GEO Stock Down 40%, and One Major Investor Just Cut $6.7 Million From Its Stake

On February 11, Hodges Capital Management Inc. disclosed a sale of 401,146 shares of The GEO Group (NYSE:GEO), an estimated $6.69 million trade based on quarterly average pricing.

What happened

According to a February 11 SEC filing, Hodges Capital Management Inc. reduced its position in The GEO Group (NYSE:GEO) by 401,146 shares during the fourth quarter of 2025. The estimated transaction value was $6.69 million, derived from the average closing price for the period. The fund’s quarter-end position value changed by $10.64 million, reflecting both the trade and price movements over the quarter.

What else to know

Top holdings after the filing:

• NASDAQ:NVDA: $39.60 million (3.4% of AUM)
• NYSE:SN: $34.20 million (3.0% of AUM)
• NASDAQ:WULF: $32.94 million (2.9% of AUM)
• NYSE:CLF: $30.55 million (2.7% of AUM)
• NYSE:TPL: $29.95 million (2.6% of AUM)

As of February 10, GEO shares were priced at $16.11, sinking more than 40% over the past year and well underperforming the S&P 500’s roughly 14% gain in the same period.

Company overview

Company snapshot

• The GEO Group provides secure facility management, electronic monitoring, reentry, and international services, with offerings including correctional facility operations, compliance technologies, and rehabilitation programs.
• The company generates revenue primarily through contracts with government agencies for facility management, supervision, and reentry services, as well as technology-enabled monitoring solutions.
• It serves federal, state, and local government agencies, focusing on correctional, detention, and community reentry populations in the United States and select international markets.

The GEO Group is a leading provider of secure facility management and community reentry services, operating across the United States, Australia, and South Africa. The company leverages a diversified portfolio of service offerings, including electronic monitoring and evidence-based rehabilitation, to address the needs of government clients in the corrections and immigration sectors.

Through a combination of secure facility operations and technology-driven supervision solutions, The GEO Group maintains significant scale and aims to deliver cost-effective, compliant services that meet evolving public sector demands. Its integrated approach to corrections and reentry positions it as a key partner to government agencies seeking comprehensive solutions in security and rehabilitation.

What this transaction means for investors

GEO stock is down more than 40% over the past year, even as earnings rebounded sharply and new ICE contracts expanded bed capacity to about 26,000. The company has been riddled with controversy amid broader backlash over President Donald Trump’s immigration policy, and against that backdrop, a roughly $6.7 million reduction might look more like risk management than a verdict on fundamentals, especially with the fund still holding a nearly $9 million stake.

In the fourth quarter, GEO posted $707.7 million in revenue and $0.23 in diluted EPS, up from $0.11 a year ago. Adjusted EBITDA reached $126 million (from $108 million), and full-year revenue climbed to $2.63 billion. Management also repurchased $90.6 million of stock in 2025, shrinking the share count while guiding for 2026 net income of $0.99 to $1.07 per share and up to $510 million in adjusted EBITDA.

For long-term investors, the real story is leverage and execution. Net debt sits around $1.5 billion, and management is targeting 2.8x to 3.0x net leverage in 2026. If occupancy and contract wins hold, cash flow could keep improving. If policy shifts again, volatility will follow. This remains a balance sheet and political risk story, not just an earnings one.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and SharkNinja. The Motley Fool has a disclosure policy.