Friday, July 15, 2005

Hit #53

Correctional Services (CSCQ) was acquired for $62 million, in cash, yesterday by Geo Group (GGI). This offer, of $6/share is a 105% premium over my average cost of $2.9/share back in January. This was mostly a speculative buy, driven by some insider purchases.

Geo Group itself is a good long-term investment in the current climate. The recent London bombings have shown that even the Europeans are likely to react irrationally to such events. Expect these countries to join the US in snooping on citizens and setting up mini Gitmos and locking up citizens with summary or no trial, which can only be good for Geo Group.

Geo runs prison facilities in US, Australia, UK, South Africa, Canada. Except perhaps for UK (but for how long ?), these countries have in the past (and some still do) abused the prison system to put behind bars sections of their societies that were deemed less worthy. So, yes, this investment does make me squirm and my penance will be in the form of donating part or all of the gains to my favorite charities.

Geo also runs detention centers for US immigration authorities. In fact, Geo may not be able to remain public for long as it will find it hard to respond to public queries on its deals/practices.

The other public entity in this area is Cornell Companies (CRN), where some investors have already made noise on the need to increase shareholder value. A management buyout there is a possibility. I have been watching this stock and may buy a few soon.

I hope I do not hear anything about making ethical investments! Between banks, that in the past have facilitated slavery (and owned slaves) and that, as recently as the early 90's redlined neighborhoods and practiced disriminatory lending, to companies that openly did business with Apartheid-era South Africa, I may not really find anything worthwhile to invest in. In fact, with tobacco, porn and prison-industrial complex companies, you know upfront what you are getting into - they do not wear a mask of righteousness.

Previous hit - Pacificare (#52)


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