The Bedside Vigil…

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Alternative Asset Opportunities, CDC, Imperial Holdings, life expectancy, life settlements, mortality tables, TLI, Traded Life Interests, ZIRP

Alternative Asset Opportunities (TLI:LN) recently released their Final Results – I thought readers might appreciate a new post. To some extent, I’m reminded of my original TLI post (wow, almost a full year ago now!) – the insured, those merry little blighters, are still trying their bloody living best to live forever! But Chronos waits for no man, or woman… Here are the policy maturities TLI has enjoyed to date:

7 maturities last year was in line with TLI’s 3 year average, and represents an accelerating mortality rate (as the total number of policies held has been steadily declining). However, proceeds of $5.7 million (mio/m) – just $0.8 mio per policy maturity – was an unexpected disappointment. But we have to chalk it up to bad luck (for us, and for them – the insured!):

Because (as of year-end) the $1.6 mio average face value (FV) of outstanding policies ($159.9 mio FV, 102 policies, 90 individual lives insured) was actually double the average policy maturity last year. And, as you can see above, at least 66% of the insured have policies which exceed $0.8 m. In fact, over 90% of the total portfolio is invested in $1.0 m+ policies. And the company has experienced a very welcome step-up in maturities since – in the first 3 months (of the new fiscal year), there’s already been 4 maturities, for a greater than expected $6.8 m (albeit with assistance from a single $5 m maturity). A pretty good harvest, and now winter’s just around the corner…

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Hitting The Century (XII – The Distressed Consumer)

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ATMs, consumer receivables, correlation, credit checks, debt agreements, discount stores, distressed assets, distressed consumers, distressed investing, European sovereign debt crisis, gold, healthcare, home shopping, life settlements, litigation, marijuana, Mosney, pawn shops, payday loans, pre-paid cards, scratch cards, student loans, sub-prime, trailers, unsecured loans, vice stocks

Continued from here (& here). In this post, we’ll turn our attention to the distressed consumer.

You may just consider this exploitation of the great unwashed – but in reality, they’re often the most expensive customers (pro rata) to acquire & service. (Illegal) immigrants also fall into this category – a fairly unavoidable cost of freight they pay in light of their status. [As US-listed Hispanic plays become increasingly touted & expensive, distressed consumer businesses are a cheap back door play on a sub-set of that population]. Also, the amounts involved with these customers is (inevitably) small. Actually, businesses are really targeting a much bigger & more lucrative opportunity – the democratic exploitation of an enduring human frailty:

Financial stupidity…

The obvious place to start here is with the usual vices – drinking, smoking, gambling, luxury goods… 😉 But these sectors are huge & everybody’s doing ’em – I’m going to skip anything so mainstream (but I’m fascinated how highly rated they are!). I probably should consider drugs too, with marijuana access now increasingly legal & convenient across the US – but the real stupidity here might actually be investing in marijuana stocks!?

While I’m at it, we could make a case for including healthcare – people who make poor financial decisions surely make even worse decisions about their long-term health? [Especially with the communist approach to healthcare in the US & most other developed nations: All good deeds go unrewarded, and the worst 20% consume 80% of the resources… Which simply encourages everybody to race to the bottom (of the ice-cream tub). Look, I’m all for providing a safety net, but not when it’s stuffed with cheese burgers!] Let’s skip healthcare as a whole other mess… In similar vein, a trillion dollars of US student debt could have mutated into the biggest distressed consumer play around – since everybody seems to have now decided they can’t/won’t pay any longer – but that’s underwritten by a suckered population also.

Right, let’s move on – picture you’re an average distressed consumer:

An Investment To Die For..!

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Alternative Asset Opportunities, catalyst, CDC, correlation, credit risk, Event Driven, Grim Reaper, intrinsic value, IRR, Leverage, life expectancy, life settlements, mortality tables, NAV discount, policy premiums, SL Investment Management, TLI, Traded Endowment Policies, Traded Life Interests, viatical settlements

Cash/bonds just bore me… Event-driven investing is a far better alternative. It’s low risk, low correlation, and it offers attractive annualized returns. But the safest short term event-driven investing is time & research intensive, and low absolute returns present a risk (‘picking up pennies…‘). Longer term event-driven/catalyst investing usually offers far better absolute returns, but at a price: i) increased market/economic correlation, and ii) no assurance your returns will be positive. I’ve written about this here. My solution: All I want is a low risk & uncorrelated investment which guarantees significant increases in intrinsic value over time. That’s like asking for the sun, moon & stars…but here’s a snap-shot of the ultimate in event-driven investments: