Do members of some Congressional committees have better trading performance than others? We've identified 4 with strong historical results.
All members of Congress have access to non-public information that can be used to make better trading decisions. However, some have more access than others.
One important factor is committee membership. Each Congressional committee has a different set of inside information, and its own confidential briefings and hearings. This raises the question:
Do members of some Congressional committees have better trading performance than others?
To answer this, we built and backtested trading strategies based on the trades made by members of each committee, and compared their performance since 2020.
Based on the results (shown below), we've identified 4 committees with particularly strong returns. To track the live performance and holdings of these strategies, check out Quiver Strategies.
*Select committees are excluded due to lack of trading volume
These initial four committees are:
Homeland Security Committee (Senate)
Energy and Commerce Committee (House)
Transportation and Infrastructure Committee (House)
Natural Resources Committee (House)
In this newsletter, we'll be taking a closer look at the performance of these strategies, along with some of the most notable trades conducted by members of each committee over the last two years.
Homeland Security and Governmental Affairs
The Committee on Homeland Security and Governmental Affairs is the Senate’s primary oversight committee with broad jurisdiction over government operations generally and the Department of Homeland Security in particular.
In a backtest from 2020 to today, our Homeland Security Committee Strategy had a CAGR of 23%, with a Sharpe Ratio of 1.05.
Notable Trades
Thomas R. Carper bought $CRWD, a cybersecurity company, in late November '20. About 2 weeks after this purchase, it was announced that the US had been hit with what was described as the worst-ever hack on the US government. Thousands of companies and some government departments were hit, including the US energy department, which responsible for managing nuclear weapons. CRWD rallied ~50% in the month following this purchase.
Carper made another interesting purchase, buying $MOS (a fertilizer company) in mid January '22. Russia was the largest exporter of fertilizer prior to the Ukraine invasion, causing the price of fertilizer, and thus shares of MOS to increase by ~70% in 2 months.
Energy and Commerce
Responsible for matters including telecommunications, consumer protection, food and drug safety, public health and research, environmental quality, energy policy, and interstate and foreign commerce among others.
In a backtest from 2020 to today, our Energy and Commerce Committee Strategy had a CAGR of 54%, with a Sharpe Ratio of 2.03.
Notable Trades
David McKinley loaded up on $QCOM before Q4 '20 earnings. The Energy and Commerce Committee was having many hearings relating to 5G during this time, with Qualcomm executives frequently providing testimonies. The hearings resulted in the committee advancing a bill to ban Chinese 5G equipment. Qualcomm jumped 18% on earnings, with specific attention to the success of their 5G investments.
Dan Crenshaw previously got in hot water for his buying activity in March '20, shortly before the $2.2T Cares Act was announced. He again showed impeccable market timing before the recent market downturn, with a string of large sales between Dec '21-Jan '22.
Transportation and Infrastructure
The House Committee on Transportation and Infrastructure has jurisdiction over all modes of transportation: aviation, maritime and waterborne transportation, highways, bridges, mass transit, and railroads.
In a backtest from 2020 to today, our Transportation and Infrastructure Committee Strategy had a CAGR of 39%, with a Sharpe Ratio of 1.27.
Notable Trades:
Alan S. Lowenthal made 3 purchases in $UBER for ~$31/share in late August '20. California soon passed Prop 22, allowing Uber to classify workers as independent contractors. This resulted in Uber spiking to ~$49/share.
Brian Mast bought $TLRY for ~$9/share in November '20, one month before both the vote for the Marijuana Opportunity Reinvestment and Expungement (MORE) Act and a reverse merger with Tilray and Aphria created the largest global cannabis company, resulting in a 10% gain. While unrelated, mid-term election results and retail trading activity started a rally in weed stocks in January '21 where the stock peaked at $67/share.
Natural Resources
The House Committee on Natural Resources considers legislation about American energy production, mineral lands and mining, fisheries and wildlife, public lands, oceans, Native Americans, irrigation and reclamation.
In a backtest from 2020 to today, our Transportation and Infrastructure Committee Strategy had a CAGR of 29%, with a Sharpe Ratio of 1.20.
Notable Trades:
Robert J. Wittman loaded up on oil stocks, specifically $XLE and $EOG, starting late December '21 into January '22 - prior to Russia invading Ukraine. Those investments are up +30% and +42%, respectively.
Alan S. Lowenthal made 15 separate purchases of $KTOS in September '20, a few months before they were awarded with a government contract to buy drones that pushed the stock up over 50%.
