Founded in 1988, Humm Group Ltd (HUM: AU) is a financial services provider that was previously known as FlexiGroup Ltd until 2020. The company offers to buy now, pay later services under a consumer business.
Based in Sydney, Australia, the company has a current M Cap of 388.78 million AUD. The stock price is currently at 0.78 AUD, which is a 14.67% decline from HUM’s price at the beginning of 2022: 0.92 AUD. This decrease was also the case for a number of other Australian buy now, pay later stocks. The main reason can be attributed to rising inflation in the overall economy.
Founding Director collects shares
Insider buying has been frequently common in the company. The most recent insider buyings were by Andrew J. Abercrombie, the company’s founder, and former chairman. Now serving as one of the Directors on Humm’s board, Abercrombie purchased almost 2 million shares, at rates of up to 0.806 AUD per share.
Prior to this, the former chairman also purchased HUM stock in May. In a nutshell, he has presently obtained approx. 4.32 million shares. The total worth of these trades is almost 2.65 million USD and raised Abercrombie’s stake in Humm to a whopping 20.5%.
Another side to the story
There is, as Abercrombie himself revealed, another motive behind these purchases.
Earlier this year, Latitude Group (LFS: AU) offered to buy Humm’s consumer business, Hummgroup Consumer Finance (HCF) in deal that consisted of 150 million Latitude shares and $35 million in cash. In a thorough presentation, Humm’s chairperson, Christine Christian, said that a majority of the board believed the deal was beneficial for Humm. Her words were, “Together, Latitude and HCF is expected to be the leading non-banking consumer lender in Australia and New Zealand. A larger and profitable business being able to compete at scale.” The same presentation encouraged Humm shareholders to vote it out, saying that if more than 50% of shareholders vote ‘yes’, the acquisition will proceed.
Andrew Abercrombie, however, thinks differently. He is against the acquisition and believes the decided deal severely undervalues the company he founded. “The sale proposal now before shareholders significantly undervalues the business and would leave shareholders with Latitude shares, which have fallen in price since the announcement. These are the key reasons why I continue to oppose the sale” said Abercombie in an interview. If Latitude does not provide an updated and better deal, then Humm ought to carry on as a stand-alone company. According to Abercrombie, Humm could grow by making acquisitions of its own.
Alas, the rest of Humm’s board has been encouraging shareholders to vote in favor of the deal. According to their shareholder presentation, unless an alternative offer comes along, Latitude’s deal is attractive and would benefit Humm due to its enlarged finance platform for consumers.