Stock Market Today: Private Prisons' Share Prices See Big Gains After Jeff Sessions Memo

For-profit prison company share prices jumped between the after-hours trading Thursday and market open on Friday, following reports Thursday evening that Attorney General Jeff Sessions had directed the Bureau of Prisons to rescind a directive from the administration of former President Barack Obama that rolled back the use of private prisons.

GEO Group (GEO), which gave generously to the Trump campaign effort and the president’s transition team, saw its stock climb as much as 3 percent between Thursday just after markets closed and Friday after market open, to $48.18 from a low of $46.89.

As a major government contractor, GEO faced a complaint from the Campaign Legal Center, an activist group, in November for allegedly breaking a Federal Election Commission law that bars businesses awarded government contracts from donating to campaigns. When reached by International Business Times at the time, a GEO spokesperson pointed out that the contribution had been made by one of GEO’s 60 subsidiaries, which was not a government contractor.

CoreCivic Inc. (CXW)—which has formerly been known as Corrections Corporation of America and donated $250,000 to support President Donald Trump’s inauguration and spent $22 million on his election effort, according to USA Today—saw its share price leap nearly 5 percent around the time reports surfaced of Sessions’ directive, to a high of $35.68 from $34 in the after-hours.

Both companies saw similar spikes immediately after what was widely considered a surprise election victory by Trump, who campaigned on promises to escalate the use of law enforcement, particularly in urban areas, and initiate large-scale deportations of unauthorized immigrants.

Immigrants are among the fastest-growing inmate populations in private prisons, at over 33,000 in 2012 from less than 20,000 a decade earlier. A full 62 percent of undocumented people detained by Immigration and Customs Enforcement end up in for-profit prisons. Just over 91,000 of state prisoners were held in private prisons in 2014, while about 40,000 federal inmates were housed in for-profit prisons the same year, according to the most recent Justice Department data.

Private detention centers, while considered likely to increase efficiency and reduce costs to taxpayers as a result of their desire to turn a profit, are often reviled for their tendency to incentivize recidivism, as well as their often crowded, under-staffed and unhealthy facilities.