Artemis builds $100m position in Trump camp contractor

Jacob de Tusch-Lec ramps up exposure to stock shunned by rivals

Artemis has refused to comment on the ethics or rationale behind the $103.6m position it has built up in a contractor connected to Donald Trump’s controversial detention camps for immigrants and asylum seekers.

Over a 12-month period, Jacob de Tusch-Lec initiated the position in Geo Group across the Artemis Global Income and Global Equity Income funds and added to a position in the Monthly Distribution fund, Morningstar data provided for Portfolio Adviser reveals. The portfolio weightings ranged from 1.82% to 2.08%, according to data last updated in May.

Geo Group operates immigration processing centres and prisons for “criminal aliens” via federal government contracts.

De Tusch-Lec’s funds are responsible for almost all UK-domiciled exposure to the private prisons contractor with other funds holding an additional $3.8m.

Artemis did not wish to comment on the rationale or ethics for investing in the detention camp contractor when presented with the figures by Portfolio Adviser.

De Tusch-Lec’s positions

Monthly Distribution was the only Artemis fund with any exposure to Geo Group when Portfolio Adviser examined UK-domiciled fund exposure to Geo Group in July last year. It had a 0.53% weighting at the time representing $5.3m in market value.

Back then Aviva Investors had the largest weighting with two versions of its US Equity Income fund collectively holding $10.2m. Those positions appear to have since been sold.

The latest Monthly Distribution half-yearly report shows de Tusch-Lec reduced his position from 1.82% in May to 1.77% in June. However, this was still higher than the 1.21% weighting he had at the end of December 2018, according to the fund’s annual report.

Morningstar holds the most up-to-date data on the Global Income and Global Equity Income funds, which have different reporting periods to the Monthly Distribution fund.

The latest Global Income reports show the weighting rose from 1.26% in July 2018 to 1.65% by January 2019.

The Global Equity Income fund had a weighting of 1.78% in February up from 1.36% in August 2018. Geo Group had been among the five largest purchases in the period leading up to August 2018, according to the fund’s half-yearly report.

Geo Group controversies

In the period since May last year, over which de Tusch-Lec has been building up the position, Trump’s immigration camps have been in the spotlight for a number of controversies.

In spring 2018, Donald Trump’s family separation policy was condemned for its cruelty and the long-lasting psychological effects it would have on children’s development, particularly their sense of secure attachment to a parent. Geo Group has said it does not hold any unaccompanied children, including those deliberately separated from their parents, and that it does not operate any immigration facilities at the US southwest border.

However, its facilities elsewhere have come under fire with a Californian immigration detention centre facing “serious issues relating to safety, detainee rights, and medical care”, according to a Department of Homeland Security investigation in October 2018. In 15 out of the 20 cells investigated, inspectors found nooses made out of bedsheets.

The following month, detainees of a New Mexico detention centre launched a lawsuit against Geo Group and another private prison operator Corecivic for breaching labour laws by making detainees work within their facilities for $0.50 an hour. The matter is still before the courts.

Private prison divestment

The controversies have prompted other investors to pull money from Geo Group and its rivals.

In Q1, Wells Fargo and JP Morgan separately announced they would be divesting from the private prison industry sending stock tumbling.

In May, investors voted overwhelmingly in favour of the company producing a human rights report.

Geo Group told Portfolio Adviser in a statement: “The divestment efforts against our company are based on a false narrative and a deliberate mischaracterisation of our role as a long-standing government services provider.”

The spokesperson said Geo Group facilities offer “24/7 medical services, modern recreation amenities, and access to legal counsel” and that it has provided services under both Republican and Democratic administrations.

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