Portfolio Spotlight: Humm Group (ASX:HUM)

Cheap Stock, Broken Board: low valuation plus a governance inflection point heading into the February 2026 EGM

Dec 29, 2025

(Note: This write up is largely LLM assisted and pulls heavily from other investors’ work. I own the stock. I am mainly trying to summarize the situation rather than add original research.

Most of the info here is sourced from the activist’s letter to shareholders “END THE CIRCUS - OVERHAUL THE HUMM BOARD”.)

Quick Pitch

Humm trades at $0.70, roughly 5.7x P/E ex-cash while peers trade at 10x+. The discount isn’t the business, but the governance.

Founder and chair Andrew Abercrombie tried to buy the company at $0.58 per share, then the board spent months on a conflicted process, and later appeared to bury a superior approach from Credit Corp. Activists with a 9.5% stake have now called an extraordinary general meeting to remove Abercrombie and two other directors, and to install a new board with a clear shareholder return plan.

Although a takeover could provide a nice quick win, it’s not necessary for a satisfactory IRR. The company just needs to be run for all shareholders.

Disclaimer: This content is for educational and entertainment purposes only and is not intended as financial advice. Perform your own research and consult a qualified financial advisor. The author may hold positions in the discussed stocks. This is not a recommendation to buy or sell securities.

1) What

Humm Group Limited is a diversified financial services company (non-bank lender) based in Sydney, Australia. It operates consumer and commercial finance businesses across Australia and internationally

Valuation

Current price: $0.70 (~5.6x LTM P/E ex-cash)
13c of net cash per share, that can be returned to shareholders
Abercrombie’s failed bid: $0.58 (4.4x P/E ex-cash, 0.75x P/NTA)
Peer group of non-bank financials trades at 10x+ P/E, 1-2x P/NTA

In FY25 (Year ending on 30 June 2025), HUMM earned 52.9$m after tax cash profit of 10.2c per share. The stock already looks cheap on those numbers, and that’s despite earnings still being weighed down by headwinds that ease in 2026.

2025 saw all the important KPIs trend in the direct direction. Add some growth and you can hit 70mm in after tax cash earnings, 13-15c per share.

Why Is it Cheap?

The core issue is governance. It’s run for the Chairman, not for all shareholders. Abercrombie owns about 29%, chairs the board, and appears to exert outsized influence over capital allocation and strategic outcomes. The fear is that value is intentionally left trapped in the company so it can later be taken private cheaply, with minority holders not sharing the upside

Recent timeline

June 2025: Abercrombie launches lowball takeover bid at $0.58/share

Values company at 4.4x P/E ex-cash, 0.75x P/NTA, massive discount to peers and historical transactions
Board grants him 4 months of conflicted due diligence despite zero chance of shareholder approval
Bid fails in November

This bid was what made some shareholders make some noise, and because of that put the company on my radar.

November 2025 AGM Reveals The Rot:

Amongst other things, Abercrombie apparently present for Board votes on dividends, disclosures, and financials while his takeover bid was live.

December 2025—The Smoking Gun:

Nov 19: Board receives Credit Corp non-binding proposal (~$0.77/share, 33% premium to Abercrombie bid)
Dec 15: Activists give notice of intent to remove directors (must disclose by Dec 17)
Dec 16: CFO suddenly resigns
Dec 17: Board finally discloses month-old Credit Corp proposal—only because forced to disclose activist notice
Dec 17-19: Abercrombie buys 15 million shares on-market at $0.72-0.73—almost 3% of the company
Credit Corp confirms no due diligence materials provided in entire month; confidentiality now blown

So in other words:

The Board engaged with Abercrombie’s $0.58 bid… but let Credit Corp’s superior $0.77 offer sit idle.

Then AA starts buying aggressively the same day the Board is forced to disclose a buried takeover proposal. He’s buying while:

In possession of near-complete quarterly trading results (quarter was 85% done)
Privy to confidential discussions with Credit Corp about their acquisition interest
Facing imminent removal via EGM

Raper wrote:

“It’s the most blatant informational asymmetry being acted upon by an insider, in size, he has ever witnessed”

The Catalyst: Activists Calling EGM

Who: Jeremy Raper (aka @puppyeh1, single-family office, top-3 shareholder ~5.95%) + Collins St Asset Management (well-respected Australian fund)

Combined 9.5% stake
Experienced in small-cap activism campaigns

What: EGM on Feb 19, 2026 to:

REMOVE: Andrew Abercrombie (Chair), Robert Hines, Andrew Darbyshire
APPOINT: Jeremy Raper and Garry Sladden (experienced turnaround chair, ex-Consolidated Press Holdings)
Bring in Rajeev Dhawan as consultant (original PE backer, served 16 years on Humm board until 2022)

The mechanics of the EGM: shareholder who own more than 5% of the votes can call for a general meeting. Here ordinary resolution can be passed with > 50% of the votes. Including removing AA from the board of directors.

A potentially important tell: at the November 2025 AGM, 55% voted against the remuneration report, signalling meaningful dissatisfaction among non Abercrombie shareholders.

The Plan: Fix The Balance Sheet, Share The Spoils

Immediate Actions Upon Election:

Capital Return Program:
- $15M fully-franked special dividend (3c per share)
- 10% share buyback over 12 months
- 75% payout ratio policy (implies 10%+ dividend yield at current prices)
Strategic Review:
- Exit/restructure loss-making Canadian operations
- Review all Board decisions from past 12 months
Governance Overhaul:
- Appoint 1-2 additional independent directors
- End the conflicts and establish true board independence
M&A Process:
- Run proper process for Credit Corp or other credible buyers
- No more burying superior bids

Simply applying peer multiples (10x P/E or comparable dividend yields) implies $1.00-$1.20 per share—43-71% upside before factoring in capital returns or M&A premium. The rerating comes from governance normalization, not a heroic turnaround in the business.

What Can Go Wrong

The EGM vote fails and the status quo persists. In that scenario, the stock likely drops because the near term catalyst is gone.

Even then, the valuation may remain attractive, and Abercrombie still has reason to grow the business. But if capital returns are withheld and confidence in fair treatment doesn't improve, the market may keep discounting the stock.

The Bottom Line

Humm is a functional business trading at half of peer multiples because the Board has operated as Andrew Abercrombie’s personal fiefdom. He blocked value-creating deals, pursued conflicted lowball bids, and buried superior offers. Activists with meaningful stakes are forcing change at their own expense. The plan is straightforward: return lazy balance sheet cash to shareholders, establish normal governance, and let the stock rerate to peer multiples.

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