GEO Group the Only Stock in Scion Asset Management’s Portfolio

Private prison operator GEO Group saw its share price jump this week after it was revealed that Scion Asset Management held a stake in it.

Aug. 16, 2022

Michael Burry’s Scion Asset Management revealed in its 13-F filing on Monday that it had dropped twelve bullish positions, leaving only one company in the fund. Some of the stocks Burry sold off were Google parent Alphabet (NASDAQ: GOOG), Booking Holdings (NASDAQ: BKNG), Meta Platforms (NASDAQ: META), and Bristol-Myers Squibb Co. (NYSE: BMY).  According to the filing, the only stock Scion held on June 30th was private prison operator GEO Group (NYSE: GEO). So, what caused this mass sell-off?

Why did Michael Burry abandon his tech holdings?

Investor Michael Burry rose to fame after his timely and hugely successful bet against the housing market before the 2008 financial crisis. He also sparked the Gamestop frenzy after claiming the company was undervalued when institutional investors were shorting the stock. Now he is in the news again, but for a different reason. On Sunday, he tweeted: 

“Can’t shake that silly pre-Enron, pre-9/11, pre-WorldCom feeling.”

The tweet referred to the three events which contributed to the 75% decline in the NASDAQ (INDEXNASDAQ: IXIC) between 2000 and 2002. With such a feeling, it makes sense why he would sell all his tech investments. Burry’s total holding in GEO Group is roughly $3.9 million or about 0.41% of the company’s total value. After the announcement of his holding on Monday, the company’s share price jumped by 10.63%, rising by a further 4.08% in pre-market trading today as investors scramble to copy the famed investor.

What does GEO Group do?

GEO Group, Inc. operates over 100 private prisons and mental health facilities in the U.S., Australia, South Africa, and the United Kingdom. The company’s largest market is the U.S., which accounts for roughly 90% of its revenue.

In its Q2 earnings release, the company recorded revenue of $588.18 million, which was 4.75% above the analyst consensus of $561.5 million. GEO Group recorded a much better earnings beat, with earnings-per-share of $0.42 or 34.04% higher than the analyst consensus. This marks the fourth consecutive quarter the company has beaten analyst estimates. 

The company’s share price is currently down by 3.18% this year, which under the current market conditions, is not too bad. However, it should be noted that just because an investor has made a few good calls in the past does not mean they are guaranteed to keep picking winning stocks in the future. Investors should do their research before investing in a company and focus on a long-term outlook, which is encouraged by us here at MyWallSt.