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Corrections Corporation of America Message Board

  • wile_e99 wile_e99 Mar 27, 1999 11:01 AM Flag

    Well, if misery likes company, I'll be w

    I have watched PZN for quite a while, and have
    been informed somewhat by flipper, when I have
    understood enough to ask questions. I finally bought my
    first round of PZN stock this week.

    The problem
    is, I really don't know what I have.

    Warren
    Buffett says he won't buy a stock he doesn't understand.
    Neither will many investors. Neither will I, usually. I
    bought PZN, but I don't understand any more than a
    neophite would, attending his first football game. You
    watch for a while, and want to get into the flow,
    but....

    For example, I don't understand who HSBC is. I
    understand that they are buying shares of PZN stock, but
    why? Why do we sell it to them? What is their hold on
    PZN?

    I also don't understand why PZN has to issue new
    stock, thereby dilluting the shares, in order to raise
    capital.

    Next, even with contracts as security,
    why would the securitization not be dangerous to
    depend on? FP saw the securitization market vanish, and
    it has gone from a $56 stock to a 60 cent stock, as
    a result. Why wouldn't the securitized leases
    produce enough money to use as a downpayment on a loan to
    build another prison? Are mortgage loans not being
    used?

    There are so many questions when I read
    the messages on this board that I would ask that
    someone write a complete, objective, multi-part
    explanation of the whold story, and post it
    here.

    Maybe this can't be done, but until the picture gets
    easier to understand, there won't be a lot of new
    investors, and the price will stay down.

    Most
    companies do not respond to investor concerns expressed on
    stock boards. When people complain because the company
    is not releasing information, it usually doesn't get
    results. On the other hand, because this puppy is SO
    damned difficult to comprehend, maybe the COMPANY should
    prepare the explanation.

    Wile E.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • A friend of mine who lives in Sarasota County
      (and who is politically active) told me there was
      never any doubt about the committee's final decision.
      The High Sheriff is a popular, powerful guy who
      really didn't want to have his department reduced to
      just serving paper. The Good-Ole-Boy network, being
      alive and well, kicked in and the committee gave the
      boot to privatization. The reasons for their decision,
      as stated, did not deal with the benefits but merely
      opted not to make any changes. Hey Bubba, y'all can
      keep them jobs, hear?

    • If you truely beleive the housing fellons was not
      a business before privatization, you are truely
      mistaken. This has been a business for a long time now. We
      just made it efficient. If you don't beleive me ask
      any of the thousands of people who draw that state
      pay check or any of those sherrifs who keep state
      inmates.

    • fairly positive on REITs. He seemed pretty
      excited about the possibility of 5 to 7 % returns. He
      stated that he would go with the leaders in the specific
      catagories he discussed ie. malls, etc. Although he
      naturally didn't mention PZN, I am positive about my
      investment, because our segment of the REIT market is growing
      much faster than those he mentioned, our yeild is
      about twice what he felt was a "good" yeild and we have
      over 50% of our segment of the private prison market.
      I may be a buyer Monday. I believe that REITS will
      make a comeback and analysts will take another look at
      PZN. I don't expect anything to happen too quickly
      though. Hopefully, the worst is over for us PZN
      stockholders.

    • Incaceration may very well be inherently
      governmental. Frankly, if the government offered investments
      into the prison system that grew at 20% a year and
      paid a 13% dividend I would by it from the from the
      government.
      I would, however, be hesitant to give much
      credibility to the NYT, which is just one more arm of the
      liberally slanted media.
      I appreciate the best wishes on
      my investments. As with every company there are
      inherent risks associated with investment,i.e.lawsuits
      from smokers, oil spills, coffee spills,drug
      complications,contaminated meat. I think you catch my drift. When I make an
      investment I look at a number of things, as I am sure that
      you do. I have been wrong before and have taken my
      lumps. All too often putting my money where my mouth
      is.With this stock, I believe that the upside potential
      far outweighs the down. I think the stock is beat up
      because it is a REIT and REITS have been out of favor,
      thats not brain surgery, you can compare this stock
      with every other REIT. Their charts all look similar.
      What I do believe I see very clearly is that almost
      all of these stocks have bottomed and that sooner
      rather than later, money will rotate into them.
      By
      the way, you never indicated whether you had a
      position in this stock. Good Luck!

    • Analysts' reports on PZN are available at
      www.multexinvestor.com for a reasonable fee. These reports provide very
      useful information and also answer many of the questions
      posed by many participants on this message board about
      PZN.

    • I am not disputing your assertions, but simply
      want to point out a few things. First of all, most of
      the objective cost studies have concluded that there
      is no appreciable cost difference, or its an �apples
      to oranges� comparison. For instance, in Florida
      there is a cap on inmate healthcare costs (i.e., $7,500
      per inmate) for private vendors, which tends to
      disproportionately reflect healthcare costs, the biggest and fastest
      growing component of correctional operating costs, in the
      public sector. Other cost considerations are
      depreciation write-offs for private firms and �hidden costs,�
      such as a decrease in local living standards when
      shareholder profits are generated from lower CO salaries and
      risky stock retirement plans, as well as the free
      assistance provided to private firms to capture escapees,
      quell riots, etc. Secondly, you wrote �Government
      regulated, privatized prisons are one way to solve this
      problem at a lower expense to the taxpaying public.�
      However, as the recent NYTs article pointed out, CCA has a
      disproportionately high amount of speculative (i.e., more risky like
      Youngstown) projects, and these tend not to be government
      regulated. Many of the jurisdictions where these spec
      prisons are located don�t know who is in them and do not
      regulate them. Lastly, you did not discuss the fact that
      several officials also argued that the incarceration
      function is inherently governmental. Good luck with your
      investing.

    • Sorry about the personal attack Hampton 1, it was
      a bit overboard. Who do you think profits from the
      incarceration business today? Let me give you a hint,
      lawyers,judges, and the untold thousands of bureaucrats who make
      our judicial system work, whether you or I like it.
      Since this is our legal system,the government owes it
      to the taxpayers(of which I am one who happens to
      have paid more in taxes this year than 95% of the
      population does in a lifetime) to reduce the cost of the
      services they render to the public. One of which happens
      to be the incarceration of criminals. Is it fair for
      the inmates to be in overcrowded prisons? Government
      regulated, privatized prisons are one way to solve this
      problem at a lower expense to the taxpaying public.

      Concerning my investment. I am very comfortable buying a
      stock that is undervalued and while waiting for capital
      appreciation, receiving a 13% dividend. Which is where my
      average cost in this stock lies.
      You mentioned that
      you were into making money but did not mention what
      your investments were. If you are not invested in this
      stock, why are you on this message board?

    • The following is cited with the General's editing
      IN BOLD for emphasis:

      Quoting Robert N.
      Corley, Committee Chairman:

      <<"We said in
      our conclusion that privatization can be justified
      ONLY IF there are expected quality improvements," he
      said. "You would not privatize for a slight cost
      savings, EVEN A SIGNIFICANT COST SAVINGS."

      "The
      committee ALL STOOD TOGETHER ON THAT," said Walter Witrock,
      another member. "The cost isn't the only thing we would
      consider.">>

      On its face, the article appears to be a reasonable
      position for the Sarasota County Committee to have taken.
      What the article doesn't say but appears to be implied
      is that even if privatization could deliver
      COMPARABLE QUALITY OF SERVICE to that provided by the
      sheriff's department but at SIGNIFICANT COST SAVINGS, the
      committee would reject it.

      If that implication is
      true, I would say a question of fiscal responsibility
      is raised regarding these elected
      officials.

      There are undoubtedly political issues that may weigh
      heavily on this body so it would mot be fair to judge
      their actions solely by what r7ualj's posting tells
      us.

      It should be remembered that the electorate gets the
      representation it deserves. If Sarasota County's taxpayers are
      content with that kind of thinking, who are we to judge
      otherwise.

      If Sarasota County's taxpayer's are not happy about
      that kind of thinking, they can express themselves at
      the ballot box.
      If they can't wait till election
      day rolls around, that's what hot pots, bitumuals,
      and feathers are for.

    • Hey ,
      You may not like my opinions pal. If so
      thats your problem. As far as manure for brains think
      about it your the one that bought into this company not
      me. I preferr to make money not put money into
      companies that arnt going anywhere. I AM AN AMERICAN THAT
      THINKS INCARSATION OF PEOPLE SHOULD ONLY BE USED AS A
      LAST RESORT AND NEVER NEVER EVER BECOME AN INDUSTRY
      FROM WHICH TO PROFIT. IF YOU LIKE PROFITTING FROM
      INCARSATION MAYBE ITS YOU THAT NEEDS TO GO TO CHINA.

    • Why do you think the IRS won't review PZN's REIT
      status? PZN must qualify for REIT status when it files
      its taxes. As far as the risk vs return factor, CCA
      did take a big drop after the merger, but the stock
      price fell even further after the Youngstown incident.
      If you don't think that escapes can drive a company
      out of business, take a look a Capital Correctional
      Resources, Inc., which was almost driven completely out of
      business after the Brazoria County video was aired on
      national TV. CCA probably lost the recent FBOP bid to
      Cornell because of Youngstown. Poor management and the
      subsequent lost of contracts affects Wall Street's
      confidence in the company's ability to maintain certain
      earnings projections. Given the perceived greater
      propensity for escapes, law suits, etc. in the private
      sector, investors demand a higher return than is
      currently offered for the potential volatility. The
      management contracts are the key to PZN's earnings. In
      addition, PZN is still viewed as a captive REIT.

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