It may not take a genius to win a seat in Congress – but it’s no simple task either.
We may love to hate Congress, but we have to admit… it’s filled with smart, savvy folks.
To help prove my point, let’s bring this back to my area of expertise – investing – and take a look at Washington politicians’ track records.
According to a December 2004 Georgia State University study, U.S. Senators’ average annual stock performance from 1993 to 1998 beat the S&P 500 by around 12.3%.
That’s not an outrageous fortune – but it’s not bad.
According to that same Georgia State study, corporate insiders on average outperformed the market by just 7.4%.
And the stock portfolios of the average U.S. household? We on average underperformed the S&P 500 by 1.5%.
Of course, many would say senators outperform in the market not because of their intelligence, but due to inside knowledge. You’re probably not wrong.
In a fit of public shame perhaps, Congress attempted to police itself in that regard by passing Public Law 112-105. The Stop Trading on Congressional Knowledge Act of 2012 prohibits members of Congress and other federal employees from using nonpublic information for private profit.
If you think the STOCK Act put an end to active trading by lawmakers or cut their profits, think again.
While 2022 saw all the major U.S. indices suffer their worst downturn since the 2008 financial crisis, many members of Congress did pretty well last year.
Data released by the website Unusual Whales shows that U.S. Rep. Patrick Fallon (R-Texas), for example, earned 51.6% on his investments in 2022, while U.S. Rep. Debbie Wasserman-Schultz (D-Florida) saw a gain of 50.8%. Other members of Congress posted gains of 10% or greater as the benchmark S&P 500 index declined 19% on the year, and the technology-laden Nasdaq Composite fell 33%.
So… it seems that, despite the good intentions of the STOCK Act, members of Congress remain savvy investors…
And perhaps investors worth following.
Thanks to Public Law 112-105, we now can.
Everything Is Public Now
The STOCK Act of 2012 doesn’t just put the hammer on inside trading among members of Congress.
It makes their active trades public records.
That means everyday individuals now have the legal ability to profit from the same trades made by Washington lawmakers.
The law allows individuals to legally invest in the same stocks as members of Congress, providing access to potentially profitable investment opportunities.
By piggybacking on the trades made by members of Congress, retail investors can take advantage of the expertise and insights and potentially achieve higher returns.
Public Law 112-105 has made it possible for everyday individuals to invest like a D.C. legislator and potentially benefit from the same investment opportunities.
After all, even the spouses of legislators have proven to be better-than-average investors. For example, Paul Pelosi, the husband of former Speaker of the House Nancy Pelosi, is referred to as the “world’s greatest investor” after making millions speculating in call options on Apple Inc. (NASDAQ:AAPL) and Tesla, Inc. (NASDAQ:TSLA).
So, in today’s Market 360, I want to share a top energy stock that has caught the attention of Republican members of Congress.
A Favorite Among Republicans
From humble beginnings as a regional marketer of kerosene more than 135 years ago, Exxon Mobil Corporation (NYSE:XOM) has grown to become one of the biggest energy providers in the world. The company’s products are marketed under four key brands: Esso, Exxon, Mobil and ExxonMobil.
During the third quarter of 2022, Exxon achieved its highest quarterly refining throughput globally since 2008, as well as achieved record production of 560,000 barrels of oil equivalent per day (BOE/D) in the Permian Basin. Total third-quarter production increased by 50,000 BOE/D and totaled 3.7 million BOE/D.
Exxon Mobil is the major American player in the global energy economy and a favorite among Republican members of Congress.
For example, U.S. Rep. Chris Jacobs of New York state bought shares of XOM when it was trading around $86. Since then, it has traded as high as $119. That means investors could have made around 40% gain in that period in comparison to a tepid 5% gain in the S&P 500.
Not a bad way to ride a “Republican Red Wave” to profits…
One of the reasons for Exxon’s recent production strength is its venture in Guyana. The company already has four oil projects there, and it plans to invest $12.68 billion in its fifth oil project in that South American nation. The five projects are anticipated to produce 1.2 million barrels per day by 2027. In Guyana so far, Exxon has made more than 30 oil discoveries, which add up to 11 billion barrels of proven crude oil reserves. Guyana expects there are up to 25 billion barrels of oil reserves there, and it will likely auction off more acreage licenses to Exxon Mobil.
In its fourth-quarter report, Exxon revealed that production increased by more than 30% in Guyana and the Permian Basin in 2022, which helped the company achieve strong bottom-line growth. Full-year adjusted earnings jumped 161.3% year-over-year to $14.06 per share, up from $5.38 per share in 2021. Full-year revenue grew 44.8% year-over-year to $413.7 billion. The consensus estimate called for earnings of $13.94 per share on $427.9 billion in revenue.
For the fourth quarter, Exxon reported adjusted earnings of $3.40 per share, which was up 65.9% from $2.05 per share in the same quarter a year ago. Analysts expected earnings of $3.29 per share. Total 4Q revenue rose 12.3% year-over-year to $95.43 billion, topping estimates for $94.67 billion.
Plus, Exxon will pay a first-quarter dividend of $0.91 per share on March 10. All shareholders of record on February 14 will receive the dividend.
The Republican Red Wave
Exxon isn’t the only energy company riding the Republican red wave right now… There are four other “recession-proof” stocks that Republican Congressmen are investing in.
So, I put together a special report called the Top 5 Stocks Republican Congressmen Are Quietly Investing In that dives into these stocks, including Exxon, that politicians have been buying. I also explain why the energy bull market isn’t over yet.
With strong sales growth and profits ahead, these stocks are must-haves for your portfolio as we navigate our way through this turbulent environment.
To read my Top 5 Stocks Republican Congressmen Are Quietly Investing In report, click here.
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
Exxon Mobil Corporation (XOM)