Hi Friends,
CoreCivic (ticker of CXW), a private prison operator, was up pretty good today, which was surprising to me:
The Biden administratration announced a phaseout of the use of private prisons, opting only for government run ones. Part of the argument is that private companies should not be allowed to profit off of others' incarceration and also that the level of care is not up to appropriate standards since they are trying to make money. The flip side argument is that a privately run company with an interest in keeping costs down/maintaining efficiencies, can bring down the cost of incarcerating people, of which is about $40k per year in a prison.
I see the argument on both sides, and I had a feeling this was coming so I had been watching the publicly traded private prisons to see how they would do. I was surprised to see that, after yesterday's announcement from the Biden administration, that CoreCivic was up 16% today. Perhaps this was telegraphed and everyone was already short so they are covering now that the news is here, but I have to be missing something to see it pop on bad news...
Anybody have any thoughts or insights?
Thanks for coming by today,
Brian