Shares of major private prison operators GEO Group Inc (NYSE:GEO) and CoreCivic Inc (NYSE:CXW) are trading higher Friday afternoon. The rally follows a new executive order signed by President Donald Trump on Thursday aimed at addressing crime and homelessness, which investors see as a potential boon for the companies.
What To Know: GEO Group is a company that invests in and operates private prisons and mental health facilities, with U.S. federal agencies making up a substantial portion of its revenue.
CoreCivic is meanwhile the largest private owner of correctional and detention facilities in the nation, providing solutions that include detention management and government real estate.
The executive order, titled “ENDING CRIME AND DISORDER ON AMERICA’S STREETS,” introduces several policy shifts. For investors, a key provision directs the Attorney General to use federal resources to ensure “detainees with serious mental illness are not released into the public because of a lack of forensic bed capacity at appropriate local, State and Federal jails or hospitals”.
The order’s emphasis on enforcing prohibitions on urban camping and loitering further signals a move toward policies that could increase detainee populations, directly benefiting the private prison industry.
Price Action: According to data from Benzinga Pro, GEO shares are trading higher by 7.5% to $26.43 late Friday. CXW shares are trading higher by 4.6% to $20.89.
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