Prison shares rise as US eyes more immigrant detention space
Homeland Security has issued a request for information from different providers to accommodate up to 15,000 people
Shares in private prison operators CoreCivic and GEO Group rose on Friday as investors bet on increasing demand for their services after US authorities asked about available capacity for the detention of immigrant families.
The US Department of Homeland Security’s office of Immigration and Customs Enforcement (ICE) issued a request for information on Friday afternoon about potential facilities from different providers to accommodate up to 15,000 beds, ideally in several locations.
The move came after US President Donald Trump issued an executive order on Wednesday aimed at ending his controversial policy of separating immigrant children from their parents caught entering the country illegally.
Under the order, which is likely to be challenged in court, families will now be detained together for the duration of their criminal and immigration proceedings. The latter can take months or even years to complete.
Shares in CoreCivic closed up 3.95 per cent at US$23.39, a nearly five-month high, in an unusually active trading day on Friday. The stock has jumped 11.2 per cent in the last four days.
Rival GEO, which has gained 6.6 per cent since Trump’s executive order was issued, closed up 1.6 per cent at US$26.48, in a fifth straight day of gains.
The Oklahoma Board of Corrections is expected to meet on Tuesday to discuss approval of a contract with Geo for its Lawton Correctional Facility, according to a notice on its website.
With ICE potentially looking for more beds, states are probably feeling pressure to accelerate such contract decisions said Jamie Cuellar, portfolio manager for Buffalo Funds in Mission, Kansas.
“It’s more and more demand that continues to get snapped up, so states will be forced to get off the sidelines and get capacity under contract before it goes elsewhere,” he said.
Immigrant families are currently housed in facilities in Pennsylvania and Texas that have about 3,300 beds and are now at 79 per cent full, according to ICE. The US military has been asked to prepare to house up to 20,000 immigrant children.
Trading volume in CoreCivic shares was more than three times the 10-day moving average on Friday. GEO trading volume was 1.7 times the 10-day moving average.