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Service Corporation International
NYSE:SCI
1969-1987
Industry: Funeral
Category: Roll-Up
Context
IPOed in 1969
Why the Company is Mispriced
No analyst for 13 years, funeral services doesn't fall into standard industry classifications
An industry that people apparently didn't want to think about or found boring
Alternative View
A roll-up play, buying up mom-and-pop funeral homes
461 funeral parlors, 121 cementeries, 76 flower shops, 21 funeral product manufacturing centers, 3 casket distributors (vertically integrated)
SCI gets pre-need sales. By the time they have the actual funeral, they would've compounded that payment >20x (apparently)
Rapid growth, near no debt
Result
144x in 19 years, a 30% CAGR
SCI grew 20x before it got Wall Street's attention in 1986, now >50% institutional ownership
Notably
Lynch mentioned that SCI was similar to Waste Management (WM), which was ignored because of toxic waste and fabled mafia ownership