Purchased Life Partners Holdings, Inc. (LPHI) today.  LPHI is has had fantastic growth in free cash flow over the last 10 years.  They do an odd thing.  They help people cash out of their life insurance policy.   By selling a life insurance policy, the policyholder receives an immediate cash payment to use as he or she wishes while the purchaser (investor) takes an ownership interest in the policy at a discount to its face value and receives the death benefit under the policy when the insured dies.  LPHI arranges the transaction.

So the investor profits when you die.  I’m sure this is a good business right now due to these economic times, and I’m betting that it will continue to be (and so are a bunch of Insiders).

LPHI generates 40% cash ROIC (10 yr median),  is selling at less than 10 times peak earnings, has no debt, is 14% cash, and has a 6% Dividend Yield.  They are shareholder friendly – recently announcing a special cash dividend.

Given it’s business model, LPHI does not always trade in line with the overall market.  It should double from here, timing uncertain of course but I can wait.