Michael Burry’s $10 million slip—Which stock did he sell too soon?

As Donald Trump’s victory in the 2024 presidential elections ignited an impressive rally for private prison stocks, an old Michael Burry bet once again came into focus, although, unfortunately, due to all the gains he missed by selling early.

Specifically, Geo Group (NYSE: GEO) stock collapsed in value from above $12 to about $7 during the first quarter (Q1) of 2023, prompting ‘The Big Short’ investor to make a $5 million bet in Q2 of the same year.

Burry cleared his stake in the private prison company only a quarter later, effectively missing out on the subsequent rallies. Still, it is worth pointing out that in late September 2023, GEO shares began climbing, meaning that, as long as he sold in late Q3, he was in the green on the bet. 

How much did Burry lose by selling GEO stock in Q3 2023

No matter how much Michael Burry actually made on his Geo Group stock maneuver as he executed it, holding the stake long-term would have generated a significantly greater profit.

In 2023, ‘The Big Short’ trader was recorded as owning 600,000 GEO shares via Scion Asset Management – worth about $4.8 million at the very end of Q3 2023. Assuming he bought near Q2 lows at $7, Burry made slightly more than $500,000 on the bet.

The exact same amount of stock is worth $14.66 million at Geo Group’s press time price of $24.43.

This difference in the company’s valuation means that Burry missed out on nearly $10 million in profits.

Why are GEO shares rocketing

In Q4 2024, Geo Group stock appears to have long departed from its downturn. Since the start of the year, GEO shares are up an impressive 127.04% and have rocketed 59.31% in the last 5 days alone.

Such a rally – particularly when the fact Geo Group’s latest earnings were, at best, lackluster – can best be seen as part of a broader prison stock upsurge than came in the wake of Donald Trump’s victory in the 2024 presidential election.

Not only have the Republicans been positioning themselves as the ‘tough on crime’ party, but the President-Elect has promised to begin a mass deportation program on his first day in the Oval Office.

Such a plan could see approximately 12 million people deported from the United States at an estimated annual cost of nearly $90 billion per one million humans. 

Though the American prison population is already vast at 1.9 million, the removal of all undocumented migrants would require a massive infrastructure project for the creation of concentration and processing camps or more permanent facilities.

Considering the private incarceration industry has been growing its market share over the years and that the Trump campaign has promised to cut spending – Elon Musk might end up captaining a Department of Government Efficiency – the ‘prison-industrial complex’ is likely to get contracts worth tends, maybe hundreds of billions of dollars starting from 2025.

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