Making Money the Morbid Way

As Benjamin Franklin put it, nothing in this world is certain but death and taxes.

It turns out that hedge funds like SAC Capital and AQR Capital Management are going long on death, according to Bloomberg. They've both recently increased their holdings in the nation's largest funeral home and cemetery owner, Service Corp. International.

The reason? The inevitable rise in mortality rates as the baby boomer generation begins to die off in years to come.

Lately, according to the Bloomberg piece, death has been a bear market. But that's all about to change. The U.S. mortality rate was 8.1 per thousand in 2006, according to the National Funeral Directors Association, but is expected to rise to 9.3 per thousand in 2020 and 10.9 per thousand in 2040.

That translates into a strong top line for funeral home and cemetery owners - two analysts cited by Bloomberg believe that Service Corp's stock could appreciate as much as 50 percent in the next year alone.

That's a lot of extra death!

Business isn't expected to really see a big boost until 2013 or 2015, but Service Corp. is doing all it can to get consumers to pre-arrange for their funeral and final resting place well before they die, rather than leaving the decision to the last minute or foisting it off on a relative after the fact.

And there you have Portfolio.com's morbid news flash of the day. Don't we all feel a little worse about capitalism?

by Liz Gunnison

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