Sign in or Register

Already a member?

Sign in

Or sign in with your account on:

Not a member yet?


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

By  +Follow August 7, 2013 8:24AM
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]

Results for CXW
Diana Scholl
16 Apr 14 05:09:41
RT @carltakei: Congrats! The Taxes You Just Paid Might Be On Their Way to a #PrivatePrison https://t.co/AJhkxTcMFf @aclu @aclutn #privatepr…
Cal Gunner
16 Apr 14 04:41:41
Wow. Great #Stock #Research on $CXW $P $VRTX $ABX Give it a try http://t.co/CN2aCTp6zn
Lilly Bynum
16 Apr 14 04:10:19
Find the next hot #pennystock $CXW $BBBY $AON $DF #overvalued http://t.co/b7NIzIamSg
16 Apr 14 04:00:03
Corrections Of America : ACLU-TN Launches 'Who is CCA?' Campaign http://t.co/Sk9NuHifZS $CXW
Samuel Farrow
16 Apr 14 03:29:20
$OFC Do you think you should hold $CXW $RLGY $EPZM View now http://t.co/PGHrvckRrn
Brecken Kingston
16 Apr 14 02:52:34
Top Performing #Stocks today $LPI $BIIB $CXW $FB #equity http://t.co/kzKPILI5ul
Brick Brocker
16 Apr 14 02:36:00
Insider Trading updates on $CXW $NNN $CIE $BWP #wealthmanagement http://t.co/Z4aFKLp0N2
Daily Contracts
16 Apr 14 02:32:46
$CXW News: Transition Agreement http://t.co/KBsTgbVh9X
Daily Contracts
16 Apr 14 02:27:03
$CXW News: Employment Agreement http://t.co/lxdqGTCOWp
Maxton Gelson
15 Apr 14 22:12:31
Are you Bearish on these #stocks $LPI $CR $CXW $IR #economy http://t.co/7jpR2EmDvK
Maxton Gelson
15 Apr 14 21:33:46
Shoud you sell or hold stocks like $CB $CXW $AXS $LGND #liquidity http://t.co/xup6gICdoB
Cal Gunner
15 Apr 14 18:30:29
$CXW CORRECTIONS CORP OF AMERICA Files SEC form 8-K, Change in Directors http://t.co/tneZrFRDND
Maxton Gelson
15 Apr 14 18:02:21
Great #Stock Newsletter you must have $CXW $HSH $NI $BLOX View now http://t.co/jsXbbJfJES
Legend Boulstridge
15 Apr 14 17:30:36
Bearish or Bullish on these #stocks $CXW $COST $OGE $SSO View now http://t.co/okcGswzeKX
Pearline Smiley
15 Apr 14 16:47:10
Did you lose money on $CXW $GGP $DLPH $FB #liquidity http://t.co/N19ybFlq2j
Maksim Latimer
15 Apr 14 16:27:12
Bearish or Bullish on these #stocks $CXW $CLH $GME $SSO #financial http://t.co/OJfh8TcsMM
Wanetta Zhang
15 Apr 14 16:07:26
Insider Trading updates on $AFG $APAM $CXW $CBM #financial http://t.co/i4hQ3DvREY
Fergus Hillo
15 Apr 14 15:14:32
Is it breakout time on $LXK $IDXX $CXW $CSIQ #financialnews http://t.co/uu9bgBfufy
Brice Latimer
15 Apr 14 14:07:28
Do you think you should hold $CXW $EQR $ODFL $CBM View now http://t.co/zJrjQeJvmx
Boaz Boulstridge
15 Apr 14 14:00:33
$CXW CORRECTIONS CORP OF AMERICA Files SEC form 8-K, Change in Direct http://t.co/mWPylDyi7m
Amy Fettig
15 Apr 14 13:37:28
RT @carltakei: Congrats! The Taxes You Just Paid Might Be On Their Way to a #PrivatePrison https://t.co/AJhkxTcMFf @aclu @aclutn #privatepr…
Cal Gunner
15 Apr 14 13:02:12
$CHS #Stock Market Reports on stocks like $CXW $MHK $GRPN #money http://t.co/PB7JKxRJs3
Sarah Solon
15 Apr 14 12:05:50
RT @carltakei: Congrats! The Taxes You Just Paid Might Be On Their Way to a #PrivatePrison https://t.co/AJhkxTcMFf @aclu @aclutn #privatepr…
Gala Arredon
15 Apr 14 11:55:00
Get the latest on $MRVL $SATS $CXW $TUR View now http://t.co/IXQ2wxPqka
Research Maven
15 Apr 14 11:45:38
$VVC Are you looking to buy $CXW $STT $DF #liquidity http://t.co/Z9EEMT8KwR
Media Sentiment
15 Apr 14 11:28:52
$CXW received a new alert. Find out why at http://t.co/WHJp8eTsSr #stocks #daytrading #trading #mkt #NYSE #NASDAQ #markets 341
Market Int Center
15 Apr 14 11:21:34
Corrections Corporation of America $CXW Showing Bearish Technicals With Resistance At $32.06 ( http://t.co/aV1OViOHjN )
15 Apr 14 11:19:46
RT @carltakei: Congrats! The Taxes You Just Paid Might Be On Their Way to a #PrivatePrison https://t.co/AJhkxTcMFf @aclu @aclutn #privatepr…
Insider Trade Alerts
15 Apr 14 11:06:25
Do you think you should hold $CXW $CSX $WYN $IGN Visit http://t.co/ApAKdxYPmH
Carl Takei
15 Apr 14 11:02:34
Congrats! The Taxes You Just Paid Might Be On Their Way to a #PrivatePrison https://t.co/AJhkxTcMFf @aclu @aclutn #privateprisons #cca $cxw
Cash Davis
15 Apr 14 09:15:01
Seeking the next hot #pennystock $CXW $OHI $AJG $EPZM Check out http://t.co/PWmTf501hO
Lilly Bynum
15 Apr 14 08:58:45
Small-cap stocks breaking 52-wk high prices $PSA $CXW $VZ $CADX Worth a look http://t.co/HqWdGV4QFI
Hermina Ochoark
15 Apr 14 07:31:11
Latest Earnings info on $SFD $BIIB $CXW $FEYE #financial http://t.co/FDSZoSw3XO
Enoch Cohen
15 Apr 14 06:40:26
Buy or sell? $MTB $SATS $CXW $IBM #StockMarket http://t.co/i9Gp3xWtYY
Day Brooks
15 Apr 14 06:27:38
#Stocks you might want to buy $JWN $CNK $CXW $ABX Must see http://t.co/gu0yzJA6XF
King of All Stocks
15 Apr 14 06:17:34
$CXW CORRECTIONS CORP OF AMERICA Files SEC form 8-K, Change in Direct http://t.co/LC67TPS55Z
Darryl Kendal
15 Apr 14 05:43:11
Are you thinking of selling $CF $PII $CXW $CAG #economy http://t.co/j3mIMScMo4
Thor Edeson
15 Apr 14 05:30:19
$NLSN It could be breaktout time on $CXW $FLO $TSLA #NSE http://t.co/7dfJNtq7lJ
Ansel Galvan
15 Apr 14 05:25:39
Wow. Great #Stock #Research on $CXW $KIM $VAL $LIVE #liquidity http://t.co/d9I6LLDEUz
Small Cap Updates
15 Apr 14 05:20:25
$CXW CORRECTIONS CORP OF AMERICA Files SEC form 8-K, Change in Directors http://t.co/1Tz8vK1g9a
Teo Black
15 Apr 14 05:08:08
$FNF Bearish or Bullish on these #stocks $CXW $IT $CI #wallstreet http://t.co/rhRyoUUAxq
Jaycob Keating
15 Apr 14 04:53:30
$CXW CORRECTIONS CORP OF AMERICA Files SEC form 8-K, Change in Directors http://t.co/P6asVc8d0c
Ignacio Johnson
15 Apr 14 04:36:35
$NFX #Pennystock Research on $CXW $AET $PCLN #NSE http://t.co/TEcCf9gkZI
Trader Luciano
15 Apr 14 04:04:04
$CXW CORRECTIONS CORP OF AMERICA Files SEC form 8-K, Change in Directors or Principal Officers, Financial Statements and E...
Tory Hollenberg
15 Apr 14 03:43:04
$CXW: CORRECTIONS CORP OF AMERICA Files SEC form 8-K, Change in Directors or... http://t.co/Y4umOYjv0w
Fergus Hillo
15 Apr 14 03:37:10
#Stocks to hold onto $CXW $HCA $JDSU $IBM #StockMarket http://t.co/KDZxhHk90P
By  +Follow August 7, 2013 8:24AM



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.