Most S&P 500 investors know it's unwise to fight the Fed. But do you know how to bet with the House — of Representatives?
New looks inside of U.S. Congress members' stock trading activity show they're loading up mostly on 10 stocks, many in the S&P 500. Top dollar-value buys by members of the House and Senate in the past 12 months include tech and communications giants like Microsoft and Alphabet plus more obscure energy plays like Shell Midstream Partners, show data from Capitol Trades reviewed by Investor's Business Daily and MarketSmith.
Congress members' stock picks are actually pretty good, too. More than half of their largest nine new buys that are publicly traded are topping the S&P 500's 20.2% rise in the past 12 months. Members of Congress would have been doing better if it wasn't for this year's 4.8% S&P 500 drop. Many of the big-cap tech stocks representatives and senators prefer are down this year.
But they seem to know what they're doing.
Watching Congress' S&P 500 Stock Picking
You might be surprised to find out that members of Congress are active investors — even while in office. But it's a fact getting more attention.
U.S. lawmakers traded a whopping $355 million in stock last year, says MarketWatch, citing data from Capitol Trades. And more than 100 lawmakers conducted trading in shares, many publicly traded, in the U.S. and abroad.
Congress members' stock market moves are monitored as part of arcane disclosures mandated by the Stop Trading on Congressional Knowledge, or STOCK Act. They're flawed reports, though. Many are filed late or incompletely if at all.
Two Senate bills are being introduced to tighten what members of Congress can do with their portfolios while in office. Some others also suggest only allowing members of Congress to own mutual funds or ETFs they don't have any influence over.
But for now, S&P 500 investors peer inside Congress' portfolios. And it's clear where their favorites lie.
Congress Sticking With S&P 500 Technology
Congress' favorite S&P 500 sector for buying is technology. By far.
Politicians tracked by Capitol Trades bought $93.2 million of tech stocks in the past 12 months. That's more than any other sector and nearly triple the buying activity in the No. 2 most-popular sector: energy. More than 50 politicians placed a total of more than 1,100 buy transactions in the tech sector.
And the No. 1 new buy by politicians is Microsoft. The dollar value of trading by politicians in the software giant hit more than $60 million, Capitol Trades says. And it's an uncanny hit. Shares of Microsoft are up more than 28% in the past 12 months, despite falling nearly 9% this year so far. That trounces the 20% rise of the S&P 500 in the past 12 months. Should you buy Microsoft stock now?
But Microsoft is far from the only S&P 500 tech stock Congress members are buying. More than half of the nine publicly traded top buys by politicians are in technology or communications services. The No. 2 top buy is Alphabet, the target of 49 trades with a cumulative dollar value of $5.5 million, says Capitol Trades. It's up more than 44% over the past year, also lapping the S&P 500.
House Speaker Nancy Pelosi, who disclosed her and her spouse's 17 stock trades valued at $18.9 million over the past year, loads up on technology stocks, too, Capitol Trades says. Information technology is her No. 1 most traded sector. Her spouse's last two trades were both buys of Apple.
Congress: Finding Value In S&P 500 Energy Stocks
You'll probably hear plenty of "yeas" from Congress following the surge in S&P 500 energy stocks the past year. It's the No. 2 sector of buying activity from Congress.
Members of Congress plunked down more than $31 million in stock buys in energy, Capitol Trades says. And some of the buys were perfectly timed. The Energy Select Sector SPDR ETF soared more than 70% over the past 12 months. And it yields another 3.6% on top of that. Such a run makes it the top-performing S&P 500 sector, by far, in that time.
The top Congressional energy buy is Shell Midstream Partners. Just this year, the stock is up nearly 12%. But more importantly, it yields a whopping 9.4%.
Time will tell if new regulation will curb Congress' love of trading stocks. But until they do, it looks like it pays to bet with the house.
U.S. Politicians' Favorite Stocks To Buy
Over the past 12 months, by dollar value of purchases
| Company | Symbol | Total value of politicians' buy trades ($ millions) | 1-year stock % ch. | Dividend yield | Sector |
|---|---|---|---|---|---|
| Microsoft | $63.9 | 28.2% | 0.8% | Information Technology | |
| Alphabet | $5.5 | 44.9% | 0.0 | Communication Services | |
| Nvidia | $5.0 | 85.0% | 0.1 | Information Technology | |
| Amazon.com | $3.5 | -9.9% | 0.0 | Consumer Discretionary | |
| Shell Midstream Partners | $3.3 | 19.2% | 9.4 | Energy | |
| Apple | $3.0 | 29.9% | 0.5 | Information Technology | |
| Netflix | $3.0 | -15.5% | 0.0 | Communication Services | |
| Morgan Stanley Finance LLC | N/A | $3.0 | |||
| Antero Midstream | $2.97 | 25.6% | 9.0 | Energy | |
| Magellan Midstream Partners | $2.6 | 13.8% | 8.5 | Energy |
Sources: Capitol Trades for stock positions, market data from S&P Global Market Intelligence
Follow Matt Krantz on Twitter @mattkrantz
