BusinessTrump's win spurs surge in private prison stocks

Published 10 November 2016

Shares of private prison companies Corrections Corporation of America and the GEO Group jumped 48.1 percent and 20.8 percent, respectively, on Wednesday following Tuesday’s victory by Donald Trump in the presidential election. If Trump follows through on his campaign pledge to deport millions of undocumented immigrants, this will be a boon for the private prison industry.

Shares of private prison companies Corrections Corporation of America and the GEO Group jumped 48.1 percent and 20.8 percent, respectively, on Wednesday following Tuesday’s victory by Donald Trump in the presidential election.

Quartz notes that back in March, Trump said that the U.S. prison system was a “disaster” and private prisons “seem to work a lot better” than government run institutions.

In August the Obama administration announced it would not renew contracts with private prison companies operating federal prisons after the Justice Department found that these prisons were more expensive to operate and less safe than public prisons.

Deputy Attorney General Sally Yates said at the time the goal was “reducing — and ultimately ending — our use of privately owned prisons.”

The administration’s decision was likely to affect thirteen privately run prisons holding more than 22,000 prisoners — about 11 percent of the federal prison population. Most of these prisoners are foreign nationals, many of them Mexicans being held for immigration violations.

About 70 percent of detainees at immigration detention centers are held in private facilities.

The administration’s decision not to renew private prison contracts did not apply to privately run state prisons.

If Trump follows through on his campaign pledge to deport millions of undocumented immigrants, this will be a boon for the private prison industry.

“Private prisons would likely be a clear winner under Trump,” analysts for Height Securities LLC wrote, “as his administration will likely rescind the DOJ’s contract phase-out and [Immigration and Customs Enforcement] capacity to house detainees will come under stress.”