Nancy Pelosi’s husband Paul Pelosi uses an investing strategy that lowers upfront costs.
Nancy Pelosi, D-Calif., has multiple major accomplishments on her resume. She’s been a U.S. Representative for nearly 37 years. She’s the first female Speaker of the House and the first woman to lead either chamber of Congress. Is she also a market-beating investor?
The former House Speaker nearly tripled the S&P 500‘s returns in 2023, giving her the ninth-best returns among members of Congress, according to options trading platform operator Unusual Whales. However, all of Pelosi’s disclosures of trades listed her husband, Paul Pelosi, as the owner.
Pelosi’s recent purchases
Over the last 12 months, Pelosi has purchased only two stocks. Both are also favorites of many other investors.
On June 15, 2023, the former Speaker’s husband exercised 50 call options to buy 5,000 shares of Apple (AAPL -0.35%) for $80 per share. Apple’s current share price is more than double this purchase price.
Mr. Pelosi has owned Apple stock for years. Other members of Congress or their families have also invested in the tech giant. Apple was second on the list of stocks lawmakers bought the most in 2023.
On the same day of the Apple transaction, Pelosi also exercised 50 call options to purchase 5,000 shares of Microsoft (MSFT 1.82%) for $180 per share. As with Apple, Microsoft’s current share price is more than twice the strike price of those options.
More options
The initial purchases of the moneymaking call options for Apple and Microsoft were made in 2022. Paul Pelosi has been buying more call options on other stocks in recent months.
On Dec. 22, 2023, Mr. Pelosi bought 50 call options for Nvidia (NVDA 6.18%) with a strike price of $120 and an expiration date of Dec. 20. 2024. At the time, Nvidia’s share price was around $488.
On Feb. 12, 2024, Pelosi purchased 50 call options for Palo Alto Networks (PANW 0.91%) with a strike price of $200 and an expiration date of Jan. 17, 2025. Palo Alto Networks’ share price then hovered around $372.
A few days later on Feb. 21, 2024, the former Speaker’s husband bought 20 more call options for Palo Alto Networks. Again, the strike price was $200 with an expiration date of Jan. 17, 2025. The stock had fallen significantly, though, to around $262.
Call options with a strike price lower than the current share price are known as “in-the-money” options. Buying in-the-money call options lowers investors’ upfront costs and limits the risk of loss while allowing them to profit from upward moves for the underlying stock.
Are Pelosi’s picks good choices now?
Valuation is a concern with all four stocks Pelosi likes. Apple’s sluggish growth arguably doesn’t justify its forward price-to-earnings ratio of nearly 26. Microsoft and Nvidia trade at well above 30 times forward earnings, while Palo Alto Networks’ forward earnings multiple is a sky-high 47.
However, Apple, Microsoft, and Nvidia should profit from the generative AI boom for years to come. The need for cybersecurity solutions should grow, boosting Microsoft and Palo Alto Networks. I think Pelosi’s picks are good choices for long-term investors.
Keith Speights has positions in Apple and Microsoft. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, and Palo Alto Networks. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
