Tuesday was a bizarre day on several fronts, inside and outside the markets. For the first time since 2013, no one was elected to the Baseball Hall of Fame's regular class as none of the candidates garnered enough votes.
If you are a baseball fan, Hall of Fame weekend in Cooperstown is incredible. I've only been twice (1983 for Brooks Robinson and Juan Marichal, and 2018 for Jim Thome and others), but it is a must attend event at least once in a lifetime. Since last year's Hall of Fame Weekend was canceled, those inductees, which include Derek Jeter and Larry Walker, will be honored this year (July 23-July 26). Hopefully this will go on as scheduled.
Second, is the incredible short-squeeze playing out with GameStop (GME) , a member of last year's Tax-Loss Selling Recovery Portfolio. In fact, it was the second-best performer, up 81%, which is now regarded as a very paltry 81%. Since January 11, GME shares have risen from about $20 to close Tuesday at about $148. It was up in pre-market trading another $39 as I am writing this. Go back one year through Tuesday, and GME has risen more than 3300%!
This, for a name that was all but left for dead in recent years, and now has a market cap in excess of $10 billion. Arguably, GME's business situation has improved, but not enough to justify the current price. That meteoric rise is what can happen when a company has more than 140% of its shares sold short, and the shorts cover those positions in the much dreaded (for short-sellers) or desired (for longs) short-squeeze. By the way, in the 15 minutes since I wrote the last paragraph, GME was up $89 in pre-market trading.
Last but not least is the presumed death knell for private corrections stocks, following an executive action by President Biden to phase out federal government contracts with private prisons. This was no secret: while operators CoreCivic (CXW) and GEO Group (GEO) fell 6% and 8%, respectively, Tuesday, presumed and elected Democrat administrations have made their views clear on this issue for years.
The question is whether this is actually the end for the industry. Plenty of states rely on private operators who can build and administer corrections more cheaply than the states can. In an era of strapped budgets, the presumed death of the private corrections industry may be premature. I'm not rushing out to buy these names, but once the dust settles, they could make for nice, albeit risky turnaround plays. Executive actions, also, are temporary, so don't bet that the Feds are done for good with the private operators.