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Burry Analysis - GEO Group

Burry Analysis - GEO Group
Written by
Max Andrews
Max Andrews
Published on
September 5, 2023
Read time
2
 min read

Burry Analysis - GEO Group

Welcome to our first installment of Burry Analysis, where we intend to take a deeper dive into the holdings of Scion Capital (Michael Burry’s asset management company). Today, we are looking at one of the most unique holdings - The GEO Group (Scion has $4.4m invested )

The GEO Group, Inc. is a company that specializes in private prisons and mental health institutions in several countries including North America, Australia, the UK, and South Africa . They manage and operate inmate correctional and detention facilities, offer rehabilitation programs, and provide electronic monitoring for offenders. As we looked into their financials, we found that 44% of GEO Group’s 2022 revenue came from ICE (U.S. Immigration and Customs Enforcement) which contracts with GEO Group for immigrant detainments (often at U.S. borders). The below chart from the U.S. Customs and Border Patrol displays the number of border encounters by month for 2023 YTD (bold), which is obviously correlated to the number of illegal crossings and thus, detained individuals. This could be a Burry investment thesis that is based on the current political administration’s view towards border security. Another important driver that Burry may have considered is the “age” of the United States prison system. United States prison facilities are quite old and old means expensive to run. States such as Indiana (avg. 64 yrs) and California (avg. 49 yrs) rank the highest in “age of prison facilities”, however, GEO Group facilities have an average age of 20 years . This may represent a cheaper/more secure alternative to state and federal prison facilities. Although there are certainly other reasons that led to Burry’s investment, these two drivers were most notable to us and worth sharing. 

GEO Group recap

- 18,000+ Employees

- 40% market share of inmate reentry service

- $539m EBITDA (2022) 

- $2.37b Revenue (2022) 

- Strong Customers (ICE, US Marshals, etc.)

Thanks for reading.

Cheers,

Sources:

Scion Capital 13F

Source: 2022 Annual Report

GEO Group Investor Presentation

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