Date: 7/17/2022
Author: Mr. X
Warren Buffet. George Soros. Paul Tudor Jones.
These are three legendary investors whose musings can reshape markets and lead retail traders to pour into individual stocks just based on the rumor that they are interested.
Yet there is one power couple on Wall Street who may outmatch them all. Of course, one of them is more prominent than the other. And this couple is moving towards one big stock.
You know the name. You know the stock. You just might not think of this person when you think of elite traders.
I refer, of course, to the investing genius Nancy Pelosi. (Oh yeah, she’s also Speaker of the House.)
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She was doing so well in 2021 that young traders were copying her moves. Nancy and her husband Paul Pelosi reportedly beat the market by 5% in 2019 and 14% in 2020. FinePrint reported in January 2021 that from 2019 through the fourth quarter of 2021, the Speaker’s portfolio grew by more than $62 million, with an additional $2.8 million picked up from options trading.
Nancy Pelosi is apparently very good at picking stocks. In fact, she’s something of a meme. Speaker Pelosi was also very vocal about the right of those in Congress to trade stocks. “We’re a free market economy,” she said in December. “They [those in Congress] should be able to participate in that.” She later said she was “open” to a ban on those in the House dealing in stocks because of concerns about insider trading.
Now, it’s a bit unfair because Nancy Pelosi’s husband Paul is a venture capitalist who runs Financial Leasing Services. It would be a significant dent to his career if he was unable to trade. Even if you think those in Congress should be prohibited from trading stocks because of possible insider trading, it could prove difficult to enforce. Where would it end? Spouses, significant others, parents, children, cousins, friends… there would always be some sort of connection that could potentially be seized upon as corrupt.
Still, it would be the height of naivete not to pay attention when the Speaker or her husband are making big moves… especially when there’s a major bill coming up for a vote.
As soon as Tuesday, the Senate may vote on a bipartisan bill that could provide $52 billion for domestic chip production. This is seen as a necessary step as geopolitical competition increases with China and the United States faces problems with straining supply chains. Commerce Secretary Gina Raimondo is pushing for swift action, saying that the bill “has to pass now… not six months from now.” She added helpfully that “it’s bipartisan.”
Is it though? While Republican and Democrat leadership tend to agree on foreign policy issues and maintaining America’s technological supremacy in key national security areas, this is an election year. So even when there is consensus, that’s no guarantee of political action. Senate Minority Leader Mitch McConnell has said that the GOP will not necessarily support the aid bill if the Democrats move forward with new legislation on climate and infrastructure. West Virginia Democrat Joe Manchin, as always, is the wildcard here.
However, it seems likely that government support for chip production is almost inevitable – if not now, then after the midterm elections. If the Republicans take back the House, we might even see a larger amount of support as GOP presidential contenders try to move to President Biden’s right by marrying “America First” manufacturing policies with aggressive defense policies.
There’s also heavy corporate support for the bill. Business Roundtable supports it and estimates that the media consumer semiconductor inventory has declined from 40 days in 2019 to fewer than 5 days in 2021. America’s share of semiconductor manufacturing has also declined from about 37% in 1990 to less than 15% today and will probably hit 10% by 2030.
Much of the other semiconductor manufacturing is also concentrated in Taiwan, which has made semiconductor manufacturing something of a national specialty. Considering its place in the sights of the People’s Republic of China, that seems like just another argument for funding American semiconductor development.
So what was Paul Pelosi’s buy that has press outlets outraged? He bought 20,000 shares of Nvidia (NVDA) on June 17 according to financial disclosures obtained by the conservative website the Daily Caller. Such an investment could prove wise if the bill for supporting semiconductors comes this week.
Yet it is no sure thing. NVDA recently hit a 52-week low. Numerous analysts have downgraded the stock recently, including Deutsche Bank, Citigroup, KeyCorp, and UBS Group among others. NVDA has also been hit hard by the collapse in crypto.
This may provide a massive opportunity. NVDA is already in the Prism Profits portfolio and will soon be in the Rogue Investing Daily Model Portfolio. We may not get the massive government investment in superconductors this week, but with the leadership of both parties behind this, it’s only a matter of time.
And hey – people leave Congress far wealthier than when they came in.
There’s a reason for that.
Mr. X is an investment analyst working in the Washington DC area who specializes in the intersection of business and public policy. After fifteen years working in politics, he writes on a classified basis for RogueInvesting.com to bring you news on what those with power are debating, planning, and doing.
