In the waning months of the Obama administration, share prices of private prison companies took a nosedive when the Justice Department announced the phaseout of federal private prisons — CoreCivic, then known as Corrections Corporation of America, saw its stock drop by 50 percent.
But the election of Donald Trump, who ran on a hard-line immigration platform, breathed new life into the industry, proving a boon for investors like hedge fund owner Robert Mercer.
> [W]ith Trump’s unexpected victory, CoreCivic stock rose meteorically. By Inauguration Day on Jan. 20, 2017, it had doubled, and it climbed higher when the new administration began implementing its hard-line immigration and law and order policies. On Feb. 24 — a day after Attorney General Jeff Sessions reversed the Obama ban on private prisons — CoreCivic’s share price hit $35.03. That was a potential windfall for investors, including Renaissance Technologies, a hedge fund then headed by billionaire Robert Mercer. According to filings with the Securities and Exchange Commission, between Trump’s election and inauguration, Renaissance unloaded 645,586 CoreCivic shares for a big profit.
> Few people backed Donald Trump’s 2016 presidential campaign with as much cash as Mercer. He donated$15.5 million to a pro-Trump PAC called Make America Number 1, making him the group’s largest donor, according to Federal Election Commission data compiled by the Center for Responsive Politics. He and his daughter Rebekah — a conservative activist who runs the family’s foundation — had started off as Ted Cruz supporters. But they reportedly worried that the Republican establishment was too soft on immigration and shifted to Trump after the Texas senator flamed out in the primaries.
> At the same time, Robert Mercer promoted a tougher national stand on immigration by funding politicians and organizations — including Breitbart News — that have fueled hysteria about immigrants by claiming that their entry into the U.S. would directly lead to crime, terrorism and job losses. And after the election, Rebekah Mercer won a spot on the executive committee of Trump’s transition team — and reportedly pushed for hiring Sessions as attorney general.
The policies pushed by the Mercers have paid off handsomely in the time since Trump took office, according to an investigation by Yahoo News and the nonprofit Project on Government Oversight.
> With Trump ratcheting up anti-immigrant rhetoric and enforcement, Renaissance Technologies — where Mercer was co-CEO until last fall and where he continues to be active — invested in corporations directly involved in the president’s immigration crackdown and the administration’s embrace of private prisons.
If any of this sounds illegal, rest assured it is not — thanks in no small part to the Supreme Court’s ruling on Citizen United, which gave the go ahead to dark money groups and greatly increased the influence on money in American politics.
> “Unfortunately, wealthy individuals pushing candidates who promote policies that advance their financial goals is not uncommon or illegal,” said Walter Shaub, the former head of the Office of Government Ethics and now senior adviser to the D.C. watchdog group Citizens for Responsibility and Ethics in Washington. “It’s sort of legalized corruption and a general problem of our campaign finance system.”
> The White House did not reply to a request for comment.
Long before Trump formally entered into American politics, the Mercers were investing heavily in Republican and conservative organizations, politicians, and causes.
> The Mercers helped launch Breitbart Newswith a $10 million contribution in 2011. They also created Cambridge Analytica, a political data analysis firm that worked for the Trump campaign and helped test and refine messages designed to stir up fears about immigration and build support for the border wall. Father and daughter also donated at least $35 million to right-wing think tanks between 2009 and 2014 and another $36.5 million to individual GOP races since 2010, according to the Washington Post.
And those efforts paid off:
> Today, Renaissance is a gigantic fund, with market holdings valued at about $91 billion at the end of June. It has delivered spectacular returns to investors, with its flagship Medallion fund registering average annual gains of more than 35 percent between 1990 and this year.
> Renaissance’s holdings in private immigrant detention firms are small proportionally, but are an example of how politics can affect investments.