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Is The For-Profit Prison Industry A Blemish On Your Portfolio?

By  +Follow August 7, 2013 8:24AM
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Incarceration is perhaps not the gentlest topic of conversation, but it has made more than a blip on the radar of the mainstream press recently.

This is especially the case in California, where a prisoner hunger strike against cruel and unusual detention practices is about to turn one month old. Concurrently, the pressure on Jerry Brown has increased after the US Supreme Court upheld a lower-court order mandating that the Governor figure out some way to reduce the state’s prison population by 10,000 inmates before the year is over.

It is commonly known but no less shocking that the United States incarcerates more people per-capita than any other country on the face of the planet, including those frightful totalitarian nations we always hear about such as Russia, China, and Iran.

Some statistics make this contention more palpable (for better or for worse): the United States is the world’s third most populous country, with just north of 300 million citizens, or about 4.5 percent of the world’s total population, a far cry from China’s 19 percent (1.3 billion people) and India’s 17 percent (1.2 billion people). And though crime rates have declined steeply over the last 30 or so years, incarceration rates have gone up, to the extent that the US is responsible for nearly 25 percent of the globe’s entire prison population.

The reasons for this state of affairs are numerous and beyond the scope of the current writing. Suffice it to say that the growth of the prison population over the last three decades has put considerable strain not only on taxpayers, but also on Federal and state detention facilities.

One of the responses to this unfortunate challenge has been to turn to the private sector. Indeed, private prisons have become a multi-billion dollar industry since the Corrections Corporation of America (CXW) was established just over 30 years ago.

The website of the investigative journalism non-profit ProPublica published an article last year with some telling statistics. As of December 2010, 1.6 million people were incarcerated in the US, 128,195 of which were being held in private facilities (a number that increased 37 percent between 2002 and 2009).

With no less than 66 facilities and 91,000 available beds across 20 states, the Corrections Corporation of America commands an enormous share of this market. The $3.27 billion market-cap company netted $156.8 million on revenue of $1.76 billion. The previous year, CEO Damon Hinninger compensation for his work in 2011 totaled $3.7 million. The CCA has spent over $18 million in lobbying US politicians over the last decade.

The other publicly traded incarceration firm is the Geo Group Inc. (GEO) , a $2.46 billion market-cap company. In 2012, the company earned $134.7 million on revenue of $1.5 billion. The Geo Group operates 65 correctional facilities throughout the land, with a total of 65,700 available beds, and has spent almost $3 million on lobbying over the last ten years. CEO George Zoley’s compensation for the year 2011 was $5.7 million.

These two companies are the biggest, best known private prison concerns in the US, but the industry is far more expansive than that, including multitudes of companies small and large, publicly traded and not. In the wake of numerous scandals that have been coming to light on an ever more regular basis, however, there has been an increasing pushback against the for-profit detention system.

Just one small but potent incident paints a vivid portrait of the dangers that can result from the conflict of interest between the bottom line and law & order. In 2011, Pennsylvania judge Mark Ciavarella was sentenced to 30 years in prison for his role in a scheme to mete out the harshest, longest possible sentences to the juveniles who had the misfortune to pass through his courtroom. Ciavarella was found guilty of accepting over $1 million in bribes from local and privately owned juvenile detention facilities in exchange for more inmates.

Not only was this act thoroughly repulsive in itself, but it resulted in the overturning of some 4,000 convictions over a five year period, from 2003 to 2008. Aside from the trauma to which this enormous number of young people was subjected as a result of being institutionalized under such conditions, it also means that taxpayers were billed not once but twice.

But the problems with private prisons are larger, and exist on a structural level. Unlike correctional facilities run directly by federal and state governments, private prisons enjoy immunity from federal disclosure laws, and as such are not subject to Freedom of Information Act requests. This means that abuse, malfeasance, and other sorts of neglect can be swept under the rug.

Aside from the obvious ethical/moral reasons to avoid investing in the incarceration industry, however, there are fundamental reasons as well. The “hacker” group Anonymous just recently released a rather smart and well-researched report that deserves a look from investors who have CXW or GEO in their portfolios, or are considering it.

While the report cites many of the objections mentioned in this article, it also discusses the fact that the states who have made the most use of the CCA’s services are the same states that are now trying their hardest to reduce the prison population rather than imprison more people, as overcrowding has become too expensive from both the budgetary and societal perspectives. Overall, prison populations have declined throughout the country over the last three to five years, and the CCA itself has admitted that less prisoners will hurt their bottom line.

 

[Image Courtesy of Flickr Creative Commons]

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Results for CXW
Mo
28 Mar 15 13:30:54
RT @CNNMoneyInvest: Some of America's most controversial companies -- for profit prisons -- have unlikely shareholders: nuns. http://t.co/S…
CNNMoney Investing
28 Mar 15 12:00:47
Some of America's most controversial companies -- for profit prisons -- have unlikely shareholders: nuns. http://t.co/Ss2Am0IhWK $GEO $CXW
4-traders.com
27 Mar 15 15:00:10
#Corrections Of America : Former Corrections Officer Sentenced to 27 Months in... http://t.co/7ByE109Ljt $CXW
Harry Walkman
27 Mar 15 14:01:06
$CXW Analysts Anticipate Corrections Corp Of America to Announce $0.63 EPS (NYSE ... http://t.co/XuUytHQ36z
Syed Waqas Nabi
27 Mar 15 14:00:49
A bullish Big MAC (Bullish) has occurred at 3:45 PM Mar 27 at $41.05 on Corrections Corporation of America (CXW) $CXW
Irma Doucet
27 Mar 15 11:05:23
$CXW Corrections Corp. of America Reaches Settlement in Idaho Sexual Harassment ... http://t.co/c0OfjnmkYh
Syed Waqas Nabi
27 Mar 15 08:00:23
A bullish Big MAC (Bullish) has occurred at 10:00 AM Mar 27 at $41.00 on Corrections Corporation of America (CXW) $CXW
4-traders.com
26 Mar 15 15:05:20
#Corrections Of America : Former Corrections Officer Sentenced to 27 Months in... http://t.co/bnbOFHyH4h $CXW
InsiderTradingWire
26 Mar 15 14:10:42
Harley Lappin G. EVP, Chief Corrections Officer Sells $545,190 Worth of $CXW Corrections Corporation of Amer - ... - http://t.co/65Mm8vaCOb
ProTradersNews
26 Mar 15 14:09:03
$CXW: New Insider Transaction on CXW by EVP, Chief Corrections Officer: http://t.co/J8J2DtkbUo
Insider Alerts
26 Mar 15 14:08:09
NEW insider transaction on $CXW reported a moment ago: http://t.co/XvnKWF4eFG
Market Int Center
26 Mar 15 12:31:08
Corrections Corporation of America $CXW Showing Resistance Near $41.85 ( http://t.co/ni3RtsuGmI )
Sleek Money
26 Mar 15 06:49:29
Corrections Corp Of America to Issue Quarterly Dividend of $0.54 on April 15th $CXW http://t.co/JPeoHKdjB9
Syed Waqas Nabi
25 Mar 15 12:00:51
A bullish Moving out of Oversold has occurred at 1:45 PM Mar 25 at $40.68 on Corrections Corporation of America (CXW) $CXW
Syed Waqas Nabi
25 Mar 15 12:00:28
A bullish Moving out of Oversold has occurred at 1:45 PM Mar 25 at $40.68 on Corrections Corporation of America (CXW) $CXW
Syed Waqas Nabi
25 Mar 15 10:01:19
A bullish Moving out of Oversold has occurred at 11:45 AM Mar 25 at $40.99 on Corrections Corporation of America (CXW) $CXW
Syed Waqas Nabi
25 Mar 15 10:01:08
A bullish Moving out of Oversold has occurred at 11:45 AM Mar 25 at $40.99 on Corrections Corporation of America (CXW) $CXW
Syed Waqas Nabi
25 Mar 15 10:00:57
A bullish Moving out of Oversold has occurred at 11:45 AM Mar 25 at $40.99 on Corrections Corporation of America (CXW) $CXW
Syed Waqas Nabi
25 Mar 15 10:00:45
A bullish Moving out of Oversold has occurred at 11:45 AM Mar 25 at $40.99 on Corrections Corporation of America (CXW) $CXW
Syed Waqas Nabi
25 Mar 15 10:00:34
A bullish Moving out of Oversold has occurred at 11:45 AM Mar 25 at $40.99 on Corrections Corporation of America (CXW) $CXW
Market Int Center
25 Mar 15 06:03:45
Potential Corrections Corporation of America $CXW Trade Has 3.03% Downside Protection ( http://t.co/Jx7oNnz26y )
Alfred
25 Mar 15 05:03:17
“@SeekingAlpha: The Philosopher Series, Part XIII: What Would Hobbes Invest In Today? http://t.co/X8Wt8PQbDF $CAT $CXW $DVA” @KhalilMHabib
NASDAQ
25 Mar 15 00:16:28
$CXW - The Philosopher Series, Part XIII: What Would Hobbes Invest In Today? http://t.co/bO1JIufBIO
Quick Stock Ideas
25 Mar 15 00:08:29
The Philosopher Series, Part XIII: What Would Hobbes Invest In Today? http://t.co/Sa2HFxeA3J $CAT $CXW $DVA
Seeking Alpha
25 Mar 15 00:08:28
The Philosopher Series, Part XIII: What Would Hobbes Invest In Today? http://t.co/DbiFOJG8oi $CAT $CXW $DVA
NASDAQ
25 Mar 15 00:01:37
$CXW - Stocks Going Ex-Dividend The Fifth Week Of March http://t.co/Kab1Xn0ERC
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24 Mar 15 23:54:37
Stocks Going Ex-Dividend The Fifth Week Of March http://t.co/g6VYYDQ4SP $MHLD $RSG $CXW $DCT $FSFR $SYY $UFS
Income Investing SA
24 Mar 15 23:54:37
Stocks Going Ex-Dividend The Fifth Week Of March http://t.co/SoQCcWXgCq $MHLD $RSG $CXW $DCT $FSFR $SYY $UFS
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24 Mar 15 23:54:36
Stocks Going Ex-Dividend The Fifth Week Of March http://t.co/eYDWQJx30l $MHLD $RSG $CXW $DCT $FSFR $SYY $UFS
James DiPlata
24 Mar 15 21:42:01
RT @stockerblog: Stocks Going Ex Dividend the Fifth Week of March http://t.co/mBh600dDUo #stocks #dividends $CXW $DCT $FSFR $MHLD $RSG $SYY…
Jerry R
24 Mar 15 21:14:09
RT @stockerblog: Stocks Going Ex Dividend the Fifth Week of March http://t.co/mBh600dDUo #stocks #dividends $CXW $DCT $FSFR $MHLD $RSG $SYY…
stockerblog
24 Mar 15 21:10:24
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Syed Waqas Nabi
24 Mar 15 14:00:40
A bullish Moving out of Oversold has occurred at 4:00 PM Mar 24 at $41.21 on Corrections Corporation of America (CXW) $CXW
Syed Waqas Nabi
24 Mar 15 14:00:27
A bullish Moving out of Oversold has occurred at 4:00 PM Mar 24 at $41.21 on Corrections Corporation of America (CXW) $CXW
Media Sentiment
24 Mar 15 08:15:21
$CXW received a new alert. Find out why at http://t.co/nZwqReM0tj #stocks #daytrading #trading #mkt #NYSE #NASDAQ #markets 167
Market Int Center
24 Mar 15 08:14:31
Corrections Corporation of America $CXW Showing Bullish Technicals With Support At $40.97 ( http://t.co/R6nIX6G8H3 )
Capital Market Labs
23 Mar 15 17:29:02
$IRM, $EXR, $PCL, $LAMR, $CXW Revenue Trend Comparison http://t.co/WqUnkifk4R https://t.co/O7J0gCDLXd
Samuel Brown
23 Mar 15 12:02:26
$CXW Analysts Anticipate Corrections Corp Of America to Announce $0.63 EPS (NYSE ... http://t.co/w42aHqyxzY
Media Sentiment
23 Mar 15 07:15:07
$CXW received a new alert. Find out why at http://t.co/nZwqReM0tj #stocks #daytrading #trading #mkt #NYSE #NASDAQ #markets 167
Market Int Center
23 Mar 15 07:13:39
Corrections Corporation of America $CXW Showing Bullish Technicals With Resistance At $42.83 ( http://t.co/XmklQdnWLZ )
Large Void Bot
23 Mar 15 06:42:13
New 52wk Highs: $CXW
The Legacy News
23 Mar 15 06:42:12
Analysts Anticipate Corrections Corp Of America to Announce $0.63 EPS $CXW http://t.co/JxRZcWJqGO
US Banking News
23 Mar 15 06:41:30
Analysts Anticipate Corrections Corp Of America to Announce $0.63 EPS $CXW http://t.co/vCIkqoHmXB
Market Trader Daily
23 Mar 15 06:33:46
$LLY 76.40 $CXW 42.16 $ROIC 18.60 $LFC 64.93 $TM 145.50 $HIG 43.20 $CENTA 10.99 $BURL 61.38 $SBH 34.59 $PGR 27.72 $EVHC 38.87 open new highs
US Banking News
23 Mar 15 06:26:05
Corrections Corp Of America Gets Average Rating of Hold from Analysts $CXW http://t.co/l70qpO6UOt
Penny Stock Secret
23 Mar 15 05:31:31
Yesterday We Made $94,000 In Just One Trade More Info Here http://t.co/NovWYe2RAx .. $CXO $CXP $CXW
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23 Mar 15 05:24:21
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ProVesting
23 Mar 15 04:30:03
$CXW: Stocks Ended in Green - Corrections (CXW), American (ACC ...: http://t.co/SH58Qtv4L8
Breaking News Now
23 Mar 15 04:04:04
$CXW $LBIO $NVO: Stocks clocking 52-week highs: Corrections Corp Of America ...: http://t.co/zWp8ag51Ad
Capital Market Labs
23 Mar 15 01:24:10
$IRM, $EXR, $PCL, $LAMR, $CXW Revenue Trend Comparison http://t.co/WqUnkifk4R https://t.co/O7J0gCDLXd
				
				
By  +Follow August 7, 2013 8:24AM
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