WE’RE ALL GONNA DIE! But a stock picker says this is a good thing. I’ll leave all the punny stuff for the more lame bloggers (but commenters can have at it.) Investing in funeral homes is a wise and prudent thing to do, says one investment anal-cyst.
I didn’t know there were chain funeral homes. I knew that many funeral homes had multiple locations, but thought they all had a grey haired woman sitting in a back room someplace running things. Ha! Service Corporation Inc. has a friggin’ “brand.”
Seems there are 38 locations within 100 miles of my old bones right where I sit. They have 20,000 people all over the place just waiting to plant the huge baby boomer generation.
And those baby boomers dying as fast as they can, means the hedge funders are loving the potential upside for being in the downside. (damn! hard not to write punny, sorry.)
“There is a demographic benefit as the Baby Boom ages and the death rate rises,” said Dana Walker, a portfolio manager at Kalmar Investments Inc., which oversees $3 billion in Greenville, Delaware. “The flow-through, in a top-line and a bottom-line sense, ought to be very generous.”
Yeah, flow through, that’s us boomers. We’re just flowing through!
If you look at the number of deaths that occurred within the U.S. over the last few years, it’s been relatively flat, Ryan, 43, said. When you get out into the Baby Boomer years, you’d begin to expect that volume would increase to the tune of 2 percent a year.
Now that’s interesting, the number of deaths in the U.S. has been “relatively flat.” I don’t think about death much (never) but it sure seems that there would be a change in the death rate – up or down. Either we are getting healthier and living longer, or vice versa. But it just doesn’t compute that the death rate would be flat.
We’re invested in the boomer economy: jails (CXW), replacement knees (ZMH), blood tests (DGX), pet fixers (WOOF), cancer sticks (MO), cancer drugs (NVS), Velveeta (KFT), fake hearts (CTE) and anti-chaffing powder (JNJ).
So we’re kinda betting against dying.
But maybe we should consider that our future lies in death.
The company yesterday offered to buy its largest competitor, Stewart Enterprises Inc., for $11 a share in cash, or about $1.04 billion, based on 94.6 million shares outstanding as of April 30. Stewart rejected a bid of $9.50 a share earlier this month. Together, the companies would control about 20 percent of the market, Ransom estimated.
Cornering the market on the death business isn’t a bad strategy. Both SCI and Stewart are beaten down.
SCI peaked in the mid-$50s in summer 1996 when its stock split 2-for-1. Stewart stock reached the mid-$50s in spring 1998, when it also split 2-for-1. Those party-poopers, the SEC, said both companies would have to restate earnings based on the fact they counted “pre-need” revenue before the need was needed. SCI sells for about nine bucks a share now.
Dumbass stock market. If the companies were worth $50 a share a dozen years ago, why are they now just worth $9? Stock Anal-cysts that’s why.
Bah, Die Boomer Die, doesn’t seem to be a strategy we should pursue. Even the blog is dead.
I’m going to live forever…