturity. The UK business just turned profitable. The Irish business is doing quite well. The New Zealand business hasn't really grown, but it's still highly profitable. The Aussie business is a bit more of a hodgepodge. They've obviously, if you have been following the non-bank lending space or direct-to-consumer lending space over the last four or five years, you'll understand that by now, pay later has kind of upended that business. So there's a lot competition in the direct-to-consumer or unbanked or unsecured direct lending space. On the other hand, the commercial business is an excellent business. I mean, it's been growing double digits for the last four or five years. Lost rates are, look, again, loss rates are function of where we are in the cycle,

but loss rates are close enough to historical lows under 2% of ANR. And the business just prints cash, essentially. So, look, I don't want to go too back into ancient history. The reason I got involved in the situation was the chairman, as is typical, made of a low bowl bid for the company in June of last year. He offered at the time, 58 cents per share when the stock was trading in the low, in the mid to high 40 cents range, which was titually about a, about a 25%,

maybe even a 30% premium over last trade. But in itself, that that last trade was only a function of the fact that a 5% share of dumped his stake the day before. So really it was a low premium to the understood price. Have you followed? Did you see PRTH? This is U.S. domestic markets, but did you see what happened there? Someone brought up to me.

I did look at it quickly, but I did. I have a small tracking position, so I'll disclose that. But it's very similar to what you said. The stock was at, let's call it eight, and they reported earnings and misanalyst estimates. So the stock went from eight to five, right? And the chairman had 60%. It went from eight to five. And the next day, he lobbed in and offers like, I'll take you out for six.

This is a 20% premium. Let's go. And people were like, whoa, man, you can't take it. He would stock out on like a one-day dump premium. Look, he did that. He, I mean, just the underlying valuation, okay? He was offering five times PE and a big discount to tangible assets. So tangible assets at the time he did the bid was about 76, 77 cents a share.

He's offering 58, okay? This is a highly profitable business had not lost money in the GFC and not lost money in COVID. Tangible assets, as I said, close to 80 cents a share. every other comp on the market trades call it 10 times earnings. Okay, there's nothing purely apples to apples, but essentially the compset trades at 10 times earnings or above, or a lot of them aren't even profitable, but they're growing very fast, right?

So they trade at 10 times earnings or above, and some of them trade north of two, even three times price to net tangible assets. The cheapest one in the group traded, I think, around net tangible assets. It's like that. I mean, the cheapest transaction in this space, even during the height of COVID was when Shinsai Finance sold their Aussie business, their Aussie Consumer Direct Lending business for, I think, 1.2 times priced in net tangible assets.

You cannot buy this stuff below price. So he comes in an offer spot seven times net tangible assets and a poultry multiple of last 12 months earnings. And by the way, the company has bootles of excess cash. So at the time he made the offer, they report about an unrestricted cash balance to 125 million, which, look, the company will quibble with the accounting definition of unrestricted cash, they do have 60 million of corporate debt, but even just removing the corporate debt and looking at the pro forma leverage of the underlying entity, look, at least 60, 70 million of that cash is

truly unrestricted. And you know that because in the prior year, they made the decision to repay some mezzanine financing debt-like instrument that's accounted for equity on the balance sheet for, I think, 57, 58 million gross, and the business generated adjusted cash in an income of about 55 minute. So they essentially took all the earnings of the business and chose to repay equity. Well, they repaid its balance sheet equity, but it's not buying back shares. It's a fixed, it's a fixed obligation in terms of the requirement to pay on that liability, you know, a nominal high interest rate, but nevertheless, a decision to repay a debt-like instrument instead of just returning 58 million cash to shareholders, which they easily could have done. I just kept that

debt piece outstanding. I mean, at the time he made the bid, the market cap was 250 million. So if it just paid out that earnings as a dividend and be trading on a 25% yield. Yep, which obviously it wouldn't because the average yield in the sector is, you know, 7, 8% or whatever. So, so highly opportunistic offer. I come off the top rope immediately. I write to the board. My position is much smaller at the time.

I say, listen, no one's saying you have to sell the company. You don't say you have to do anything. You shouldn't engage with this offer. Is this an insulting offer? Like the standard for a board to engage with an offer always and has to be, is this, you know first what is the best alternative to a negotiated transaction what is our battener and second is this transaction capable of being consummated into a binding agreement okay because it was a non-binding indication now as soon as they launched the bid socials are covered all the shareholders are furious

yes he owns 30 percent but there's a few other shareholders in there i'm off the top road there's no chance 58 would get up it's just insulting it's derisory it's desultry and so that was made clear from the get despite that the board allowed five months of due diligence. During that period, they did not extract a standstill agreement. They did not conduct a market test. They made no attempt to develop a battener. They made no attempt to return excess capital on their own for the benefit of all shareholders. They simply opened the kimono and allowed the chairman to do as much and as deep do

as deep due to know what, with no consequences for the rest of the shareholders. Because guess what happened? When the deal obviously fell apart as it was always going to do, the chair judge, jumped into the market and started buying shares to entrench himself even further. And so, you know, these matters have come to a head over a period of time, but that demonstrated that chairman is acting in bad faith that fundamentally here. And look, there's a whole other host of problems with his behaviors over the last nine months. You know, there's rules.

On this, there's rules. Takeout offers. Well, yes, obviously we'll get to that. But there are strict rules in Australia, as there are in any jurisdiction where if a person has a material personal interest in the stock price at large, need to be stood down and or recused from all matters that affect said stock price, right? This is in the Corporations Act, which is the governing document that overrides or sets the tone for corporate and capital markets legislation in this country. And look, he was present in board meetings discussing the annual accounts. There have been press reports alleging that he massaged and had edit on the one Q trading

update. He did not recuse himself from discussion of the accounts. He was part of that decision to pay back the debt instead of paying a, proper dividend policy. I mean, his fingerprints are all over the behaviors of the company, all these matters that clearly affect the stock price during the pendency of his bid while he's in doing

supposed due diligence on the company. So the fact that environment was allowed to continue, the fact that the supposedly independent members of the board willfully ignore the views of the other shareholders

and also would not even conduct themselves within the norms of standard good governance or decent governance, I should say, was problem A1. And then we had... It's the lack of a standstill that gets me because I do a lot of these. Obviously, these are U.S. focus and I don't want to opine on other countries' loss because they can get very technical. But it's the lack of a standstill where you have them make the offer.

And then you don't even put a sandill and you let him buy, it's a creeping takeover, right? Like you could get into a creeping takeover territory. And, yeah, it's just, I can't believe that. But please continue. These issues, look, these issues, what really prompted us to go EGM as opposed to a consensual workout is obviously these issues came to afford the AGM, which was in last November, okay, mid-November. All these issues were given a full airing before the

shareholders. We asked directly, why was there no standstill? They said, look, we asked for a standstill, he wouldn't give it to us. We just said, that's not good enough. Stanstill is MNA Defense 101. As you just said, it doesn't matter on the jurisdiction. We could be doing this in Poland. We could be doing this on the moon. There'd be a bloody standstill agreement. If he wants diligence, yeah, it's just, as you're saying, like, there has to be a quid pro quo. And if he wants diligence, you've been to say, you've got to do it or else you say, hey, you're not working in the interest of all shareholders. You're out, you know? Look, I wish the violations just stopped with a no-standstill agreement.

The reality is that the chair puts out a document called a notice of meeting before the AGM in which he, I mean, this is a signed off by the board, but it's a document put to the stock exchange. You know, it's a, what is that, a quasi-legal document. It's a binding document. And that notice of meeting explains how the chair intends to vote on all the resolutions put to the meeting. In that notice of meeting, the chair stated he intended to vote for all the resolutions. One of those resolutions was a proportional takeover defense resolution. As part of explaining that resolution, the company put out a six, seven-page document explaining the benefits of why a defense against proportional takeovers was good for all shareholders. I don't want to get too technical, but essentially it was a resolution that would stop someone coming in and bidding for, say, 10% of the company or 20% of the company and thereby encroaching and creeping without offering a full control premium.

Okay. He said in the notice of meeting, he would vote for that resolution. At the AGM, that resolution was withdrawn. It was withdrawn the day, you know, a couple days before the meeting. The day after he dropped his bid for the company, the day after he dropped his bid for the company, that way the resolution was withdrawn, but no explanation was given why that was withdrawn. Only at the AGM. did he disclose that he changed his voting intention and that he decided to vote against that resolution as a shareholder and therefore he would have killed that resolution because a 30% vote against would have killed it. It's a special resolution. You need three-quarter support. So he didn't make an announcement to the stock exchange. The board didn't find it problematic that the chairman of the company would not announce to the market that the chairman had changed his voting intention before the AGM. I find it. It's literally incredulous to me that the board can continue on after something like that, after making a false statement to the market.

I mean, under continuous disclosure in the US that would qualify as FD, their disclosure rules, it's a similar thing in Australia is called continuous disclosure. That is just insane to me. So that happened. Then we find out, you know, so then after that we're still, you know, I approach the company. I say, listen, the culture is not good enough. It needs to improve. Are you interested in pursuing consensual border renewal?

No, we are not. Go away. That's essentially the message. So we put in a section 203D. Section 203D is a technical notice in Australia that says you have an intent to remove directors of the company at a forthcoming meeting. As soon as we popped that in, they announced to the market they'd been sitting on a third party bid at a 33% premium to the chairman's bid. So in other words, a third party bid came in wants to buy the company at 77 cents. Last chairman bid that never got anywhere that was cooked, that was undercooked, I should say, that was enabled by a compliant board.

That was 58 cents. Okay, that got four and a half, five months of due diligence. That was okay to get due to those. 77 cents, nothing happens for a month. They don't even sign an NDA. They don't even disclose it to the market. Then, by the way, they're not legally obliged to disclose to the market. To be clear, it's an immature proposal.

So they don't have to disclose it to the market. But then they make the choice to disclose it to the market paired with the announcement that we had challenged the board in this way. So the only time the Shells actually learned that there was a bona fide, this is another listed company, billion dollar company in Australia, credible company, a bona fide bid to acquire the company at a huge premium to the chairman's owned derisory offer. The only time that information comes out is when it has to come out to cleanse the chairman to allow him to trade the shares, because that's obviously inside information.

Guess what happens? He announced that. He starts buying shares in the market, same day. No Stancel agreement. He buys 15 million shares in the market in the next two days, 3% of the company, in order to try to entrench himself. So this, is where we are. I mean, the companies come out with their statement saying, obviously, vote against all that resolutions for various reasons, most of which are ridiculous. But at its core, if you cannot trust management to look after your interests as shareholders, and if the chairman has demonstrated, not said he would, not hinted he would, demonstrated he intends to buy you out at a massive undervalue. Indeed, he was asked directly at the AGM, will you guarantee

you will not make another office of the company? He said no. He said no. He said no. So, 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. I should not say. He will try to extract your shares from you at a massive undervalue to fair value. That's the only possible outcome unless you change the board. If you change the board, all manner of things become possible, right? We can reform the governance culture of the company.

We can institute a proper dividend payout ratio, a proper dividend payout policy based on sustainable earnings. We can pay back some of the excess cash within the company. We can conduct a full strategic review of best alternatives for the company. Last and not least, we can do a full examination of all the conduct that occurred at the board over the last 12 months to understand exactly the extent of misconduct and to clean the slate, to move forward with what ultimately is a good company, profitable company, and should be a growing company going forward for the benefit of all shareholders, not just for the narrow interests of the chairman. Jeremy, we got to, you had to have taken debate in high school.

That end with the five points and the finger, that was fantastic. Yeah, I love debate. I was a debater at high school, but unfortunately, I didn't continue on at college. Girls and whiskey got in the way. I think all the time, man, some of the stuff in college. I was very focused, but I wish I had been a little more. All right. Well, look, Jeremy, I hate to cut it off here, but there's one other thing we want to do, so we're going to have to.

The only thing before we cut off, sorry, I was going to talk. The last thing on the HUM thing, yeah, yeah, the last thing I want to say is if you are interested, I would only encourage you to look at it if you intend to vote. There's no point either getting involved or buying shares unless you intend to vote. If you have any questions, you can reach out to me on DMs, or you can go to www. www. Humb board cleanout. H-U-M-M-Bord Cleanout.com. Easy to find. Has all the information you need for the meeting, all the coverage, all of your points,

collater on that site. that is exactly what I wanted to wrap it up with. Jeremy, we said we were going to do 20 to 25 minutes bouncing around the market. We went for 50. I'm going to end this video right here and then we'll do the next thing. But thanks so much for coming on. And get another value podcast, Hall of Famer, Jeremy Rayper. We'll talk soon. Thanks. A quick disclaimer, nothing on this podcast should be considered an investment advice. Guests or the hosts may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial advisor. Thanks.