In this article, we’ll look at what stocks Democratic congressmen are buying.
The reason? Simple. Many investors believe U.S. lawmakers have the inside track regarding the stock market. Hence, stock pickers are increasingly monitoring their trades to see if they fit their investment profile.
Last September, former House Speaker Nancy Pelosi announced that the Senate would soon pass a bill prohibiting members of Congress from trading single stocks. But come 2023, Democrats are no longer in power in the House, and Pelosi is not the speaker (although she remains a prolific stock picker, more on that later!).
At present, it is permissible for members of Congress to engage in the purchase and sale of individual stocks, provided that they reveal their trades within 45 days.
That provides a treasure trove of data to sift through when picking stocks democratic congressmen are buying. And the time to take advantage of this information is now!
American Express (AXP)
In January 2022, Pelosi exercised 50 call options with an $80 strike price to purchase 5,000 shares of American Express (NYSE:AXP). Notably, she acquired a minimum of $100,000 worth of AXP stock in June 2020.
Interestingly, Pelosi is in an esteemed company after investing in AXP. Warren Buffett, one of the most successful investors ever, is one of the biggest supporters of AXP.
Over the years, Berkshire Hathaway (NYSE:BRK-A, BRK-B), the holding company run by Buffett, remains one of American Express’s largest shareholders. The investment has paid off handsomely. American Express is one of the world’s most successful financial services companies. Consequently, Berkshire Hathaway’s investment has appreciated considerably.
You can chalk that down to consistent performance that continues to date.
In Q4 2022, American Express achieved impressive top-line performance, $14.18 billion, representing a remarkable 17% increase year-over-year.
The total network volume also experienced a significant surge, reaching $413.3 billion, a 12% increase from the previous year. Furthermore, the company’s net interest income grew by 31% due to higher interest rates, while card fees rose by 21% compared to the previous year. The travel and entertainment sector also demonstrated robust growth. There was a 38% increase as travel restrictions eased worldwide.
American Express experienced a 25% rise in revenue and reported earnings per share of $9.85 for the full year. The company also added a record-breaking 12.5 million fresh card accounts in 2022.
Although shares have lost nearly 10% of their value in the last month, this presents an opportune moment to capitalize. If you are looking into data for the stocks democratic congressmen are buying, this one is worth highlighting. There are very few financial services companies out there with the pedigree of American Express. And it is rare to see them trading at a discount.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) also makes it on this list because it is among the holdings of Unusual Whales Subversive Democratic ETF (BATS:NANC). It is an exchange-traded fund tracking securities purchased or sold by Democratic members of Congress and their spouses.
Historically, the tech conglomerate is considered a safe investment option. Nonetheless, shares are in the red when considering six-month data.
Alphabet stock is down primarily because Microsoft’s Bing, powered by artificial intelligence, may threaten the company’s dominant position in search.
Alphabet experienced a significant market value drop of $100 billion in February because of fear surrounding this. In addition, the release of a promotional video in which its new chatbot provided incorrect information. The event fueled concerns that Alphabet is trailing its rival, Microsoft.
OpenAI, a startup backed by Microsoft with around $10 billion, introduced software in November that has impressed consumers and gained attention in Silicon Valley circles. Its remarkably accurate and well-crafted responses to basic prompts promise to revolutionize the tech space.
The reaction seems overblown, in my opinion. Since the early 2000s, Google has dominated the search engine market and continues to do so. As of January 2023, Google leads the market with a share of approximately 84.69%, while Bing accounts for 8.85% of the global search market. Yahoo’s market share was 2.59%.
Furthermore, Google’s vast resources give it a distinct advantage in developing cutting-edge AI technologies. There are very few companies with the kind of computational power Alphabet possesses. Therefore, the race for AI supremacy is far from over. Investors must take advantage of the current downturn to increase their stake in this innovative tech giant.
Microsoft Corp. (MSFT)
Microsoft (NASDAQ:MSFT) is one of the world’s largest professional software and cloud services providers. Hence, it comes as no surprise that is another company that is interesting to Nancy Pelosi.
In May 2022, Pelosi picked up 50 call options for Microsoft with a $180 strike price set to expire in June 2023.
Although Microsoft reported fiscal second-quarter earnings surpassing consensus analyst estimates in January, the company’s revenue and quarterly guidance did not meet Wall Street’s forecasts.
Furthermore, Microsoft’s net income fell 12.4% from the prior year to $16.4 billion. The company’s Azure and other cloud services revenue growth fell to 31%, a fall of 15 percentage points versus the prior year.
Despite the current market conditions, very few investors are betting against Microsoft. This is due to its significant investment in artificial intelligence, particularly through its partnership with OpenAI.
OpenAI’s ChatGPT is a cutting-edge AI tool trained on massive amounts of data to generate human-like responses to prompts within seconds. Recently, Microsoft announced its plans to invest $10 billion in OpenAI and integrate GPT, the underlying language model of ChatGPT, into its Teams and Office software. Hence, despite the recent slowdown in key business lines, optimism reigns for MSFT stock.
In conclusion, as AI continues to transform various industries dramatically, Microsoft’s emphasis on integrating AI into its software and services will give it a unique competitive advantage over its peers for the foreseeable future.
— Faizan Farooque
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Source: Investor Place