In short, many members of Congress beat the market in 2021. They traded more than ever before.
And they made numerous unusually timed trades, resulting in huge gains.
Here are members of Congress that beat the S&P last year:
I am going to post the full report below, but here is the TL;DR and then one of my favorite sections:
Here is my favorite section:
Aligning the data with events that took place throughout the year, we have compiled a list of unusually timed trades by Congress (we’ll continue to update this as we notice things):
Make sure to go read the full report, but I am posting it below to spread this information to anyone who will listen.
(And please, share it too, with or without a link to Unusual Whales--that’s just not the point about this, at all, make no mistake. We need answers to this. This cannot remain the norm.)
2022-01-10
Congress likes to trade. That being noted, last week marked the end of President Joe Biden’s first year. The Biden Administration has continued to fund pandemic aid, rolled out vaccines, promoted infrastructure, and insists on Build Back Better.
Our congressional members have been privy to the conversations and negotiations that have formed Biden’s legislative agenda. These have been taking place throughout the year in meetings behind closed doors. All the while, our elected officials have also been actively trading stocks, options, and other financial assets.
UnusualWhales.com is the go-to place for retail tooling in options, equities, and crypto markets. It helps retail traders, exposes market-wide corruption, does deep market research, and also has cool memes. I have previously highlighted unusual political trading. This report aims to summarize all political trading from the past year. There was a lot.
I looked at all financial disclosures from December 1, 2020, to December 22, 2021 (Note: as the remaining trades from 2021 come in, I’ll update this report).
Here’s the TL;DR just in case, but I encourage you to read through, check out my other posts on the topic (all linked below), and to share your thoughts with me on
Last year, Congress bought and sold nearly $290 million in stocks (corresponding to 3,500+ transactions), $140 million in options contracts (280+ transactions), $124 million in other securities like private equity funds (200+ transactions), and $500k in cryptocurrencies (25 transactions). Other assets were also bought and sold, you can see total amounts below:
Compared to 2020, the total amount of options trading exploded in 2021 by over 5x, meanwhile trading in other notable asset classes decreased. We see that stock trading decreased by nearly $200M. However, we should remember that former Georgia Senators David Perdue and Kelly Loeffler traded a ton in 2020 and actually account for ~$200M in those stock transactions! When we exclude these two Senators, stock trading in both years were comparable.
The total value of stocks traded was nearly identical in the House, with House Democrats selling slightly more than Republicans in 2021. Meanwhile, Senators were selling nearly 3x more than buying stocks.
Looking at total amounts traded per month, we see that Senate Republicans did some major buying at the beginning of the year, coinciding with the start of Biden’s term. Meanwhile, August was a big month for House Democrat stock purchases. This can be mainly attributed to huge $MSFT buys disclosed by Rep. Suzan DelBene (FYI her spouse is a top Microsoft exec).
On the other hand, September to November saw huge stock sales in Congress. Again, the majority can be attributed to Rep. Suzan DelBene’s family selling off up to $25 million in $MSFT in bothSeptember and October. In the Senate, November saw Senator Bill Hagerty sell up to $5 million in tech company Datadog ($DDOG) and Senator John Hickenlooper sell millions in other tech stocks (such as $PYPL, $NVDA, $MSFT, $FB, $AAPL, $AMZN, $GOOGL).
By breaking out these trades into their sector, Congress mostly traded tech, finance, industrials (oil and gas), non-energy materials, and miscellaneous stocks. Miscellaneous stocks are mostly broad sector index funds and ETFs.
Some observations:
Who’s been busy trading in 2021? The heat maps below show the number of stock trades and total amounts traded per sector by House and Senate members.
Here are some observations from the number of trades made by our politicians:
It’s a different story when looking at the total amount of money traded:
Let’s look at the top 10 tickers per sector that were bought and sold by Congress in 2021. The total amounts spent by Congress on each company’s stock in 2021 are represented by the size of the rectangle. We see that tech and industrials (oil and gas) reign supreme.
When we look specifically at the top 10 stocks preferred by the House, we see notable tech companies, as well as oil and gas stocks.
Meanwhile in the Senate, the top 10 stocks bought were infrastructure and tech related. While the top 10 sold stocks were mostly just tech.
This section aims to show what the majority of returns on these political trades look like.
To approximate returns, the following assumptions were made:
Let’s quickly address some limitations to this approximation method:
With that out of the way, let’s talk about visualizing data distributions. Box plots are a great way to show what the distribution of data looks like. In a box plot, 50% of data points are contained within the “box”, while the upper and lower vertical lines running out of the box show the top and bottom quartiles (ie. 25% of the data points).
The dots above and below the box and lines indicate outliers (in this context, trades that resulted in insane gains or really bad losses). The box plot below shows that the majority of trades had returns between 0-15% across both parties and branches.
If we zoom in on just the boxes, we can show the distribution of data in a different way using a histogram. Histograms show the number of data points across a range (in this case percent returns). We see that the majority of trades hover above 0% but below the average (indicated as a dotted line in each group).
Here’s a summary table on average amounts by party and branch, as well as the number of trades included (n), the standard deviation (sd), the variance in percent change (var), and maximum and minimum returns observed:
On average, House Democrats and Republicans had returns at +14.7%. Meanwhile, Senate Democrats were at +15.4% and Senate Republicans just under +13%. Independent Senator Angus King’s two trades yielded a +16.5% return rate (excluded from the charts above).
To compare, we can take the same transaction periods and estimate $SPY returns (ie. instead of trading those tickers, we trade SPY instead). Using this method, SPY returns were found to be only +13.6%.
This means that in 2021, on average, Congress beat the market.
Using these estimates, we can provide a "visual list" of politicians that beat SPY last year.
How about those outliers that had insane returns? This section will highlight the Top 10 in each branch.
We can see that Rep. Austin Scott had the biggest returns with a bet on FuelCell Energy Inc, followed by Rep. Brian Mast’s convenient Tilray sale at its ATH last year, and then Rep. Thomas Suozzi’s United Rentals sale after picking it up at its lowest price in 5 years following the stock market crash in 2020.
Returns in the Senate look modest compared to their House colleagues. The top trades in the Senate could be attributed to Senator Tuberville and his Alcoa Corp sales in late 2021 which was when intense negotiations were happening on Biden’s Infrastructure Bill. Ranking second was Senator Pat Toomey’s post-split Tesla purchase and sale in early 2021.
These estimates also provide a look into the average amount of time stocks were held before sale. For the ~1400 transactions with buying and selling dates (i.e. not held past the end of 2021), the average amount of time for the House was 134days between buy-sell dates and 128 days for the Senate.
Aligning the data with events that took place throughout the year, we have compiled a list of unusually timed trades by Congress (we’ll continue to update this as we notice things):
(We'll continue to update this list as trades get disclosed)
Speaker Nancy Pelosi’s financial disclosures are arguably the most followed in Congress. The perception is that she is the best trader on the Hill. I took a look into her financial portfolio
Earlier in this post, I stated that President Biden “kinda” had control in the Senate. He has the majority with 50 + 1 VP Kamala Harris out of 100… But with the filibuster in place (requiring 60 votes to pass legislation) and with Senator Joe Manchin power-tripping, Biden faces many more roadblocks ahead. Speaking of Joe Manchin…
Joe Manchin makes $500K a year from coal company Enersystems, and recently raised $400,000 from corporate coal lobbyists this third quarter alone.
He stated opposition to a proposed Build Back Better deal, with its clean electricity program.
Link:https://t.co/lodTLftEbF — unusual_whales (@unusual_whales)
December 21, 2021
Last year, I highlighted which elected officials had their hands (read: financial portfolios) positioned in infrastructure prior to Biden’s Big Infrastructure Bill getting passed. It was interesting to see who was buying what to potentially profit from the influx of $550B in new infrastructure funding. Why is this still allowed? Read my coverage
Although not elected by the people, high-ranking officials at the Federal Reserve were exposed for insider trading in the latter part of 2021. Who watches the Fed? No one, it seems. Read the post
The pandemic has caused a lot of problems on supply chains. One of those resulting in a major shortage in semiconductor chips, which are used in literally everything. Currently, China houses most of the world’s chip manufacturing capacity, and in the last 2 years, we saw them hoard that supply for themselves.
Congress was aware of this dependence (read: national security issue) back in 2020, and legislation was drafted accordingly. Proposals included ramping up domestic chip manufacturing capacity and tax credits for manufacturers. Throughout 2021, we’ve continued to hear about the urgency required to address this problem. With the following events happening:
As it stands, no funding has been provided to address the problem. But this hasn’t stopped Congress from dipping into the chips industry! I highlighted this fact
Isn’t it a bit odd to be an elected official, where your colleagues and agencies you oversee are negotiating the finer details of vaccine pricing with pharmaceutical companies and funding the deployment of those vaccines, and you still decide to invest in said companies? Well, that’s been happening throughout 2020 and 2021. You can read about my recent coverage on this topic
2021 was a year of firsts. One of those was the first time Congress entered the world of cryptocurrencies. Not only in legislation to regulate the industry but also in adding crypto to their financial portfolios.
A total of 7 congressional members bought and sold cryptocurrencies last year. They included:
House Representatives:
Felix Moore: Invested up to $45k in ADA and $15k in ETH
Marie Newman: Invested up to $50k in GBTC
Mark Green: Bought and sold BAT, CELO, DOGE, EOS, ETC, LINK and XLM with disclosed amounts varying between $15k to $30k
Michael Waltz: Invested up to $100k in BTC
Senators:
The general public has become aware of Speaker Nancy Pelosi’s proficient options trading. We have covered her trades and her portfolio elsewhere on this site.
However, there are a couple of other Congressional members who also traded options in 2021. Most notable is House Democrat Josh Gottheimer. We can see that he bought and sold over $60 million in calls alone. These disclosed values are so big that they skew other amounts disclosed by his colleagues. So I removed him from the following chart so we could better see other trades.
Speaker Pelosi comes in second with her calls totaling over $10 million, followed by Senator Tommy Tuberville and selling puts, calls, and shorts.
Options were bought and sold for a diverse range of companies. The first set of heat maps shows the number of times each member bought or sold options for specific companies. We see that all of Rep. Gottheimer’s calls were exclusively for Microsoft. Clearly, not an Apple fanboy. Meanwhile, Senator Tuberville’s puts were for his infrastructure and tech stocks.
The second set of heat maps shows the total value spent per company options. As expected, Rep. Gottheimer’s $MSFT calls outshone everyone else’s total traded amounts. If you’re wondering whyspeaker Pelosi’s family trades options the way they do, we asked Dan Wagner to comment on this. His post will come out later this week! Stay tuned.
In 2021 and 2020, we witnessed several elected officials’ trade options. I've written about Pelosi's options strategies
Because we cannot verify aspects of these individual trades (as details on options trades vary in detail per disclosure), we have to make a few assumptions about the options trading. For the sake of argument, we looked at around 100 options trades by members in 2021 and assumed these trades were buying/holding. Very simple long or short positions, nothing complicated. Although not fully accurate, let's determine the approximate returns overall:
It looks like the House Representatives are quite good at options trading (with an overall average return of 35.7%). The best options trader in the House, from this limited analysis, is Rep. Blake Moore with an average return of 62.5%, followed by Speaker Pelosi with an average return of 36.6% at the time of this analysis. You can track her returns in real-time at our __i_am_the_senate__page.
When we exclude puts, their returns are even better at an overall average of 47.1%. Here’s a chart of their returns on-call contracts in 2021.
It should be stated that elected officials making leveraged options trades off privileged information should probably not be allowed. Here are some unusual options trades and the context around them:
First introduced by the STOCK Act, Congress has at most 45 days to file their financial disclosures from the transaction date. If they require more time, they have at most 90 days from the transaction date but must file an extension request. Late disclosures are subject to penalties in both the House and Senate. See screenshots below from Ethics Committee websites.
Here is a list of elected officials who filed late financial disclosures in 2021 (ie. more than 45 days late. I did not confirm if extensions were filed for these). It is interesting to note Senator Tommy Tuberville’s 132 trades that were disclosed late. Apparently, he didn’t know the procedure. Right… Furthermore, the only consequence for filing that many transactions late is the single $200 fine! Senator Tuberville did not comment on whether he paid the fine. I wish the IRS were that easy on us. However, some elected officials took action this past year to act in more of an ethical manner. For example, Rep. Tom Malinowsku moved his entire financial portfolio into a blind trust… after he was found to be in violation of the STOCK Act in early 2021.
Whether it’s questionable timing or something the individual may or may not know, our elected officials put themselves in tough situations when they are allowed to trade in specific equities and derivatives while actively legislating. They open themselves up to perceived conflicts of interest, which can make the public question their motivations.
This is why many have called for measures that go above and beyond the STOCK Act. These include moving financial portfolios into blind trusts, being restricted to broad sector index funds only (and not individual company stocks), or not being able to trade at all while in office.
Ultimately, without any support from the Old Guard, such as Speaker Nancy Pelosi, these measures will never be implemented. Pelosi has been very vocal about whether elected officials should be able to trade while in office.
This report shows that in 2021 Congress continued to trade in the very sectors they were tasked to create legislation for. Our politicians traded in huge volumes and amounts while being privy to closed-door meetings and negotiations on committees in the House and Senate. I have previously highlighted how our elected officials have profited during the beginning of the pandemic (links to
For me, this analysis was surprising, maddening, and upsetting. Despite what Speaker Pelosi thinks, the general sentiment amongst regular folks is that our elected officials should not be trading in the stock market while they represent us in office. We should remember, though, that we, the people, wield power to elect folks who also believe in the same. One encouraging stat is that for every one Congressional member that did disclose trades in 2021, there were around 3 that did not trade at all. Until Congress changes, we’ll continue to highlight their financial ties here at
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