If you have followed my writings for any length of time you will know that I try to reward myself for a weeks’ worth of workouts by going to a coffee shop on Saturday for what I term my “Starbucks Saturday”.  And, I use that time to also buy a Wall Street Journal (WSJ) weekend edition and catch up with the “news of the day”.

 

That was my modus operandi just a couple of days ago and in the WSJ I came across an article titled, “Why investors aren’t fleeing to haven stocks”.   A sub-title to that headline was “Healthcare and consumer staples are supposed to be defensive, but this time it hasn’t worked out that way”.

 

The article alluded to the fact that since the United States has has began its mission against Iran (as of March 13)  the S&P 500 is down 3%, but the Health Care sector is down roughly 5% and the Consumer Staples sector is down about 6%.  The WSJ article mentions that is different from most market declines because healthcare and food companies are usually a “port in the storm” for weathering “choppy” market conditions.

 

The WSJ states, however, that those sectors have their own “other” issues at this time as well  —  for Consumer Staples it has been the inflationary environment which has shoppers “buying down” into store brands instead of national well-known brands and for Healthcare the issue is the strong pressure to curb expenses which has those stocks moving downward.

 

What is holding up well, price-wise, in this environment where oil is somewhat embargoed by shipping issues and other supply-chain issues have popped up?  Again, according to the weekend WSJ article it is the companies that receive a high percentage of their revenues in North America. . . .i.e “local companies”.

 

That got me to thinking. . . . .Death Care companies are, in a North American fashion, all local.  What companies are more local than Death Care?  First of all, funeral home and cemetery companies like Service Corporation International (SCI) and Carriage Services come to mind.  Then I was also reminded that Security National Financial Corporation (SNFC), to my knowledge, operates only in the United States with their funeral homes, cemeteries,  preneed insurance, insurance assignment, and mortgage businesses.  Finally, although they have some exposure internationally, Matthews International has a large presence of Death Care products produced and sold in North America.

 

Matthews International, being in the manufacturing business to some extent, probably has more exposure to “supply chain” than the others also.

 

So, the question here, at least to my point of view is does SCI, Carriage Services, and SNFC have less exposure to disruption in supply chain than other potential investable companies which give them one less plank of possible disruption than others?  Offering funerals, cemetery services, and financial instruments on a local level would seem to bring the risk of at least one denominator — that of supply chain — to a minimum.  And, if that is true, are those companies possibly a “port in the storm” to park investment capital while you wait out the issues affecting “supply chain” during this period?

 

I don’t think that “Death Care” has ever been a large enough public ownership industry to ever have the major brokerages look at it as a “port in the storm”, but it seems to me that it is “defensive” by its very nature and while not a rapid growth engine, it could certainly be a “port in the storm”.

 

Answering my own Question —  I wanted to go back and look at results to test out my hypothesis.  In doing so, I found out that at least for the last ten-day period since the hostilities in Iran began, Death Care stocks are not being bought as a “port in the storm”.  Even though I think that they would be “defensive in nature” and “local” in de-risking the supply chain issues, I’m guessing that there simply is not a large enough grouping of Death Care stocks for the vast majority of brokers to even think of them as a defensive possibility.

 

Here’s my findings for the period of March 2 through March 12, the 10-day period which includes the beginning of the Iran situation.  I found the composite Death Care Index (owning one share of each of the four Death Care companies — SCI, Carriage Services, SNFC, and Matthews International – The DCI) to have dropped from a total value of $166.04 on March 2 to a value of only $154.96 on March 12.  That’s a decrease in value of about 6.7%.

 

That’s almost twice the drop in value of the S&P 500 for the same period. . .which was a loss of 3.3%.

 

By the way, every one of the four DCI stocks had a drop in value for that March 2-12 time period.

• Carriage Services:  -7.3%
• SCI:  -7.2%
• SNFC:  -2.0%
• Matthews International:  -5.6%

Disclaimer —  The author of this article for Funeral Director Daily owns shares of Service Corporation International, Carriage Services, and Security National Financial Corporation.

 

More news from the world of Death Care:

• Spotify’s new $495 burial urn let’s you play your personal playlist from the grave.  Interesting Engineering
• Leak and Son prepares for Jesse Jackson’s funeral, playing a “small part” in the history of an iconic leader.  Chicago Sun Times (IL)
• A Connecticut man has had a quest for years.  Why a lawmaker says a “solution-oriented approach” is in sight.  Hartford Courant (CT)
• From coffins to crematoriums:  Russia’s funeral industry booms as mortality rises.  Kiev Post (Ukraine)
• Robertson-Drago Funeral Home sold to new owners.  Mountain Home Today (AR)

 

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