We recently published a list of Billionaire Rob Citrone’s 10 Small-Cap Stock Picks with Huge Upside Potential. In this article, we are going to take a look at where The Geo Group, Inc. (NYSE:GEO) stands against Billionaire Rob Citrone’s other small-cap stock picks with huge upside potential.
Rob Citrone founded Discovery Capital Management in 1999. Based in Connecticut, Discovery Capital is one of the Tiger Cub hedge funds. Rob Citrone worked as a portfolio manager at Fidelity Investments and Julian Robertson’s Tiger Management before founding Discovery Capital. Citrone was also a wrestler in high school and today owns a small slice of his favorite football team, the Pittsburgh Steelers. His firm focuses on liquidity, valuation multiples, past and potential growth in picking stocks, and has a focus on technology, services, basic materials, and financial sectors. The last reported 13F filing for Q4 2024 included $1.47 billion in managed 13F securities and a top 10 holdings concentration of 44.09%.
Robert Citrone recently cut his long equity portfolio. In his January monthly letter, obtained by the Institutional Investor, the firm halved its net equity exposure to 25% from a peak of 50% just at year-end to go flat to short in developed markets. He has been expecting a stock market correction of 5% to 7%. He believes it is meaningful enough to reduce risk and potentially be short, even though it’s not a large sell-off. Citrone thinks the market is expensive in historical terms, especially relative to interest rates. Still, the majority of global investors are long corporate America, including venture, private equity, private credit, long-only equity, and/or credit long-short hedge funds, even as the US enters tariff uncertainty and no more Fed cuts are anticipated in the near term.
Our Methodology
To compile the list of billionaire Rob Citrone’s 10 small-cap stock picks with huge upside potential, we sifted through the Q4 2024 13F filings of Discovery Capital Management from Insider Monkey. From these filings, we checked the upside potential from CNN for the top 50 stock picks that were trading between $1 billion and $10 billion and ranked the stocks in ascending order of this upside potential. We have also added Discovery Capital Management’s stake in each company and the hedge fund sentiment around each stock.
Note: All data was sourced on May 8.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Security guards in uniforms patrolling an area, standing for the company’s safe and secure facilities.
The Geo Group, Inc. (NYSE:GEO)
Discovery Capital Management’s Stake: $51.47 million
Number of Hedge Fund Holders: 39
Market Capitalization as of May 8: $3.92 billion
Average Upside Potential as of May 8: 69.68%
The Geo Group, Inc. (NYSE:GEO) owns, leases, operates, and manages secure facilities, processing centers, and community-based reentry facilities. It operates through 4 segments: US Secure Services, Electronic Monitoring & Supervision Services, Reentry Services, and International Services. It also provides facility management services, such as the provision of security, rehabilitation, and food services.
The stock is rated as a Buy at Jones Trading with a $55 price target. The company’s Secure Services segment, which includes owned and leased facilities, improved its revenue by ~3% year-over-year in Q4 2024 and contributed to the overall quarterly revenue of ~$608 million. This segment is growing due to the demand from Immigration and Customs Enforcement/ICE and the US Marshals Service.
GEO is expanding its detention capacity for ICE, which includes an anticipated $70 million investment ($9 million incurred in 2024, with $38 million planned for 2025) to renovate existing idle facilities. This is expected to create ~17,000 incremental detention beds, which would increase GEO’s total available capacity for ICE detention from ~15,000 beds to ~32,000. These additional beds could generate between $500 and $600 million in incremental annualized revenues.
River Road Small Cap Value Fund stated the following regarding The GEO Group, Inc. (NYSE:GEO) in its Q4 2024 investor letter:
“The holding with the highest contribution to active return in the portfolio during Q4 was The GEO Group, Inc. (NYSE:GEO), an owner and operator of private prisons for federal, state, local, and foreign governments. GEO rallied significantly after the U.S. election victory of President Trump and the Republican majority in the House and Senate. GEO is poised to play a large role in President Trump’s top agenda item of mass deportation of undocumented immigrants. Given the estimates of roughly 11 million to 13 million undocumented immigrants crossing the border during the Biden administration, the resources required for deportation will be enormous. The demand for detention beds should greatly exceed the available supply for several years. We expect GEO’s largest customer, Immigration and Customs Enforcement (ICE), will take all available GEO detention beds for the foreseeable future. Additionally, GEO’s electronic monitoring segment has held the exclusive contract for ICE’s Alternatives to Detention program for 15 years. This is GEO’s highest margin segment, and we expect a substantial increase in electronic monitoring usage. We trimmed the position.”
Overall, GEO ranks 2nd on our list of Billionaire Rob Citrone’s small-cap stock picks with huge upside potential. While we acknowledge the growth potential of GEO, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than GEO but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.