NEW: GEO Group shares can thank Trump effect on stock market

Reviews of President Donald Trump’s first 100 days in office are mixed, but there’s no debating this fact: Shares of GEO Group have been on a tear since Trump was inaugurated Jan. 20.

Investors are betting on Trump to make good on his promise of an immigration crackdown. Boca Raton-based GEO Group, a private prison operator that runs detention centers for U.S. Immigration and Customs Enforcement, is poised to house more inmates in a Trump administration.


GEO Group continues to grow, despite criticism

FAU flap “a little surprising” to GEO chair

Palm Beach Post investigation: Private Prisons: Profit, Politics, Pain

Shares of GEO Group closed Jan. 19 at $26.03 (adjusted for a recent three-for-two split). On Friday afternoon, GEO Group traded at $33.31, a 28 percent gain that makes the company a stellar performer during Trump’s first 100 days. Atop that impressive return, GEO Group pays a hefty dividend of more than 5 percent a year.

GEO Group isn’t the market’s hottest stock since Jan. 20. Panera Bread Co., to name one rocketing issue, is up 46 percent in that time. But GEO Group has easily outpaced the Standard & Poor’s 500 index, up 5 percent in Trump’s first 100 days.

GEO Group isn’t the only beneficiary of the “Trump trade.” Shares in GEO Group’s main rival, CoreCivic, are up 26 percent since the inauguration.

“The president has come to office promising to deport a lot of people and lock a lot of people up, so of course their stocks are up,” said Paul Wright, director of the Human Rights Defense Center in Lake Worth.

Geo Group executives declined to discuss the stock’s run-up. In a February conference call with Wall Street analysts, GEO Group Chairman and Chief Executive George Zoley said he expects Trump to usher in an “expanded and more aggressive border security program.”

“I believe ICE has been visiting various facilities around the country to expand its capacity because of, among other things, the discontinuation of the catch-and-release program, which meant essentially, as people were caught illegally crossing the border, they were held very temporarily and just let go instead of being detained,” Zoley said. “I think the new policy requires, in most cases, detention and informal processing of the individuals, and that will take several thousands of beds.”

Shareholders of GEO Group have ridden a roller coaster in recent months. On Aug. 18, former President Barack Obama’s Justice Department said it would stop renewing contracts with private prisons, and GEO Group shares shed half their value in just a few hours.

“Private prisons served an important role during a difficult period, but time has shown that they compare poorly to our own [federal] facilities,” a deputy attorney general wrote at the time. “They simply do not provide the same level of correctional services, programs, and resources; they do not save substantially on costs; and as noted in a recent report by the Department’ s Office of lnspector General, they do not maintain the same level of safety and security.”

GEO Group stock recovered some of those losses during the summer, but with most investors expecting Hilary Clinton to beat Trump, the company’s shares languished. Then, on Nov. 9, the day after Trump’s surprise victory, GEO shares soared more than 20 percent.

“We won’t speculate about future policy initiatives,” GEO Group said in a statement, “but we look forward to working with both the new administration and the new Congress in continuing our longstanding partnership with the federal government providing high-quality and cost-effective services, while treating those entrusted to our care with the respect and dignity they deserve.”

GEO Group’s share price has proven far more volatile than the company’s underlying business of hiring guards and holding inmates under contracts with federal and state agencies.

Revenues have grown steadily, climbing gradually from $1.48 billion in 2012 to $2.18 billion in 2016. GEO Group is solidly profitable, although profit margins have been smaller in recent years.

Socially responsible investors recoil at such a play: GEO Group has been cited time and again by federal and state regulators for horrid conditions at its facilities, concerns that led Obama’s Justice Department to announce fewer deals with GEO Group and other private operators.

In one example, Texas in 2007 canceled an $8 million contract with GEO Group and closed the Coke County Juvenile Justice Center. Inspectors found feces on floors, padlocked emergency exits and overuse of pepper spray on young inmates.

However, Trump has said he believes private prisons can operate more efficiently than government-run prisons.

“That’s the lie they’ve perpetuated,” Wright said. “Can they run a prison cheaper? Sure they can. But all their savings come from cutting staffing.”

In fact, wages are just one place where GEO Group can skimp. In a 2008 report, the Florida Office of Program Policy Analysis & Government Accountability looked at the state’s private prisons and concluded that operators save money by taking on fewer “special needs” prisoners with medical problems and mental health issues that make them expensive to house.

Such findings have led critics to question the wisdom of outsourcing prisons to for-profit companies.

“It’s literally all a political decision,” Wright said. “It has nothing to do with how good or bad their services are or the value they provide.”

Reader Comments ...

Next Up in

HOA may be able to charge owners for each vehicle parked in community

First this week, an update on condominium term limits. You may recall that, in 2017, the Legislature amended the Condominium Act to provide that directors serving two-year terms could not serve more than four consecutive two-year terms unless elected by a supermajority of the membership. The big question at the time was whether prior board service...
Florida Crystals unit buys 30 acres for housing west of Lake Worth
Florida Crystals unit buys 30 acres for housing west of Lake Worth

The housing arm of sugar stalwart Florida Crystals has purchased 30 acres of land near Lake Worth Road and Florida’s Turnpike for its latest project, company officials said. The plan: To build 370 proposed “high-end” apartments, including 70 “workforce housing” units and a pre-school, officials said. “We plan to...
Hello epidemic: Robocalls in 561 area code blast to record levels
Hello epidemic: Robocalls in 561 area code blast to record levels

No, it’s not your imagination. An epidemic of robocalls — automated calls dominated by scams and spam — is blazing into record territory in the 561 area code. With more than a quarter of the year left, robocalls in Palm Beach County’s area code this year have already blown past totals for all of 2017, an analysis shows. That&rsquo...
Palm Beach County jobless rate dips, job growth remains tepid
Palm Beach County jobless rate dips, job growth remains tepid

Palm Beach County’s jobless rate fell to 3.9 percent in August, but job growth continued to lag the rest of the state. Palm Beach County unemployment fell from 4 percent in July and 4.4 percent in August 2017, Florida’s labor department said Friday.  However, the falling unemployment rate was accompanied by a shrinking number of workers...
New arts center for Boca Raton? Here is the plan
New arts center for Boca Raton? Here is the plan

Art is a draw. Residents and businesses in West Palm Beach know this from the success of the Kravis Center and the $100 million expansion of the Norton Museum of Art. Both cultural venues are cited as factors for the city’s population growth and corporate expansion. RELATED: $200M Uptown Boca Raton to feature shopping, movie theater, apartments...
More Stories