Chief Investment Officer | Michael Katz
The American Federation of Teachers (AFT) has released a report saying that hedge funds, pension funds, and corporations are profiting from the detention of immigrant families in private prisons.
The AFT says the hedge fund industry has invested billions in for-profit detention, and that many public pension funds are exposed to this through these funds, or with direct shareholdings.
“Hedge funds that invest in private prisons are not only profiting off a broken justice system and abetting the administration’s policies of family separation,” AFT President Randi Weingarten said in a release. “They are also making a risky bet on an industry rightfully under siege.”
The report names 26 funds that hold more than $4 billion in stock in General Dynamics, GEO Group, and CoreCivic, firms the AFT says are making money from the Trump administration’s strict policies policing the Mexican border. AFT is advising pension trustees to examine portfolios for exposure to certain asset managers, and to consult a watch list in the report when making asset allocation decisions. It also strongly encourages them to ask hedge funds to divest their private prison holdings and commit publicly to avoid them in the future.
Some of the managers and funds with the largest investments in the companies mentioned on the watch list include Wellington Management Group, which has $950 million invested in General Dynamics; and Geode Capital Management, which has nearly $618 million in General Dynamics, $26.3 million in GEO Group, and $44 million in CoreCivic. Cohen & Steers has nearly $263 million invested in CoreCivic, while Hotchkiss and Wiley have just under $163 million invested in the company.
Illinois, Iowa, and New York have already passed legislation banning private prisons, and both New York City and the New York State Common Retirement Fund recently divested from private prisons across all asset classes. Additionally, the California State Teachers’ Retirement System (CalSTRS) is evaluating the investment risks and will meet later this month with teachers who are calling for divestment.
The AFT said a second private prison watch list will be released next month in the second part of its report and will target investment managers who profit from private prisons.