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Prison Company Stocks Up

DaaaihLoong writes: "The New York Post published the following article on October 4:



October 4, 2001 -- America's new wall of homeland security is creating
a big
demand for cells to hold suspects and illegal aliens who might be
rounded up.

Stocks of private companies that build and operate prisons for
have zoomed as high as 300 percent in anticipation of internment camps
and new

"Unfortunately, these are becoming good investments," said James
MacDonald, a
prisons-security analyst at First Analysts Securities.

One company, Wackenhut Corp., may be able to put its expertise to work

"Wackenhut has had some success running the immigrant camps in
Austraila by
converting military bases," said MacDonald.

"It could be done here, too, but turning our old military bases into
internment camps would be a highly charged issue for us," said
MacDonald. "It
would be too drastic."

He said the half-dozen publicly traded prison companies are in a buzz
expanding prison projects being issued by the Federal Bureau of

The Bureau has just let out requests for bids for two prisons to hold
aliens in Georgia.

"It's going to be the biggest award made this year by the Bureau, and
generated a lot of excitement," said MacDonald.

He said the Bureau is also seeking bids early next year for three more
in the Southwest deserts that can hold more than 1,500 detainees.

Governments pay private prisons about $31,000 a year to handle each
jailbird -
about half what a government agency spends to run a prison on its own.

Private prison investors are also jubilant about an expected U.S.
Court ruling that would bar any inmate from suing a privately run
prison for
civil rights violations.

"The Bureau is expanding rapidly to free up extra space in its system,"

In line to get a big piece of that business is the nation's largest
prison company, Corrections Corp. of America. Its stock has soared 308
this year, and closed yesterday at $13.98, up 30 cents in active

The company was on the brink of bankruptcy just months ago, but a new
management team and the sudden new business in the aftermath of the
Sept. 11
terror attacks has changed its prospects.

"There's clearly a better outlook for the company than it had a few
ago," said MacDonald.

The company runs about 65 prisons around the U.S. and Puerto Rico and
about 61,000 prisoners, including 500 in Leavenworth.

Analysts say many security companies got a huge and immediate profits
from supplying guards and new security in the aftermath of the terror

"They got immediate returns, but it's going to take a while for any new
prisons to make their way into the market," said MacDonald.

Also helping the profits outlook for private prisons is an expected
rise in
the crime rate due to the recession.

"Crime always goes up in a bad economy," said MacDonald. "Where's there
good times and jobs are plentiful, people who get out of prison can
find work and don't have to go back to their old ways. When the
economy fails, so do the former inmates."

Federal prisons are the fastest growing in the U.S., rising as much as
percent a year. State prison populations have been in a decline for a
years and barely will make a 1 percent rise this year, most of it
expected in the fourth quarter, said MacDonald."