TY - JOUR T1 - Super Cats as Alternative Investments JF - The Journal of Alternative Investments SP - 42 LP - 49 DO - 10.3905/jai.2005.491500 VL - 7 IS - 4 AU - Joseph. Calandro, Jr Y1 - 2005/03/31 UR - https://pm-research.com/content/7/4/42.abstract N2 - When a catastrophe or Super Cat occurs the costs can be exorbitant as Hurricane Andrew in 1992 dramatically showed. While the probability or odds of a hurricane striking southern Florida are rather high, not all catastrophes or Super Cats occur with such frequency. In fact, the probability of many Super Cats actually occurring is extremely low. Super Cats, which are currently little understood and thus scarcely covered, can present a potentially lucrative alternative investment opportunity for financial institutions with the requisite resources and proper valuation methodology. This article introduces the concept of super catastrophes, or Super Cats, as alternative investment opportunities. Using the recent Pepsi Play For a Billion sweepstakes case, it presents a methodology for valuing Super Cats with a reasonable margin of safety. The methodology combines insurance and value investing theory. In addition to the case discussion, general guidelines are presented that could prove useful in future alternative Super Cat investments. ER -