Nancy Pelosi Alert: 3 Stocks That Members of Congress Are Buying
Given differing perspectives, there has been significant discussion regarding whether members of Congress should be permitted as they have access to information that helps them profit from stock trades, whether they are actively trading or not. Some argue politicians have demonstrated an uncanny ability to time their stock investments to maximize financial gains, prompting calls for stricter regulations and a new ban for Congress members and their immediate families.
However, academic research suggests that stocks members of Congress are buying are most likely picked at random. Only a select few demonstrate greater aptitude in the financial markets than in the legislative process.
On the other hand, ban supporters argue that politicians can use close family members, such as spouses and children, to get around scrutiny of trades. It is still possible to track the stocks members of Congress are buying and get a glimpse of their recent trading activity, whether they are actively trading or their spouses and dependents. The success of some members of Congress has even inspired brokers to propose the creation of exchange-traded funds (ETFs) based on their stock picks.
With that in mind, let us examine some of the more successful stocks members of Congress — or their spouses and dependents — are buying:
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Palo Alto (PANW)
Source: Sundry Photography / Shutterstock.com
Palo Alto (NASDAQ:PANW), the California-based cybersecurity firm, saw its shares jump 9% after disclosure that former Speaker Congresswoman Nancy Pelosi purchased call options in the company. Pelosi isn’t the only major politician investing in the company, as data shows five other members of Congress from Republican and Democratic parties have also taken stakes in PAWN. However, Pelosi’s prominence and ability to achieve a 91% return on her investment over the last 12 months has generated the most attention, despite it was revealed that the calls’ owner was a spouse.
PAWN’s share price fell after reporting disappointing quarterly earnings a couple of weeks ago, and currently trades at a price-to-earnings (P/E) ratio of 46.4x. This is only slightly above the average for the broader U.S. technology sector of 44.2x. As one of the stocks that members of Congress are buying at large, it could signal confidence in Palo Alto’s long-term prospects despite recent earnings results not meeting market expectations. As the threat of cyberattacks increases, the company remains well-positioned in a growing industry.
