Former Speaker of the House Nancy Pelosi is one of the most high-profile members of Congress when it comes to buying and selling stocks and options. Pelosi's trading activity is well-documented and helped lead to the creation of Congress-themed ETFs, with one bearing her name as the ticker.
Here’s a look back at a controversial trade from 2022 and how Pelosi may have lost big by selling early while facing public pressure.
What Happened: Pelosi and her venture capitalist husband Paul Pelosi have faced scrutiny over the timing and nature of their trades. Many in the public and some Congress members are advocating for a prohibition on trading by Congress members.
One of the questionable trades made by the Pelosis revolved around Nvidia Corporation NVDA.
Pelosi and her husband announced in a filing they sold 25,000 shares of Nvidia Corporation July 26, 2022. The filing showed the couple took a loss on the trade.
The Pelosis sold 25,000 shares of the semiconductor stock at an average price of $165.05. The couple took a loss of $341,365 on the trade, which was valued between $1 million and $5 million.
Pelosi's decision to exercise semiconductor company calls just before the CHIPS Act vote, which she vocally backed, drew public attention and concern. The CHIPS Act was seen as something that could directly benefit Nvidia.
Experts also questioned the way the Pelosis disclosed the trade.
“It is surprising to see the sale. Also, what’s surprising here is that she sold and reported one day later. Usually she takes a couple of weeks. She wanted the public to know she cleared the books of this conflict of interest immediately,” the founder of Congresstrading.com, who asked to remain anonymous due to the sensitive nature of his site, previously told Benzinga.
The transaction came prior to Congress's CHIPS Act vote, and Nvidia shares rose heading into the vote.
The sale by the Pelosis could have been done for numerous reasons, including public pressure over a potential conflict of interest. Others questioned the timing of the sale due to semiconductor companies later facing pressure on exports to China and Russia.
Additionally, 50 options on Nvidia with a strike price of $100 and an expiration of Sept. 16, 2022, were sold on Sept. 16, 2022, for a loss of $361,476 by the Pelosis.
Fast-forward to 2023 and Nvidia shares have been on absolute fire, gaining 219% year-to-date and hitting new all-time highs.
Nvidia became one of the newest members of the $1-trillion market capitalization club, attracting keen interest from investors and analysts, especially as the applications and growth of artificial intelligence expand.
After Nvidia reported first-quarter financial results in May, many analysts said they had never seen a guidance raise that was as high as the company announced thanks to its lead in the artificial intelligence space.
Related Link: Is Nvidia Overpriced? Cathie Wood's Ark Invest Points To 3 Other Stocks
Why It’s Important: Although Pelosi's Nvidia sale might have been a response to public pressure, it resulted in a six-figure loss, a setback they could have sidestepped had they retained their position.
Here’s a look at what could have been for the Pelosis had they held on to their Nvidia shares.
Shares of the company hit new all-time highs of $481.88 on Tuesday, a day ahead of their second-quarter financial results.
Based on a price of $464.68 for Nvidia Wednesday, the 25,000 shares of the semiconductor stock would be worth $11,617,000 today.
The original sale price by the Pelosis based on the $165.05-per-share average was $4,126,250. This means Pelosi and her husband missed out on potential profits of $7,490,750.
Pelosi was one of the top 10 traders among Congress members in 2021, but saw a loss of 19.8% in 2022, according to data from UnusualWhales.
Pelosi has often been asked if her husband, who is a venture capitalist, gets any information based on her activity in Congress.
The former speaker of the house is not the only one who sold Nvidia shares and missed out on future gains. Cathie Wood and Ark Invest sold out of the majority of their position earlier this year, and several insiders also cashed out previously.
Read Next: Nancy Pelosi Exercised Options In 2 Tech Giants: Here Are The Stocks And Their Subsequent Gains
Photo: Shutterstock.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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