Corrections Corp Short Squeeze Could Have Legs

Corrections Corp of America CXW is spiking higher by more than 36 percent Wednesday following Donald Trump’s election victory. Fellow prison stock The GEO Group Inc GEO is also up 17.7 percent.

Both stocks had been under tremendous pressure since Hillary Clinton called for an end to private prisons at the first presidential debate back in September.

“You shouldn’t have a profit motivation to fill prison cells with young Americans,” Clinton said.

In March, Trump praised the for-profit prison model: “I do think we can do a lot of privatizations ad private prisons. It seems to work better.”

While Trump’s election is certainly good news for Corrections Corp, the extremity of the move suggests short covering could be playing a major role. Prior to Wednesday’s big move, Corrections Corp stock was down 47.8 percent in 2016.

At the same time, short interest in the stock remains extremely elevated with short percent of float at 9.26 percent and days to cover at 3.6.

According to shortsqueeze.com, more than 10.7 million of Corrections Corp shares are currently held short. That huge number suggests that a very ugly day for Clinton speculators could get much worse before the short squeeze is over.