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GEO Group (GEO): A Detractor for Miller Value Partners in Q4’20

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Jose Karlo Mari Tottoc
·3 min read
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Miller Value Partners, an investment management firm, published its ‘Income Strategy’ fourth-quarter 2020 Investor Letter – a copy of which can be seen here. A net return of 19.17% was recorded by the fund for the Q4 of 2020 which is almost twice as much of its benchmark that returned 6.48%. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Miller Value Partners, in their Q4 2020 Investor Letter, said that The GEO Group, Inc. (NYSE: GEO) was their top detractor in their fourth quarter 2020 results. The GEO Group, Inc. is a real estate investment trust company that currently has a $1 billion market cap. For the past 3 months, GEO delivered a -1.23% return and settled at $8.84 per share at the closing of February 12th.

Here is what Miller Value Partners has to say about The GEO Group, Inc. in their Q4 2020 investor letter:

"GEO Group (GEO) was the top detractor over the quarter, falling 19.4%. The company reported Q3 revenue of $579.1M (-1% Quarter-over-Quarter (Q/Q)), net operating income of $151.4M (+2% Q/Q), and Earnings Before Income, Taxes, Depreciation, Amortization, and Restructuring (EBITDAR) of $112.1M (-1% Q/Q). Adjusted funds from operations (AFFO) of $0.67 drove 2.0x coverage on the quarterly dividend of $0.34/share (15.4% annualized yield). GEO exited the quarter with cash of $54M and net debt of $2.6Bn, which on TTM EBITDAR of $448.8M implies net leverage of 5.8x. Management lifted Fiscal Year (FY) 20 guidance across the board, including revenue +0.3% to $4.347Bn, Net Operating Income (NOI) +3% to $609M, EBITDAR +4.4% to $429M, and AFFO +5.6% to $2.44/share (28% FCF yield). Additionally, GEO maintained guidance for $100M of debt paydown in 2020 and a minimum of $50M each year moving forward, which coupled with savings from the previously announced reduced dividend will be applied towards debt reduction."

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investing, investment, real, risk, market, loan, banking, business, sale, home, crash, loss, danger, problems, despair, credit, falling, gamble, model, housing, economy,

Brian A Jackson/Shutterstock.com

Last December, we published an article telling that The GEO Group, Inc. (NYSE: GEO) was in 12 hedge fund portfolios. Its all time high statistics is 23. GEO delivered a -48.75% return in the past 12 months.

Our calculations show that The GEO Group, Inc. (NYSE: GEO) does not belong in our list of the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

https://youtu.be/OgBhPDmWMtI

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website.

Disclosure: None. This article is originally published at Insider Monkey.