Report: Congress Beat the Market in Trading for 2021

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Spencer Platt/Getty Images
Jordan Dixon-Hamilton

Congress beat the market, on average, with its millions of dollars of trades in 2021, according to watchdog organization Unusual Whales.

Members of Congress bought and sold close to $290 million in stocks, $140 million in options contracts, $124 million in other securities like private equity funds, and $500k in cryptocurrencies during 2021.

In addition, House representatives held stocks for an average time of 134 days compared to 128 days for Senators.

Beating the market was a bipartisan effort, with both Republicans and Democrats in the House and Senate having higher returns than the SPDR S&P 500 ETF ($SPY), which “seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P 500 Index.”

Unusual Whales found $SPY returns to be +13.6 percent for the year. However, House Democrats and Republicans had average returns of +14.7 percent. Additionally, Senate Democrats were up +15.4 percent, and Senate Republicans were up just under +13 percent. Therefore, Unusual Whales concluded that, on average, Congress beat the market.

A collection of 35 members of Congress had individual portfolios that beat $SPY last year. Of those, 16 were Republicans, and 19 were Democrats. These include prominent politicians like Reps. Dan Crenshaw(R-TX), Nancy Pelosi (D-CA), Ron Wyden (D-OR), and Sens. Mitch McConnell (R-KY), and Tommy Tuberville (R-AL).

Some of the largest trades come from Rep. Suzan DelBene’s (D-WA) family selling up to $25 million in Microsoft stock in September and October. In November. Sen. Bill Hagerty (R-TN) sold off $5 million in tech company Datadog’s stock.

The busiest congressional traders were Reps. Josh Gottheimer (D-NJ), Marie Newman (D-IL), Susie Lee (D-NV) and Zoe Lofgren (D-CA), in the House. Senators John Boozman (R-AR) and Tuberville were the busiest Senate traders, according to Unusual Whales.

The organization also called attention to several “unusual trades” that took place throughout the year. Notably, Rep. Brian Mast (R-FL) bought Tilray stock, a marijuana company, before voting for a marijuana-related bill. Subsequently, Mast sold Tilray at its all-time high for returns of +563 percent.

Multiple members had unusual trades of Lockheed Martin ($LMT) stocks. For example, Rep. Kevin Hern (R-OK), a member of the House Budget Committee, bought a second round of up to $100K in $LMT stock two weeks before news broke that Lockheed won a $10.9 billion contract with the federal government.

Rep. Kathy Manning (D-NC), a House Foreign Affairs Committee member, also bought up to $30,000 in Lockheed stock two weeks before the multibillion-dollar contract.

Congressional stock trading advocate Nancy Pelosi added to the list of unusual trades. As Unusual Whales explains:

The US Army first announced a $22B augmented reality deal with Microsoft on March 31, 2021 and reiterated its commitment to this partnership in October. Speaker Nancy Pelosi disclosed exercising 150 calls on March 19, 2021 at a strike price of $130. She’s up 160%.

Sen. Cynthia Lummis (R-WV) bought up to $100K in bitcoin, and Sen. Pat Toomey (R-PA) held cryptocurrencies while the senate was drafting cryptocurrency tax regulations.

Sen. Tuberville’s late financial disclosures revealed he sold up to $15,000 in Microsoft stock two weeks before the U.S. Department of Defense (DOD) canceled a $10 billion contract with the company. Rep. Pat Fallon (R-TX), who “sits on the House subcommittee responsible for reviewing DOD software contracts,” also sold up to $250,000 in Microsoft right before the contract cancellation.

Rep. Blake Moore (R-UT), who had the best options trades in the house with an average return of 62.5 percent, bought up to $60,000 in Raytheon stock while sitting on the House Armed Services Committee responsible for reviewing DOD tech contracts.

The trades could add to pressure to tighten the rules around trading by House members and senators. The STOCK Act passed Congress with huge bipartisan support and was signed into law in March 2012. This came after Breitbart News senior contributor Peter Schweizer released Throw Them All Out in 2011, exposing corruption in the highest echelons of elected life. 

Prior to that, academics had shown several times that the unusually excellent performance of Congressional stock portfolios indicated lawmakers were using non-public information when buying and selling stocks. 

A 2011 study showed that Democratic lawmakers had far higher “abnormal returns” than their Republican counterparts, an indication of more widespread use of nonpublic information by Democrats.

The STOCK Act did not, however, ban lawmakers from buying or selling individual securities. It only required disclosure of trades in excess of $1000.

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