On Life, Liberty, and Stock Markets

Unusual whales was created in the hopes of exposing unusual trading.

So far, it has done that, for example, catching infamous moves like Citron's short before it was announced on GME. Here's the twitter link of that short caught

But the example list of unusual trading is long and exhaustive. What is new is whether unusualwhales also could be used to track and determine congress/senate transactions from the US House of Representatives, and see if these people were also potentially using information privy to them to trade.


This report will show:

• The breakdown of trading by House Members
• The breakdown of sectors by Party lines
• The richest members
• Whales linked to those transactions via the data tab

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TLDR.

• House Members traded a lot
• Most house members followed trends far earlier (ie: pharma/covid plays before retail, tech before/during shutdowns)
• House members are outperforming market averages
• Most Congress trading happening in June (covid vaccines), February (before covid released on selling), and March (QE announced), and August (tech rallies + more vaccine news)
• For the first time in congressional data, 2020-2021 saw numerous house members use options to leverage information and positions before the public. This is unprecedented.
• The whale catches the stock and options moves by senators/representatives, but this is only known after the fact due to reporting requirements and delay from the elected official.

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A Short History.

Let’s talk about the US House of Representatives and financial disclosures.

Like the US Senate, elected members in the US House of Representatives must disclose financial activity they or their spouse or their dependent children conduct while in office. These financial disclosures can be found here.

Every year the topic of representatives using knowledge they have access to make profits comes up, but was front and center last year when the pandemic began.

The 2012 STOCK Act was created to try and stop rampant profiteering from members of Congress and has worked to some degree (the legislation was subsequently weakened in 2013).

The purpose in this report is to explore trading behaviour of House Representatives especially in 2020 as the pandemic put the world on pause. Who was making a killing with their portfolios while the virus was making a killing around the world?

The Data

In 2020, the 116th House of Representatives purchased well over $100 million in securities (assuming maximum investment amounts). Without more research its hard to comment on how this compares to previous years, but that’s a lot of money regardless! Overall, these disclosures could be traced to the trading activity of 84 House Reps (and their spouses).

What’s up with August 2020? Well, that’s Congresswoman DelBene’s Microsoft disclosures skewing the data. So let’s remove her for the next couple sections and see what the data looks like.
For the record, here’s a list of the DelBene family’s 2020 disclosures… Interestingly, the huge 5M-25M “purchase” in August 2020 was her husband Kurt DelBene’s transfer of his vested stocks at the height of the Microsoft + TikTok deal. That amount was partially sold off on Sept 2 at MSFT’s peak in the summer and right before September’s sell-off.

Back to the Trends

Here’s what the data looks like now without the DelBenes:

Here’s how these investments look per sector:

On a whole, Democrats seem to love tech and Republicans seem to love oil and gas. (Note: Most of the “no sector info” tickers appear to be ETFs, trusts and indices, ex. IWN)

When we look at the Top 5 sectors invested in each month (table below), we see that tech was a consistent favorite throughout the year. Retail, finance and health sectors were popular at the beginning of the pandemic. Energy picks surged in June/July and again at the end of the year.

When looking at the Top 10 securities purchased in 2020, Microsoft was the top pick for many House Democrats, along with Amazon, Salesforce, Netflix and PayPal. Meanwhile, Republican Congressman Mark Green, alone, accounts for 99% of the stock purchases in oil and gas companies like USA Compression and Energy Transfer.

Check out the interactive Candlestick charts in the Appendix for each of these tickers. You can explore them to see who invested, when they invested and how much they invested in these 10 companies.

If you look at the interactive charts, the house members are VERY good at buying dips, and selling on rips/highs. Generally they are leading indicators, but because of the delay in when their transactions are reported, the data is backwards looking.

Who's a Rich Public Private Servant?

When breaking this down by individuals, it gets really interesting… Here are the top 20 House Reps with the most investments purchased in 2020.

Who would rather be day trading?

And here are the top 20 Congressmen and women who have disclosed the most transactions (# of buy, sell and partial sells) in 2020. The wild thing is that other than Lofgren, Courtney and Clark, all of these House Reps have reported that they were making these trades under their own accounts or jointly held accounts.

Highlighted Examples

Below is a heatmap of the number of purchases that each House Rep has made in different sectors in 2020. The darker the blue, the more purchases in that sector. If there isn’t a blue square then no purchases were made in that sector. If you hover over the square you can see the number of stock purchases, Member, sector and the committees they sit on (if any). Sometimes House Reps invest in the sectors their committees regulate, influence or get nonpublic information on.

Here are some standouts:

• Former Congressman Greg Gianforte sat on the Committee on Energy and Commerce and its Subcommittee on Communications and Technology in 2020. Invested up to $50,000 in the energy stocks, $2,875,000 in finance stocks, $315,000 in communications stocks, and $2,045,000 tech stocks
• Congressman Josh Gottheimer sat on the Committee on Financial Services and its Subcommittee on Investor Protection, Entrepreneurship and Capital Markets. Invested up to $540,000 in finance stocks and $6,825,000 in tech stocks (many of which were e-commerce companies)
• Congressman Donald Beyer sat on the Committee on Science, Space and Technology and its Subcommittee on Space and Aeronautics. Invested up to $180,000 in health stocks, $285,000 pharmaceuticals, and $300,000 in aeronautics and nautical systems manufacturing
• Congressman John Curtis sat on the Committee on Natural Resources. Invested up to $15,000 in oil and gas

When pairing House trades with real world events, particularly pandemic-specific ones, here's some notable events:

• Congresswoman Mikie Sherrill’s massive sell-off of stock and next day purchases of indices in response to Senators Richard Burr & Kelly Loeffler’s conflict-filled pandemic sell-off
• The CARES Act was signed by Trump on March 27, 2020. The Act set aside $9.5 billion for vaccine development (ie. Operation Warp Speed announced on April 29). But before that:
  • March 18: Former Congressman Greg Gianforte purchased up to $1 million in GlaxoSmithKline stocks (+25% at 2020 peak). The company eventually signed a contract with US Gov through Operation Warp Speed.
  • March 19: Gianforte purchased up to $15,000 in Sanofi stocks (+37% at 2020 peak), manufacturer of hydroxychloroquine (pushed by Trump around this time) and later an Operation Warp Speed participant. Also, FDA gave emergency authorization to hydroxychloroquine on March 30.
  • April 13: Congresswoman Virginia Foxx purchased up to $50,000 in GlaxoSmithKline stocks (+10% at 2020 peak). Another $15,000 on July 10 (+6.3% at 2020 peak).
  • July 22: Congressmen Mo Brooks, Ed Perlmutter and Mike Conaway all bought Pfizer stocks in June/July right before the US gov signed a $1.95 billion vaccine contract
  • July 29: US Gov announces $2.1 billion deal with Sanofi and GSK for vaccine development
  • August 5: US Gov announces $1 billion COVID vaccine contract with Johnson & Johnson. Congressman Kevin Hern (sat on the House Committee on Budget) and Carol Miller (Oversight and Reform) purchased JNJ stocks in July
• Congress passed the COVID Relief Bill on December 21, 2020. Trump signed on Dec 29. Also included was funding for clean energy.
  • October 28: Former Congresswoman Susan Davis purchased up to $50,000 in Canadian Solar Inc. (+64% at 2021 peak). Did not sell in 2020.
  • October 28: Congressman Josh Gottheimer purchased up to $15,000 in Enphase Energy Inc. (+108% at 2021 peak). Did not sell in 2020.
  • November 5: Congresswoman Katherine Clark purchased up to $30,000 in First Solar Inc. (+24% at 201 peak). Did not sell in 2020.
  • All through 2020: Congressman Alan Lowenthal has dipped in and out of Sunrun for most of the year, but made additional purchases of up to $15,000 each time on October 13 (+48%) and November 12 (+81% at 2021 peak). Did not sell any Sunrun for the rest of 2020.
  • December 22 (next day): House Speaker Nancy Pelosi’s spouse purchases 25 Tesla leaps with a strike price of $500 and expiry March 18, 2022 (max amount estimated to be $1 million). Has not sold these yet.
  • December 22 (next day): Congressman Gilbert Cisneros bought up to $100,000 in Tesla stocks (+37% at 2021 peak). Did not sell in 2020.

Who is trading Options?

Numerous house members also trade options. This means they are using leveraged positions on leveraged information. Please go through the info yourself.
As of December 22nd stimulus was just approved on that day. On December 22'nd, Pelosi’s Husband purchased deep ITM TSLA and AAPL calls. After Market close on December 22'nd, she voiced support for $2000 of stimulus after Donald Trump tweets the need for additional stimulus. Those same companies rally 5%, giving an instant +30 return, on Dec 23rd.
Here are some initial examples:

• Congressman Langevin: In 2019 he bought $BABA calls right before a Chinese trade deal. He sold large amounts of $HUYA, $ROKU, $FB calls RIGHT BEFORE Covid, those positions ralling on QE and "online" momentum.
• Congressman Gottheimer: He has sold calls at peaks on $MSFT all 2021, & seemingly buying back the contracts on dips. This in blocks of $250,000 - $5,000,000, which is incredible size given the amount of $MSFT shares he owns. For example, on 02-12 he sold 500k $MSFT $160 strike expiring 06/18/2021. On that same day, he bought deep ITM calls of $1M-5M at $145 expiring 03/19/2021.
• Congressman Langevin: In 2019 he bought $BABA calls right before a Chinese trade deal. He sold large amounts of $HUYA, $ROKU, $FB calls RIGHT BEFORE Covid, those positions ralling on QE and "online" momentum.
• Pelosi: On that day Pelosi bought, whales pushed hard for $TSLA. Here was the $TSLA whale from that day: $655 C 12-24 trading at $1.55 at 12:47. It runs 600% in two days. Pelosi's play, bought at 250 ask, is now up 413, or 65% on a LEAP. She is a literal whale.

Summary

On https://unusualwhales.com/politics, you can explore different trades Members of Congress have made. The unusual stock and options trades and news that occurred around that time are linked. Detecting unusual trading is challenging and requires thorough analysis, but these tools hope to make it a bit easier.

This research reinforces why this tool was created: To detect insider and unusual market activity and to share that information widely in order to level the playing field.

Thank you for joining me and for creating this community together.

Together, we are whales.

APPENDIX

Check out these interactive candlestick charts for the Top 10 companies that the House invested in last year. You can zoom into a date range, you can hover over each candlestick to gain more info, and you can see who invested when and how much. If there were multiple entries on a single day, then only one will show up.