logo  
Sign in or Register

Already a member?

Sign in

Or sign in with your account on:

Not a member yet?

Register
    

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

By  +Follow August 7, 2013 8:24AM
Share:
Tickers Mentioned:

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]

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


Liked What You Read? Join Equities.com as a contributor and get eyeballs on your content FOR FREE!

Results for CXW
Market Int Center
30 Oct 14 07:22:34
Corrections Corporation of America $CXW Trading Near $35.68 Support Level ( http://t.co/kdvZiVJOaw )
Cristobal Barberis
30 Oct 14 06:25:57
Top 5 stocks with Up days in a row. #bearish $CXW {10}, $MAR {10}, $MCRS {10}, $PAYX {10}, $AJG {9} #brberisReport
Peter Bardens
30 Oct 14 05:30:44
$CXW Corrections Corporation of America Larger Than S&P 500 Component Avery ... http://t.co/FI0GCot3rZ
Jeffrey Blake
30 Oct 14 05:30:43
$CXW Diamond Hill Capital Comments on Corrections Corp of America http://t.co/0Ark4ZkXeH
Steve
30 Oct 14 02:48:16
RT @_JohnWalsh_: 30/10/14 Long Watch List Part 1 $ADP $AEE $ALSN $BR $CAH $CHD $CHKP $CHRW $CNC $CTAS $CTB $CUBE $CVS $CXW $DFT $DUK $EA $E…
BlackCabbieTrader
29 Oct 14 19:26:52
30/10/14 Long Watch List Part 1 $ADP $AEE $ALSN $BR $CAH $CHD $CHKP $CHRW $CNC $CTAS $CTB $CUBE $CVS $CXW $DFT $DUK $EA $EIX $EQR $ETR $EXR
Kevin
29 Oct 14 16:56:02
RT @_JohnWalsh_: 29/10/14 Long Watch List Part 2 $CVS $CXW $DFT $EIX $EXR $FAF $FB $FISV $GEO $GPN $HCN $HD $HR $IBN $IRM $ITC $ITW $JAH $K…
LVK
29 Oct 14 12:54:10
RT @_JohnWalsh_: 29/10/14 Long Watch List Part 2 $CVS $CXW $DFT $EIX $EXR $FAF $FB $FISV $GEO $GPN $HCN $HD $HR $IBN $IRM $ITC $ITW $JAH $K…
John Turner
29 Oct 14 12:01:09
$CXW Corrections Corporation of America (CXW) Ex-Dividend Date Scheduled for ... http://t.co/ygelLG0bHt
David Tuchman
29 Oct 14 08:53:14
@karenfinerman Still like being short $CXW? Would you add to position today?
Estimize
29 Oct 14 08:23:52
@chrishar00 $CXW is reporting earnings for Q3 2014 on 11/03/14 – http://t.co/cYeLj4jyew
John Ablemann
29 Oct 14 08:02:28
$CXW Corrections Corporation of America Larger Than S&P 500 Component Avery ... http://t.co/rSL8y4TCsg
David
29 Oct 14 06:49:25
@Stephanie_Link would you say that $GEO and $CXW are somewhat recession proof high yielding REITS that benefit as the U.S. cuts expenses
Vizimi Stocks
28 Oct 14 20:59:24
Tuesday 10/28 #NYSE News: $CXW closed up for the 9th day in a row for the first time since April 2010 #stocks
Afflicted
28 Oct 14 14:19:24
RT @_JohnWalsh_: 29/10/14 Long Watch List Part 2 $CVS $CXW $DFT $EIX $EXR $FAF $FB $FISV $GEO $GPN $HCN $HD $HR $IBN $IRM $ITC $ITW $JAH $K…
BlackCabbieTrader
28 Oct 14 13:29:03
29/10/14 Long Watch List Part 2 $CVS $CXW $DFT $EIX $EXR $FAF $FB $FISV $GEO $GPN $HCN $HD $HR $IBN $IRM $ITC $ITW $JAH $KMX $LCI $LHO $LOW
Large Void Bot
28 Oct 14 07:59:13
New 52wk Highs: $CXW
David
28 Oct 14 01:08:39
RT @_JohnWalsh_: 28/10/14 Long Watch List Part 1 $ABBV $ADP $AEP $AFSI $AGIO $ALL $BRX $CAH $CHD $CHKP $CHRW $CMS $CSX $CVS $CXW $DUK $ED $…
Vizimi Stocks
27 Oct 14 19:33:02
Monday 10/27 #NYSE News: $CXW closed up for the 8th straight day for the first time since July 2012 #stocks
TickerChirp
27 Oct 14 18:05:20
Leading Tweets Regarding $CXW (Corrections Corp Of Ame symbol CXW) on 10/28/2014 http://t.co/IJlQMK8h3i
Hugh
27 Oct 14 15:53:00
RT @_JohnWalsh_: 28/10/14 Long Watch List Part 1 $ABBV $ADP $AEP $AFSI $AGIO $ALL $BRX $CAH $CHD $CHKP $CHRW $CMS $CSX $CVS $CXW $DUK $ED $…
Anton
27 Oct 14 13:41:31
RT @_JohnWalsh_: 28/10/14 Long Watch List Part 1 $ABBV $ADP $AEP $AFSI $AGIO $ALL $BRX $CAH $CHD $CHKP $CHRW $CMS $CSX $CVS $CXW $DUK $ED $…
BlackCabbieTrader
27 Oct 14 13:41:21
28/10/14 Long Watch List Part 1 $ABBV $ADP $AEP $AFSI $AGIO $ALL $BRX $CAH $CHD $CHKP $CHRW $CMS $CSX $CVS $CXW $DUK $ED $EIX $ETR
John Turner
27 Oct 14 12:32:17
$CXW Corrections Corporation of America Larger Than S&P 500 Component Avery ... http://t.co/OvvyzuQXRU
Penny Stock Secret
27 Oct 14 03:59:30
The Hottest Way to Make Millions From Stock Market.Click HERE http://t.co/SVqoMkrw2z .. $CXO $CXP $CXW
James P Worthy
24 Oct 14 14:30:37
$CXW Diamond Hill Capital Comments on Corrections Corp of America http://t.co/gQayFdDmY3
Thomas Collins
24 Oct 14 14:30:35
$CXW Ex-Dividend Reminder: Corrections Corporation of America, Erie Indemnity and ... http://t.co/O6C02VSVvr
Irma Doucet
24 Oct 14 12:01:45
$CXW Ex-Dividend Reminder: Corrections Corporation of America, Erie Indemnity and ... http://t.co/FRtyR3tv35
wininstocks2014
23 Oct 14 23:51:09
CXW 35.54 Stock Charts $CXW Corrections Corp. of America (NYSE) Last Updated: 10/24/2014 01:51:09 CXW Stock Ch http://t.co/AwxKyulb5O
wininstocks2014
23 Oct 14 23:49:56
CXW 35.54 Stock Charts $CXW Corrections Corp. of America (NYSE) Last Updated: 10/24/2014 01:49:57 CXW Stock Ch http://t.co/JchLif2d0f
David
23 Oct 14 16:03:35
@jimcramer hey Jim would you say that $GEO and $CXW are somewhat recession proof high yielding REITS that benefit as the U.S. cuts expenses
Stock Relay
23 Oct 14 15:01:12
wininstocks2014: Stock Charts: CXW 35.54 Stock Charts $CXW Corrections Corp. of http://t.co/TvLtMXvdZY
Samuel Brown
23 Oct 14 10:01:46
$CXW Diamond Hill Capital Comments on Corrections Corp of America http://t.co/9MItbzTzz9
Peter Bardens
23 Oct 14 10:01:45
$CXW Ex-Dividend Reminder: Corrections Corporation of America, Erie Indemnity and ... http://t.co/UFNPjiDEvM
Media Sentiment
23 Oct 14 07:46:43
$CXW received a new alert. Find out why at http://t.co/5udYd0Ofs6 #stocks #daytrading #trading #mkt #NYSE #NASDAQ #markets 422
Market Int Center
23 Oct 14 07:44:53
Corrections Corporation of America $CXW Showing Bullish Technicals With Support At $34.80 ( http://t.co/ZEojtFvvVC )
Stock Relay
22 Oct 14 21:31:08
wininstocks2014: Stock Charts: CXW 35.15 Stock Charts $CXW Corrections Corp. of http://t.co/iuqgpUHxZ2
wininstocks2014
22 Oct 14 21:28:57
CXW 35.15 Stock Charts $CXW Corrections Corp. of America (NYSE) Last Updated: 10/22/2014 23:28:56 CXW Stock Ch http://t.co/31tHs3BDGH
Peter Bardens
22 Oct 14 09:00:46
$CXW Diamond Hill Capital Comments on Corrections Corp of America http://t.co/oij26v6I7x
Jack Trader
22 Oct 14 09:00:44
$CXW Ex-Dividend Reminder: Corrections Corporation of America, Erie Indemnity and ... http://t.co/ykY5m78cUL
Market Int Center
22 Oct 14 07:21:50
Potential Corrections Corporation of America $CXW Trade Targets 2.82% Return ( http://t.co/40QfG3Jtqy )
Mike Parker
22 Oct 14 03:42:42
RT @QUlXOTE: #GOP Investments $CXW $GEO Mississippi locks up more per capita than China & Russia! #Racist http://t.co/TLmqTjGPyo @Sysparate…
				
				
By  +Follow August 7, 2013 8:24AM
Share:

Comments

 

blog comments powered by Disqus

About us

Equities.com is the most advanced interactive online social ecosystem for the financial industry, serving as a resource center and next-generation communication platform that connects self-directed investors with public issuers, market experts, and professional service providers and vendors. Registered members can leverage our exclusive proprietary research tools such as the Small-Cap Stars, which outperformed 90% of all small-cap mutual funds, and robust do-it-yourself E.V.A. research reports. The Equities.com Issuer Dashboard is the ideal tool to communicate and manage investor awareness campaigns to the investment community, as well as to access valuable resources to help your company grow.

Market Data powered by QuoteMedia.
Copyright © QuoteMedia. Data delayed 15 minutes unless otherwise indicated. Terms of Use.