Nancy Pelosi, D-California, has several major accomplishments on her resume. She has been a U.S. Representative for almost 37 years. She is the first female Speaker of the House of Representatives and the first woman to lead a chamber of Congress. Is she also a market-beating investor?
The former speaker of the House of Representatives almost tripled the number S&P 500She has the ninth-best return among congressmen in 2023, according to options trading platform operator Unusual Whales. However, all of Pelosi’s trading disclosures listed her husband, Paul Pelosi, as the owner.
Pelosi’s recent purchases
In the last 12 months, Pelosi has only purchased two stocks. Both are also favorites of many other investors.
On June 15, 2023, the former speaker’s husband exercised 50 call options to purchase 5,000 shares of Apple (NASDAQ:AAPL) for $80 per share. Apple’s current share price is more than double this purchase price.
Mr. Pelosi has owned Apple shares for years. Other members of Congress or their families have also invested in the technology giant. Apple was second on the list of stocks that lawmakers bought most in 2023.
On the same day of the Apple transaction, Pelosi also exercised 50 call options to purchase 5,000 shares of Microsoft (NASDAQ:MSFT) for $180 per share. Like Apple, Microsoft’s current stock price is more than twice the strike price of these options.
More options
The first purchases of the profitable call options for Apple and Microsoft occurred in 2022. Paul Pelosi has purchased additional call options on other stocks in recent months.
On December 22, 2023, Mr. Pelosi purchased 50 call options for Nvidia (NASDAQ:NVDA) with an exercise price of $120 and an expiration date of December 20, 2024. At that time, Nvidia’s share price was around $488.
On February 12, 2024, Pelosi purchased 50 call options for Palo Alto Networks (NASDAQ:PANW) with an exercise price of $200 and an expiration date of January 17, 2025. Palo Alto Networks’ stock price was hovering around $372 at the time.
A few days later, on February 21, 2024, the former speaker’s husband purchased 20 more call options on Palo Alto Networks. Again, the strike price was $200 and the expiration date was January 17, 2025. However, the stock had fallen significantly to around $262.
Call options whose strike price is lower than the current stock price are called “in-the-money” options. Purchasing in-the-money call options reduces upfront costs for investors and limits the risk of loss, while allowing them to benefit from upward movements in the underlying stock.
Are Pelosi’s picks a good choice now?
Valuation is an issue for all four stocks Pelosi likes. Apple’s sluggish growth probably doesn’t justify its forward price-to-earnings ratio of nearly 26. Microsoft and Nvidia trade at well over 30 times forward earnings, while Palo Alto Networks’ forward earnings multiple is a sky-high 47.
However, Apple, Microsoft and Nvidia are likely to benefit from the generative AI boom for many years to come. The need for cybersecurity solutions is expected to grow, giving a boost to Microsoft and Palo Alto Networks. I think Pelosi’s selection is a good choice for long-term investors.
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Keith Speights has held positions at Apple and Microsoft. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia and Palo Alto Networks. The Motley Fool recommends the following options: long $395 January 2026 calls on Microsoft and short $405 January 2026 calls on Microsoft. The Motley Fool has a disclosure policy.
Former House Speaker Nancy Pelosi Nearly Tripled S&P 500 Returns in 2023: Here Are the Stocks She Bought was originally published by The Motley Fool