U.S. Election 2020 Investable Theme for Trump: Private Prisons

Over the past few weeks we’ve been covering investable themes for both the Biden and Trump campaigns. So far, we’ve discussed higher education, police funding and cannabis decriminalization. Today , we’ll look at private prisons.

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Q3 2020 hedge fund letters, conferences and more

While President Trump does not directly address the use of private prisons by various federal, state, and local agencies, his opponent, former VP Biden, does address the issue quite explicitly: “Biden will end the federal government’s use of private prisons.”

D1 CapitalThe first two months of the third quarter were the best months for D1 Capital Partners’ public portfolio since inception, that’s according to a copy of the firm’s August update, which ValueWalk has been able to review. Q2 2020 hedge fund letters, conferences and more According to the update, D1’s public portfolio returned 20.1% gross Read More

And there is substantial historical precedent for this: the Obama administration did, in fact, outline a plan to end private prison use at the federal level in 2016.

The two “pure play” REIT stocks, CoreCivic (NYSE: CXW) and The GEO Group (NYSE: GEO) got cut in half almost immediately. Then, these two stocks almost tripled following President Trump’s election. The Trump administration rescinded the Obama administration orders in early 2017.

CXW And GEO To Benefit

The 2016 volatility in CXW and GEO is clearly visible in the price chart below.

Going into this election cycle, people and groups associated with CXW and GEO have been active in terms of contributions, mostly to Republicans, and have been signing long-term contracts with federal agencies.

CXW GEO

(Interactive Chart Viewer)

You can read more in our reports: Six Stocks and One ETF for a Biden Presidency and Six Stocks and One ETF for a Trump Second Term. You can also subscribe to the Sentieo blog for more investable theme highlights. You can also find a synopsis of each theme on the Election 2020 home page as well as a preview of our U.S. Election 2020 Dashboard here.

Article By Sentieo

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