Friday, October 12, 2007

S&P 500 Index and Crime

Below is an updated chart of the S&P 500. It looks like there was not a whole lot of interest above the 1571.44 target level. The market has been extremely strong given the news environment. With more and more companies reporting earnings over the next few weeks, this was a place to take profits. Also included below is a chart comparing the percentage of stocks trading above their 40 day moving average and a chart showing the divergence with the transportation index.

S&P 500 Index

S&P 500 Index w/% above 40day moving average

Dow Jones Transportation Index

The market seems to perform in a healthier fashion when the transportation index is above its 50day moving average(dark blue line).

Below are some companies that profit from the growing prison population. This might just not be a play on domestic prison growth, as some deal with countries all over the world. The Pew Charitable Trusts recently estimated that the U.S. prison population could grow at 13% per year. That is a staggering pace. The Pew report estimates that the growth in the prison population will produce a five-year cost to taxpayers of $27.5 billion.

CXW - Corrections Corp Of America

CXW - Corrections Corporation of America engages in the ownership and operation of privatized correctional and detention facilities in the United States. It owns, operates, and manages prisons, jails, and other correctional facilities, as well as provides inmate residential and prisoner transportation services for governmental agencies. The company's facilities offer various rehabilitation and educational programs, including basic education, religious services, life skills and employment training, and substance abuse treatment. It also provides healthcare services, including medical, dental, and psychiatric services; food services; and work and recreational programs. Corrections Corporation offers its services to federal, state, and local correctional and detention authorities. As of December 31, 2006, the company owned 43 correctional, detention, and juvenile facilities in 14 states and the District of Columbia, of which 3 were leased to third-party operators. It also managed 24 correctional and detention facilities owned by government agencies. The company was founded in 1983 and is based in Nashville, Tennessee.

CRN - Cornell Corrections Inc.

CRN - Cornell Companies, Inc. provides correction, detention, education, rehabilitation, and treatment services to adults and juveniles in federal, state, and government agencies in the United States. The company operates in three divisions: Adult Secure Institutions and Detention Centers; Juvenile Justice, Educational, and Treatment Programs; and Adult Community-Based Corrections and Treatment Programs. The Adult Secure Institutions and Detention Centers division offers security incarceration and detention; confinement of juveniles adjudicated as adults; facility design, construction, and operation; education courses; healthcare services; substance abuse counseling; life skills training; religious opportunities and culturally sensitive programs; food and laundry services; and recreational activities. The Juvenile Justice, Educational, and Treatment Programs division offers residential, detention, shelter care, and community-based services, as well as educational, rehabilitation, and treatment programs to juveniles between the ages of 10 and 17. The Adult Community-Based Corrections and Treatment Programs division provides community-based correction services, including temporary housing, employment assistance, anger management instruction, personal finance management training, academic opportunities, vocational training, and substance abuse or addiction counseling to parolees and probationers. This segment also offers community-based treatment services, such as short-term and long-term residential care, counseling, HIV services, DUI services, detoxification, and methadone maintenance. Cornell was founded in 1991 and is headquartered in Houston, Texas.

GEO - The Geo Group

GEO - The GEO Group, Inc. and its subsidiaries provide government-outsourced services in the management of correctional, detention, and mental health facilities in the United States, Australia, South Africa, the United Kingdom, and Canada. The company operates correctional and detention facilities, including maximum, medium, and minimum security prisons; immigration detention centers; minimum security detention centers; and mental health and residential treatment facilities. It offers correctional and detention management services, such as provision of security, administrative, rehabilitation, education, and health and food services, primarily at adult male correctional and detention facilities. The company's mental health and residential treatment services involve the delivery of care, programming, and active patient treatment, primarily at privatized state mental health. It also offers life skills and transition planning programs that provide inmates job search training and employment skills, anger management skills, health education, financial responsibility training, and parenting skills, as well as offer counseling, education, and treatment to inmates with alcohol and drug abuse problems. In addition, the company also develops new facilities based on contract awards, as well as provides consultation and management services relating to the design and construction of new correctional and detention facilities, and the redesign and renovation of older facilities. As of December 31, 2006, it operated approximately 62 correctional, detention, and mental health and residential treatment facilities, and had approximately 54,000 beds under management. The company was formerly known as Wackenhut Corrections Corporation and changed its name to The GEO Group, Inc. in 2003. The GEO Group, Inc. was founded in 1984 and is based in Boca Raton, Florida.

Some of our nation's most creative CEOs now reside in prisons. That thought sure makes us feel better about this kind of investing.

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