Private Prison Company GEO Group Hits New 52-Week High

A company in the prison facilities field hit a new 52-week high this week, a sign of solid investor interest. 

The GEO Group Inc. GEO benefits from the optimism of famed value investor Michael Burry, whose work at Scion Asset Management LLC is closely followed by Wall Street analysts. The company is one of Scion’s core holdings, of which there are not that many right now.

GEO Group invests in private prisons and mental healthcare facilities, among other types of properties, from its headquarters in Baton Rouge, Louisiana. 

With a relatively small market capitalization of $1.3 billion, the company trades with a price-earnings ratio of 18.9 (roughly the same as the P/E for the S&P 500) and at just above its book value. GEO Group does not pay a dividend.

Burry achieved fame after the movie “The Big Short” came out in 2015, the plot of which followed his success in shorting the U.S. housing market before it tanked, a hugely profitable move for him. That he continues to hold The GEO Group is unusual because, according to his recent comments, Burry is mostly short U.S. equities.

The daily price chart looks like this:

That 6.53% move upward on Nov. 21, took the company to a level it hasn’t seen in at least 52 weeks. Note how GEO has lifted strongly off of the uptrending 50-day moving average (the blue line) and well above the uptrending 200-day moving average.

Here’s the weekly price chart:

The closing high here exceeds the two previous closing highs from the June 2021 spike upward and the early November 2021 high. It’s considered bullish among price chart analysts that GEO is now above that downtrending 200-week moving average and well above the 50-week moving average.

Charts courtesy of StockCharts