Bloomberg- Service Corp. International, the biggest U.S. funeral-home and cemetery owner, is becoming a magnet for hedge funds which see the rising death rate among Baby Boomers as the surest way to resurrect the company’s shares.
Steven Cohen’s SAC Capital Advisors LLC added almost 2 million shares in the first quarter to increase its stake to 2.2 percent, according to regulatory filings. AQR Capital Management LLC, run by Cliff Asness, also boosted holdings in Service Corp.
“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.” Kalmar owned 1.2 percent of Houston-based Service Corp. as of March 31.
After at least four decades of declines, the U.S. death rate will rise to 9.3 per thousand people in 2020 and 10.9 per thousand in 2040, according to projections from the National Funeral Directors Association in Brookfield, Wisconsin.