Target Hospitality (TH) is a relatively overlooked potential beneficiary of Trump’s Immigration policy. They are one of the largest providers of temporary accommodations. These temporary accommodations have been used for (a) immigration, and (b) large construction projects - think infrastructure build-outs or oil exploration. This chart shows they have benefited from contracts under all recent administrations. **They did especially well under Trump’s previous administration.**
https://preview.redd.it/murphr17sede1.png?width=1148&format=png&auto=webp&s=815a9700f682c01faed351f064ed4ed01c6ce2e1
**Indications They Are Vying For Immigration Contracts**
On Nov 18, 2024 - immediately after the election - they brought on board a former Chief of US Border Patrol under Trump. If that was not telling enough, the ACLU announced this week that a FOI act request makes clear they submitted a proposal to expand ICE’s detention capacity and facilities.
[https:\/\/www.sec.gov\/Archives\/edgar\/data\/1712189\/000171218924000082\/ex99-1.htm](https://preview.redd.it/x92tzbybsede1.png?width=1080&format=png&auto=webp&s=e9a4a8005f6a63face54d545f33fea822153dce1)
[https:\/\/www.aclu.org\/press-releases\/aclu-foia-litigation-continues-to-disclose-ice-proposals-to-expand-immigration-detention-nationwide](https://preview.redd.it/vaf1pqvcsede1.png?width=1080&format=png&auto=webp&s=e585cd86300791ad04e2c39302d68e11bd7aed09)
**The Scale of Opportunity**
Now the WSJ has estimated that Trump’s plan could cost \~160b, and detention centers by far stand to be the greatest beneficiaries - costing \~168b.
[https:\/\/www.youtube.com\/watch?v=eqPgAU1JRL4](https://preview.redd.it/nklhqzcusede1.png?width=1080&format=png&auto=webp&s=db0e51ff20612a0424cdbc4e163a03f4913b0226)
*TH currently has a 1 billion enterprise value. If they received even a small portion of the expected cost of detaining immigrants, they would stand to be worth far more.*
**The oil exploration opportunity**
Aside from Immigration Policy, Trump is most vocal about increasing oil production within the US. Again, TH is well positioned to benefit here - providing lodging throughout the Permian basin.
https://preview.redd.it/q8l1wu6wsede1.png?width=962&format=png&auto=webp&s=6f8dc8706e1f94c7cce74e414b7b11e5ca93ca1b
**Comps**
The two other players in this space are CXW and GEO. They have both already seen sharp moves both upon Trump winning the election and now in anticipation of him taking office and taking swift action to limit illegal immigration. And despite running massively, price targets have recently been raised.
https://preview.redd.it/6h4symaxsede1.png?width=945&format=png&auto=webp&s=b9eea46c31f05d4b2d859ebd6fc6074eb88d46a8
https://preview.redd.it/w4zo2bqxsede1.png?width=972&format=png&auto=webp&s=180e912394e1facad4679cbde09524b0ee4b2e38
Both of these operate private prisons and detention centers. The thesis for these names has been widely circulated, so there is little value in re-iterating it here. However, they are important comps for Target Hospitality (TH) and illustrate some of the possible upside to the trade. Notably TH is ⅙ of the size of GEO, and trades at much lower valuations.
**Frankly, given the size of necessary expenditures - all of these stand to be winners. IMO, TH offers the greatest possible upside at this juncture.**
https://preview.redd.it/0omquuwysede1.png?width=553&format=png&auto=webp&s=ddb9d7db74e85cae34861f2e7170c3ac265023b6
For more info on the company, the investor presentation is here:
[https://investors.targethospitality.com/presentations-and-events/presentations/default.aspx](https://investors.targethospitality.com/presentations-and-events/presentations/default.aspx)
I am long commons and calls of various strikes and expiries as indicated below.
https://preview.redd.it/bkjwjp28tede1.png?width=775&format=png&auto=webp&s=0f3c00862e5af8a0ca1132d4185449d620b09b83