Companies that operate private prisons got a break on Thursday as the Justice Department reportedly rescinded the previous administration’s policy beginning the phase-out of the use of private contractors to operate federal prisons.
Geo Group’s shares rose 1.5 per cent in after-hours trading, and shares of CoreCivic – a rebranded version of Corrections Corp of America – were up nearly 3 per cent.
The late-day surge came as multiple outlets reported that President Donald Trump’s new attorney general, Jeff Sessions, had issued a memo saying the previous policy — implemented under Mr Trump’s predecessor Barack Obama — would hurt the government’s ability to meet the prison system’s future needs. The Obama administration, by contrast, said that the use of these contractors made prisons less safe, among other issues.
Investors appeared to anticipate such a policy reversal immediately upon Mr Trump’s surprise election victory in November. The day after his win, both companies saw their shares jump “big league”, to borrow a phrase from Mr Trump.