Author Topic: Investing in the funeral industy  (Read 5675 times)

my2c+61

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Investing in the funeral industy
« on: October 22, 2016, 08:39:09 PM »
Investing in the funeral industry is something I have been thinking about for a while.

Taking into account the large number of boomers heading towards old age and the fact a funeral of some sorts is something that can't be avoided.

As a long term medium growth industry I keep thinking that a small percentage of stash should be directed to the industry.

Any thoughts?

Paul der Krake

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Re: Investing in the funeral industy
« Reply #1 on: October 22, 2016, 08:52:28 PM »
Death is great to extract money out of grieving relatives. The whole experience doesn't exactly encourage comparison shopping or DIY.

Have you identified public companies that dabble in this industry, or are you thinking of selling tombstones and caskets on the down-low?

my2c+61

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Re: Investing in the funeral industy
« Reply #2 on: October 23, 2016, 12:48:28 AM »
A couple of years ago I looked into crematoriums but due to high upfront cost and government regulations and red tape it went into the to hard basket. Plus I got a good flaming from my family for being a morbid bottom feeding prick.

So that led me to Invocare a funeral conglomerate that is listed on the Australian stock exchange. They are buying out their competitors as they become a threat to their business and are the dominant player in the local industry.

Looking at my own family, between my wife's siblings , our parents and immediate uncles and aunts there are around 30 people aged from 75-85. It's not a nice thought but the majority our elderly relatives will pass in the next 15 years. Thats not counting those that have passed in the last 5 years.

I am not looking to profit from others misery. Death is a fact of life and has to be catered for.

« Last Edit: October 23, 2016, 01:23:40 AM by my2c+61 »

Metric Mouse

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Re: Investing in the funeral industy
« Reply #3 on: October 23, 2016, 12:50:51 AM »


Taking into account the large number of boomers heading towards old age and the fact a funeral of some sorts is something that can't be avoided.


I would say that this line of thinking would lead me to invest more heavily into healthcare than I would directly into the funeral industry.

my2c+61

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Re: Investing in the funeral industy
« Reply #4 on: October 23, 2016, 01:08:04 AM »


Taking into account the large number of boomers heading towards old age and the fact a funeral of some sorts is something that can't be avoided.


I would say that this line of thinking would lead me to invest more heavily into healthcare than I would directly into the funeral industry.

Healthcare will form a part of my portfolio.
Unfortunately for a lot of people health care is not an option due to insufficient funds.
Where as a funeral even on the most basic level can't be avoided.

arebelspy

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Re: Investing in the funeral industy
« Reply #5 on: October 23, 2016, 02:23:47 AM »
Where as a funeral even on the most basic level can't be avoided.

Huh?  Is there a law I'm not aware of that everyone has to have a funeral?

I sort of like the idea of starting some businesses around funerals though.

The question is, do you go the app route, or the franchise model?
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misterhorsey

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Re: Investing in the funeral industy
« Reply #6 on: October 23, 2016, 02:44:40 AM »
I looked at invocare when I used was into buying shares directly. I think they were sitting at around $7.50 at the time, and now they're a bit over $13.

It wasn't long after a relatives funeral.  I was initially very skeptical about the value funeral directors provided, but when everyone else is emotional and inconsolable there is some value in having a discreet and steady hand directing proceedings.

Their results announcements always make inadvertently entertaining reading. From their 2016 half yearly results.

Martin Earp, InvoCare’s Chief Executive Officer, said:
“The business has performed well in challenging trading conditions. The focus for the second half of the year will be on continuing to manage our costs and putting in place revenue generating activities,whilst also continuing to fund initiatives for longer term value creation.”

During a period of lower than anticipated numbers of deaths in InvoCare’s core markets, comparable business funeral case volumes declined by 2.2% on the prior comparative first half of 2015.


Most public companies bemoan falling sales. For Invocare, less people dying puts pressure on margins!

Anyway, reason I didn't go with them is I felt they were by and large achieving growth by acquisition.  They increase their revenue year on year by swallowing up competitors.  And so it's unclear whether their profitability was derived from better management. Certainly there is potential for economies of scale, but its unclear whether any of this is being achieved. Think QBE - increasing revenue by buying other companies.

Also, the share seemed to be a bit of a darling amongst the Motley Fool and other newsletter tipsters.  These stocks often seem to get a rise after they get tipped, with a subsequent longer term deflation.

Also, I'm not sure that the corporate model is the best for these kinds of services.  Not quite sure why  - seem a little too intimate and personal. 

The other reason why I didn't by was I ended up going the way of the index.

Metric Mouse

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Re: Investing in the funeral industy
« Reply #7 on: October 23, 2016, 02:49:18 AM »
I looked at invocare when I used was into buying shares directly. I think they were sitting at around $7.50 at the time, and now they're a bit over $13.

It wasn't long after a relatives funeral.  I was initially very skeptical about the value funeral directors provided, but when everyone else is emotional and inconsolable there is some value in having a discreet and steady hand directing proceedings.

Their results announcements always make inadvertently entertaining reading. From their 2016 half yearly results.

Martin Earp, InvoCare’s Chief Executive Officer, said:
“The business has performed well in challenging trading conditions. The focus for the second half of the year will be on continuing to manage our costs and putting in place revenue generating activities,whilst also continuing to fund initiatives for longer term value creation.”

During a period of lower than anticipated numbers of deaths in InvoCare’s core markets, comparable business funeral case volumes declined by 2.2% on the prior comparative first half of 2015.


Most public companies bemoan falling sales. For Invocare, less people dying puts pressure on margins!

Anyway, reason I didn't go with them is I felt they were by and large achieving growth by acquisition.  They increase their revenue year on year by swallowing up competitors.  And so it's unclear whether their profitability was derived from better management. Certainly there is potential for economies of scale, but its unclear whether any of this is being achieved. Think QBE - increasing revenue by buying other companies.

Also, the share seemed to be a bit of a darling amongst the Motley Fool and other newsletter tipsters.  These stocks often seem to get a rise after they get tipped, with a subsequent longer term deflation.

Also, I'm not sure that the corporate model is the best for these kinds of services.  Not quite sure why  - seem a little too intimate and personal. 

The other reason why I didn't by was I ended up going the way of the index.

Ha! I can just imagine what 'revenue generating activites' are. Maybe they're selling cigarettes?

mathjak107

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Re: Investing in the funeral industy
« Reply #8 on: October 23, 2016, 04:07:44 AM »
i think it is a good investment . people are dying to get in to it .

when they cut expenses do they use a skeleton crew ?


Paul der Krake

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Re: Investing in the funeral industy
« Reply #9 on: October 23, 2016, 04:40:40 AM »
i think it is a good investment . people are dying to get in to it .

when they cut expenses do they use a skeleton crew ?
They just cut expenses to the bone.

mathjak107

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Re: Investing in the funeral industy
« Reply #10 on: October 23, 2016, 04:43:44 AM »
my goul friend used to work in that industry .  the good thing was if your had a cold you did not have to worry about getting others sick if you were coffin .

seattlecyclone

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Re: Investing in the funeral industy
« Reply #11 on: October 23, 2016, 01:00:46 PM »
I would look at this the same way as I would look at other investments. There are a bunch of professional investors who have looked over all the data about projected death rates for the foreseeable future, trends in pricing for the funeral industry, and trends among families in what funeral services (if any) they decide to purchase. They have used this data to estimate the growth rate of companies in this industry, and set a price accordingly. All this is to say that an aging population is no secret, and that you aren't the first person to try and capitalize on this phenomenon by purchasing this stock.

By choosing to invest in one particular stock or group of related stocks, you are expressing your opinion that the consensus developed amongst all the professionals who know more about this industry than you do is wrong, that they have underestimated the future need for funeral services. Do you really think that's the case?

Metric Mouse

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Re: Investing in the funeral industy
« Reply #12 on: October 23, 2016, 06:10:27 PM »
i think it is a good investment . people are dying to get in to it .

when they cut expenses do they use a skeleton crew ?
They just cut expenses to the bone.

Another pun thread that will bury all the useful information.

arebelspy

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Re: Investing in the funeral industy
« Reply #13 on: October 23, 2016, 06:17:57 PM »
You guys are killing me!
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Greenway52

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Re: Investing in the funeral industy
« Reply #14 on: October 23, 2016, 09:07:50 PM »
The problem I see in this industry is that it's very hard to get repeat customers.

Metric Mouse

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Re: Investing in the funeral industy
« Reply #15 on: October 23, 2016, 09:16:16 PM »
The problem I see in this industry is that it's very hard to get repeat customers.

Not really a concern when you have a customer base of 9 billion, and it is increasing daily.

misterhorsey

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Re: Investing in the funeral industy
« Reply #16 on: October 23, 2016, 09:35:53 PM »
I looked at invocare when I used was into buying shares directly. I think they were sitting at around $7.50 at the time, and now they're a bit over $13.

It wasn't long after a relatives funeral.  I was initially very skeptical about the value funeral directors provided, but when everyone else is emotional and inconsolable there is some value in having a discreet and steady hand directing proceedings.

Their results announcements always make inadvertently entertaining reading. From their 2016 half yearly results.

Martin Earp, InvoCare’s Chief Executive Officer, said:
“The business has performed well in challenging trading conditions. The focus for the second half of the year will be on continuing to manage our costs and putting in place revenue generating activities,whilst also continuing to fund initiatives for longer term value creation.”

During a period of lower than anticipated numbers of deaths in InvoCare’s core markets, comparable business funeral case volumes declined by 2.2% on the prior comparative first half of 2015.


Most public companies bemoan falling sales. For Invocare, less people dying puts pressure on margins!

Anyway, reason I didn't go with them is I felt they were by and large achieving growth by acquisition.  They increase their revenue year on year by swallowing up competitors.  And so it's unclear whether their profitability was derived from better management. Certainly there is potential for economies of scale, but its unclear whether any of this is being achieved. Think QBE - increasing revenue by buying other companies.

Also, the share seemed to be a bit of a darling amongst the Motley Fool and other newsletter tipsters.  These stocks often seem to get a rise after they get tipped, with a subsequent longer term deflation.

Also, I'm not sure that the corporate model is the best for these kinds of services.  Not quite sure why  - seem a little too intimate and personal. 

The other reason why I didn't by was I ended up going the way of the index.

Ha! I can just imagine what 'revenue generating activites' are. Maybe they're selling cigarettes?

Yes, I thought that gave me a chuckle as well.

It's not unlike fast food.  Get the customer to agree to an upsize for an extra $1, when the cost is negligible.

Invocare may offer a range of fancy caskets that may cost very little extra produce, but could be 10x the price of a pine box.

I'd like to be covered over in leaf litter myself when it's my time and rejoin the earth via the worms.

Drifterrider

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Re: Investing in the funeral industy
« Reply #17 on: October 24, 2016, 05:26:52 AM »
Investing in the funeral industry is something I have been thinking about for a while.

Taking into account the large number of boomers heading towards old age and the fact a funeral of some sorts is something that can't be avoided.

As a long term medium growth industry I keep thinking that a small percentage of stash should be directed to the industry.

Any thoughts?

My thoughts:

You can't get out alive.
A lot of people (in the US) spend a lot of money on funerals.
Death.  A thriving business.

Axioligy

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Re: Investing in the funeral industy
« Reply #18 on: October 24, 2016, 05:44:45 AM »
I was a licensed F.D. and embalmer for almost a decade.  During the recession the small family owned home I worked for was bought out by one of these "chains".  I was offered a position which was great but it changed from a caring and compassionate place to a body farm.  I went from 2-3 services a week to 2-3 a day and I had sales quotas I was constantly pressured to hit.  I was working 60 hours a week and making 50k a year.  Like just about every director that's worked for these companies I got burnt out and left the industry.  I'm not saying you shouldn't invest because of this... I simply don't believe their business plan will work long term.  You can't run a funeral home like a restaurant or retail store.

frugalnacho

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Re: Investing in the funeral industy
« Reply #19 on: October 24, 2016, 07:16:52 AM »
The problem I see in this industry is that it's very hard to get repeat customers.

All joking aside, it's not always the deceased that are the paying customers.  I have indeed been to the same funeral home multiple times in the past year.  I anticipate having to go back several more times in the coming years too.

BTDretire

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Re: Investing in the funeral industy
« Reply #20 on: October 24, 2016, 09:49:53 AM »
I've been following STON for a couple years, it is a dividend payer
with a 10.6% dividend. The dividend has increased continually
since 2005. The price is at a low point and the ex dividend is
within a couple weeks, I can't find the exact date.
 The downside is it generates a K-1 form, I've never had a K-1,
but I have a friend that does his own taxes and he doesn 't like them.
 Probably just a couple key strokes for an accountant.
 Do your DD if you have interest. Might be interesting to pick up
on ex div date, after a $0.66 price drop, if it's not up before then.

my2c+61

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Re: Investing in the funeral industy
« Reply #21 on: October 26, 2016, 07:45:54 PM »
I looked at invocare when I used was into buying shares directly. I think they were sitting at around $7.50 at the time, and now they're a bit over $13.

It wasn't long after a relatives funeral.  I was initially very skeptical about the value funeral directors provided, but when everyone else is emotional and inconsolable there is some value in having a discreet and steady hand directing proceedings.

Their results announcements always make inadvertently entertaining reading. From their 2016 half yearly results.

Martin Earp, InvoCare’s Chief Executive Officer, said:
“The business has performed well in challenging trading conditions. The focus for the second half of the year will be on continuing to manage our costs and putting in place revenue generating activities,whilst also continuing to fund initiatives for longer term value creation.”

During a period of lower than anticipated numbers of deaths in InvoCare’s core markets, comparable business funeral case volumes declined by 2.2% on the prior comparative first half of 2015.


Most public companies bemoan falling sales. For Invocare, less people dying puts pressure on margins!

Anyway, reason I didn't go with them is I felt they were by and large achieving growth by acquisition.  They increase their revenue year on year by swallowing up competitors.  And so it's unclear whether their profitability was derived from better management. Certainly there is potential for economies of scale, but its unclear whether any of this is being achieved. Think QBE - increasing revenue by buying other companies.

Also, the share seemed to be a bit of a darling amongst the Motley Fool and other newsletter tipsters.  These stocks often seem to get a rise after they get tipped, with a subsequent longer term deflation.

Also, I'm not sure that the corporate model is the best for these kinds of services.  Not quite sure why  - seem a little too intimate and personal. 

The other reason why I didn't by was I ended up going the way of the index.

Ha! I can just imagine what 'revenue generating activites' are. Maybe they're selling cigarettes?

Revenue generating is the easy bit.
With the ethnic and religious diversity that we have in Australia there is a demand to diversify standard anglo services to suit many cultural needs.
With first world wealth the funeral industry could become the next wedding business.



Where as a funeral even on the most basic level can't be avoided.

Huh?  Is there a law I'm not aware of that everyone has to have a funeral?

I sort of like the idea of starting some businesses around funerals though.

The question is, do you go the app route, or the franchise model?

You don't necessarily need a funeral but you have to do something with the body whether it is cremation or burial. There is a lot of red tape to go through if you want to do it yourself if it is possible at all given local government regulations.

Goldielocks

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Re: Investing in the funeral industy
« Reply #22 on: October 26, 2016, 08:03:58 PM »
One option is to invest privately in a owner-run monuments (Headstones / urn) business.   Many of them are bought out by large chains, but a few do still exist that are independent.   

I saw the same statistics as OP, but my thought was that I need to add 'funeral services support' to the list of my volunteer activities (helping to provide low cost funerals to the community).  LOL how we can see the same numbers and come to different conclusions.  I love this forummm.

Drifterrider

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Re: Investing in the funeral industy
« Reply #23 on: October 27, 2016, 12:26:24 PM »
As the population gets more liberal and less religious on average, I think we are going to see less traditional funerals - or so I hope - I hate these things.  Some religions even prohibit cremation and force the family to spend thousands on traditional burial.  Traditional embalming, viewing, funeral, burial is repulsive to me - I've already requested a quick cremation with no services.

Things I don't like:
1.  As a mustachian - the expense is too high
2.  I don't like the formality of the events
3.  Embalming is gross.  It's baffling how religions are OK with this process, but don't allow cremation.
4.  Burial in a cemetary is not a good use of real estate - no one is going to visit anyways!

I think this will catch on.  I've never seen anyone enjoy this process or get much out of it in terms of healing that couldn't be done in a vast number of other ways.

Sorry to rant - helped a family member through this recently and I was quite disgusted with the whole industry.  It's a lot like the wedding industry.

I laughed at the embalming.  My father planned his own funeral.  He scoffed at the $75 embalming charge saying no one was going to dig him up to take a look.

Visiting?  Lots of people visit cemeteries. 

misterhorsey

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Re: Investing in the funeral industy
« Reply #24 on: October 27, 2016, 04:59:12 PM »
I was a licensed F.D. and embalmer for almost a decade.  During the recession the small family owned home I worked for was bought out by one of these "chains".  I was offered a position which was great but it changed from a caring and compassionate place to a body farm.  I went from 2-3 services a week to 2-3 a day and I had sales quotas I was constantly pressured to hit.  I was working 60 hours a week and making 50k a year.  Like just about every director that's worked for these companies I got burnt out and left the industry.  I'm not saying you shouldn't invest because of this... I simply don't believe their business plan will work long term.  You can't run a funeral home like a restaurant or retail store.

This sounds horrible and confirms my suspicions of what could be some of the impact of the corporatisation of funeral personal services. 

Another publicly listed company in Australia is Greencross, which is swallowing veterinary practices across Australia.  On the one hand there's economies of scale to be realised with a huge network of veterinary practices - both in negotiating better prices on supplies as well as possibly sharing knowledge across vets. Also, from reports I've read many vets are weary of managing the business side of their practice and willingly sell to the company.  On the other hand, there are also reports of a culture of over servicing to increase revenue/meet corporate targets.  I'm not sure that the provision of these kind of personal services is  compatible with that kind of business model and sustainable in the long run.




Bicycle_B

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Re: Investing in the funeral industy
« Reply #25 on: October 28, 2016, 09:30:46 AM »
As the population gets more liberal and less religious on average, I think we are going to see less traditional funerals - or so I hope - I hate these things.  Some religions even prohibit cremation and force the family to spend thousands on traditional burial.  Traditional embalming, viewing, funeral, burial is repulsive to me - I've already requested a quick cremation with no services.

Things I don't like:
1.  As a mustachian - the expense is too high
2.  I don't like the formality of the events
3.  Embalming is gross.  It's baffling how religions are OK with this process, but don't allow cremation.
4.  Burial in a cemetary is not a good use of real estate - no one is going to visit anyways!

I think this will catch on.  I've never seen anyone enjoy this process or get much out of it in terms of healing that couldn't be done in a vast number of other ways.

Sorry to rant - helped a family member through this recently and I was quite disgusted with the whole industry.  It's a lot like the wedding industry.

I laughed at the embalming.  My father planned his own funeral.  He scoffed at the $75 embalming charge saying no one was going to dig him up to take a look.

Visiting?  Lots of people visit cemeteries.

These posts made me think that the funeral business is vulnerable to changes in societal opinions.  I've read that cremation is rising, for example, in the US.  Since there are a lot of high-margin goods and services built into the current US (and Australian?) model, it is possible for margins to decline.  Not saying that they will, just that the business doesn't seem  particularly to be better or worse than others.

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Re: Investing in the funeral industy
« Reply #26 on: October 28, 2016, 09:43:25 AM »
I used to work for SCI, the biggest in the industry (and they own a good chuck of Carriage too).  Houston is ground zero for cemetery and funeral home roll ups.  It's a terrible industry that is bogged down by crippling debt.  I'm glad I got out.

BlueHouse

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Re: Investing in the funeral industy
« Reply #27 on: October 28, 2016, 09:54:29 AM »
The problem I see in this industry is that it's very hard to get repeat customers.
I used to have Hillenbrand as a customer (years ago).  One of their branches (Batesville -- I know, creepy sounding!) makes caskets and all types of things for the funeral industry.  Hillenbrand's message and strategy though was (on the consumer side anyway) that they would have a product for every phase of a person's life.  Cradle to grave, literally (yes, they manufactured cribs as well).  One of the main places where you see their branded products are in hospitals -- hospital beds, and every piece of equipment that is in a hospital room often has a Hillenbrand label on it. 

my2c+61

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Re: Investing in the funeral industy
« Reply #28 on: November 04, 2016, 07:57:41 PM »
Another example of how the industry is being transformed by customer requests.

http://www.smh.com.au/good-weekend/last-rites-20161102-gsgsum.html