Jeremy Raper, with 12+ years of buy- and sell-side experience, returns to The Business Brew to discuss various topics. These include the impact of the geopolitical situation and market downturn, Alto Ingredients' position in the ethanol industry, carbon capture and storage for ethanol refineries, social activism and creating value for shareholders, lessons learned from leasing during COVID, the importance of price in investment decision-making, the government's case against an airline merger, and the bullish stance on Japan's value proposition.
Jeremy Raper focuses on identifying undervalued opportunities and maximizing value for shareholders through activism.
Raper emphasizes the importance of speaking out and advocating for minority shareholders when unfair deals are proposed.
The aviation industry is experiencing high demand for planes, particularly in the wide-body plane market, leading to increased lease extensions and purchases by airlines.
Deep dives
Jeremy Raper's Activist Approach to Value Investing
Jeremy Raper is an activist investor who focuses on identifying undervalued opportunities and maximizing value for shareholders. He has a track record of successfully advocating for change and extracting value from companies. Raper explains his approach of identifying value situations and taking action to get the value out. He highlights the importance of understanding the market dynamics and identifying opportunities in smaller companies. Raper also discusses his experience investing in different regions, such as Australia, where he has found undervalued opportunities. He emphasizes the need for a clear plan of action to realize the value and the importance of having the majority shareholder position to have a greater impact.
The Case of Hunter Douglas and the Importance of Social Activism
Raper shares his experience with Hunter Douglas, a controlled company where the majority shareholder attempted to take out the minorities at an unfairly low price. He explains how he used social activism to highlight the unfairness of the deal and put pressure on the majority shareholder. Raper emphasizes the importance of speaking out and making noise when minority shareholders are being taken advantage of. He also discusses his change in strategy to focus on acquiring larger stakes in companies through special purpose vehicles to have more influence and maximize the chances of extracting value.
Shortages in the aviation industry impact plane production
The production of new planes is falling behind schedule, affecting the aviation industry. Maintenance repair organizations (MROs) are also facing backlogs, leading to longer wait times for repair and maintenance work.
Aircraft leasing companies benefit from high demand for planes
Aircraft leasing companies, such as the one discussed in the podcast, are experiencing high demand for planes. This has resulted in increased lease extensions and purchases of aircraft by airlines.
The wide-body plane market is booming due to increased demand
The wide-body plane market, which historically faced oversupply and volatility, is currently experiencing high demand due to airlines wanting to secure sufficient aircraft capacity. This increased demand is driven by the need to lock in lift and extend leases.
Capital allocation priorities and financial gains in the aviation industry
The discussed company has successfully sold assets, making substantial financial gains and strengthening its capital allocation strategy. They have repurchased a significant portion of shares and achieved favorable returns on their asset sales.
Jeremy Raper returns to The Business Brew to discuss what he has been up to lately. Jeremy is currently focused on smaller situations and being the catalyst for value realization. We hope this episode is entertaining and informative. We also implore you to do your own research and due diligence. His bio can be found at https://rapercapital.com. He describes himself as follows: Australian born and raised, I majored in History at Harvard University (Class of ’08). I have 12+ years of buy- and sell-side experience in a variety of roles, and currently manage my personal account full-time. I tend to view the equity markets through a credit analyst’s lens (‘thinking like a creditor rather than an owner’); I try to consider the whole capital structure of an enterprise when I invest; and I believe sustainable free cash flow is the primary foundation of business value. I have little interest in purported growth stocks (unless on the short side if there is a balance sheet/restructuring angle).
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