Jeremy Raper
Key Views & Dialogues
Avation Post-Mortem with Jeremy Raper $AVAP
Jeremy Raper’s fully closed Avation (AVAP, London-listed) trade turned a 79p block bought against 140-145p tangible book into an average exit near 150p. That stake enabled activism in an illiquid, concentrated lessor, alongside debt refinancing, purchase-right monetization, asset sales, and buybacks. The post-mortem highlights aircraft values’ 25% rise and consolidation logic, but also tax complexity, operating entanglements, and the risk-reward shift after the rally.
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- Jeremy Raper’s Avation (AVAP, London-listed) activist trade is now fully closed and publicly filed: he bought a hedge fund’s ~20% block at 79p in late September/early October 2023 — roughly a 25% discount to the ~100-105p last trade, against tangible book of 140-145p — and exited at an average of roughly 150p, with the final tranche sold back to the company at 138p on November 5, 2025. Andrew calls it “one of the best… activism ideas I’ve ever seen” because the block was the only way to capture the discount at size, and 20% bought “a voice in the room.”
- The sourcing story is a genuine one-off: Jeremy tweeted “does anyone know anyone at this hedge fund?” and the fund’s manager called him directly roughly 24 hours later. The seller was a small fund winding down that appeared to want out of an illiquid ~20% stake; Jeremy also already knew Avation’s executive chairman (who owned ~14-15%) socially from Singapore, so “it wasn’t a cold call.” The setup also involved a potential conflict between the fund’s shorter-term value objective and the founder’s desire to run the company his way.
- The macro backdrop was Jeremy’s two-decade conviction that aircraft lessors are structurally mispriced: he recalls AerCap at 0.6x book generating ~15% returns on tangible assets while banks traded at 2-3x book — “finance theory 101” says no discount to book when returns exceed cost of equity — and AerCap has since rerated, so “we’ve been vindicated over the long run.” Avation was the extreme case: about $100M market cap, ~30-33 planes, “junkier” regional jets, and >20% asset concentration to Virgin Australia, which went under during COVID.
- The biggest general learning was that activism behind the curtain is “an order of magnitude more involved than I had anticipated” — jobs attached to assets, competing personalities, and structural surprises like the tax treatment of piecemeal asset sales by a UK PLC versus a whole-company takeover, which can be quite different. Andrew made the order-of-magnitude point; he said the tax nuance was a contributing factor in why the intended endgame — selling Avation into a larger, lower-cost-of-capital balance sheet — never closed, “which is why you need the discount on the way in.”
- The capital-allocation core of the campaign: Jeremy argued against putting more capital into aircraft purchase rights (e.g., using illustrative numbers, $40M of deposits on 20 planes) while the equity trades at 50 cents on the dollar — “the market is directly punishing you for making a new investment… That’s the market telling you what to do.” In practice they monetized some purchase rights, refinanced debt, bought bonds back below par, and bought back shares.
- The exit logic is instructive: aircraft values rose ~25% over the two years and were partly monetized via asset sales, so the risk-reward “in the 140s and 150s is quite different” than it was at 80 — Jeremy scores the operational campaign “six or seven out of 10” and said he thought a whole-company sale would ultimately go in that direction because “the logic is largely irrefutable.” Andrew cites Bill Ackman’s claim that stocks his firm sold outperformed the S&P for three years afterward: trying to sell at the absolute top can make future exits harder. “It’s kind of someone else’s bet now.”
General Market Thoughts and the Case for Change at Humm with Jeremy Raper
Japan’s large-cap activism trade may be in its sixth or seventh inning, but sub-$500-700 million family-run companies remain in the second or third. HUMM’s commercial asset-finance business grows double digits with loss rates below 2% of ANR, but Raper calls governance the problem. Raper’s February 19 EGM seeks three director removals, including the chairman, with dividends, cash distribution, and strategic review as potential catalysts.
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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.”