Members of U.S. Congress are permitted to buy and sell stocks and options in public companies as long as they publicly disclose their trades. The rule has come under scrutiny recently and became one of the focuses of the online platform Unusual Whales.
Launching Unusual Whales: Founded in June 2020, Unusual Whales was created to provide more information to traders.
“There were gross inequities in information, education and access for the everyday trader,” said the founder of Unusual Whales, who has remained anonymous for fear of being targeted by hedge funds and members of Congress.
Unusual Whales has now become a source to follow activity in the market including short sellers, unusual options activity and tracking the trades of politicians.
“Retail are the future. They are involved with options more than ever and [we give] them the tools they need to not only follow the whales, but to become them themselves.
“That is why I make unusualwhales.com mostly free, so retail can get the tools they need, when they need it.”
Taking On Congress: Unusual Whales became one of the first to “categorically catalogue the trades of U.S. politicians.” A section on the Unusual Whales site called “I Am The Senate” lists and tracks the trades and performance of members of the U.S. Senate.
“A lot of the trades were seemingly around, or as a result of, deals that would not be known to the average trader,” the founder said.
One example cited was a trade in Amazon.com Inc AMZN call options by House Speaker Nancy Pelosi. The trade came before the Pentagon cancelled the JEDI contract for Microsoft Corp MSFT, which could benefit Amazon.
So why does Unusual Whales track Pelosi and members of the Senate? “The answer is not so much why we have to, but that we do.”
Pelosi recently said politicians should be able to trade because it is a free market, but free and fair are two different things, Unusual Whales points out.
“She, the most powerful position likely in D.C., with a strong network and privy to knowledge most of us will never see ... has tools retail traders do not.”
UnusualWhales also highlights U.S. Rep. Brian Higgins failing to report three stock transactions valued at $115,000 until 11 months after the trades were made. Higgins was a sponsor of the STOCK Act, which makes it mandatory for members of Congress to report their trades within 45 days.
“He didn’t follow the rules he made.”
Related Link: Nancy Pelosi Loads Call Options In Alphabet, Micron, Roblox, Salesforce And Disney
The Nancy Pelosi ETF: Analyzing the performance of members of Congress and the numerous trades by Pelosi led to the recent creation of the "Nancy Pelosi ETF.”
Among the largest holdings by Pelosi are NVIDIA Corp NVDA and Apple Inc AAPL. The Pelosi ETF tracks all of Pelosi’s active positions from 2020 onward.
“Her trades beat the market — currently she is up 39% on her options position, with and average stock return of 40%. To contextualize, the S&P 500 was only up 26% in 2021,” Unusual Whales told Benzinga.
Pelosi could be up even more, as the site has to assume an options position was exercised on the day of purchase.
As of the time of writing, Pelosi’s positions are up an average of 37.9% with options up an average of 34.3% and stocks up an average of 42.5%.
Pelosi bought call options in Tesla Inc TSLA in 2020 ahead of legislation for electric vehicle credits. The options are one example of many that are up by triple digits in the Pelosi portfolio.
Pelosi’s recent trades include call options in Alphabet Inc GOOGGOOGL, Micron Technology MU, Roblox Corp RBLX, Salesforce.com CRM and The Walt Disney Co DIS.
The Nancy Pelosi ETF tracker is one of several free tools offered by Unusual Whales, which also offers some premium subscription offerings.
House Speaker Nancy Pelosi in 2019. Public domain photo.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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