The 10 Favorite Stocks of the U.S. Congress

Posted in Investments , Stock Market • January 27, 2012

congress investments

“Follow the money!” might have become the now-iconic line from Jerry Maguire had Tom Cruise’s character been an investment advisor rather than a sports agent.

Insiders–those who possess non-public knowledge–have an edge when it comes to investing in the stock of public companies. Insiders typically include those working for a specific company, usually in higher-level positions, but can also include others, such as politicians.

Following the money of insiders can often point to potentially good stock investments (as well as uncover unethical behavior, but that’s another topic).

Center for Responsive Politics

The Center for Responsive Politics–a non-profit, non-partisan research group that tracks money in politics–analyses the finances of the members of the U.S. Congress each year. The analysis is based upon the annual financial disclosures the members are required to submit. These disclosures do not list an exact value for each holding, but a range of values.

High-Yielding Stocks Owned by Congress Members

Are you an investor who likes dividend paying stocks? If so, maybe you’ll find a stock you like among Congress members’ holdings.

Of the 10 stocks most widely held by Congress, six have a dividend yield higher than the 2.6% average for dividend-payers on the S&P 500.

The relatively high-yielding stocks owned by Congress members are:

  1. AT&T (T): 5.8%
  2. General Electric (GE): 3.8%
  3. Pfizer (PFE): 3.7%
  4. Intel (INTC): 3.5%
  5. Microsoft (MSFT): 3.1%
  6. Proctor & Gamble (PG): 3.1%

AT&T is the #8 highest yielding stock of the S&P 500 (Frontier Communications, sporting a yield of 14.6%, is #1).

Top 10 Stocks of U.S. Congress: 2011 Returns

Wondering if Congress members can invest their own money better than they can the government’s–or your–money? Let’s take a look at how the top 10 stocks of Congress members fared in 2011:

congress investments

Excluding Bank of America (it imploded due to the financial crisis of 2008, and is considered a one-off thing), the average total return of Congress’ top stocks was 5.7%. This is very good on a relative basis as the market, as represented by the S&P 500 index, had a 0.9% total return.

(Note: Jane Harman, D-CA, was included in this analysis, as she was in Congress when the Center for Responsive Politics conducted its annual analysis–she has since resigned).

Analysis of Congress Investments

Congress’ investments in stocks are listed below in order of the number of members currently invested in each stock.

1. General Electric (GE)

Members invested: 75
Total value of holdings (min.-max.): $3.58-11.41 million

Top Congressional Investors

  • Darrell Issa (R-CA.): $1-5 million
  • John Kerry (D-A): $616,004 to $1.315 million
  • Michael McCaul (R-TX): $400,003 to $850,000

GE Stats

GE might bring good things to light, but its stock had a slightly dark 2011, losing 2.0%. Operating and profit margins are about 14% and 9.6%, respectively. Last quarter’s (Dec. 31) revenue decreased almost 6%, while earnings dropped almost 18%. P/E (trailing) is 15.3.

Negatively, GE has a huge debt load and beta of 1.95 (meaning its stock is almost twice as volatile as the market). Positively, it currently sports a 3.6% dividend yield, and has been working to shed its money-losing commercial lending business.

2. Procter & Gamble (PG)

Members invested: 62
Total value of holdings: $8.72-39.42 million

Top Congressional Investors

  • Rodney Frelinghuysen (R-NJ): $7.07-35.15 million
  • Michael McCaul (R-TX): $200,002 to $500,000
  • James B. Renacci (R-OH): $180,485 to $222,482

PG Stats

The stock returned 3.0% in 2011. Operating and profit margins are 18.6% and 13.9%, respectively. Last quarter’s (Sept. 30) revenue growth was 8.9%, while earnings decreased 1.9%. P/E is 16.5.

Key stats such as Return-on-Equity (ROE), Debt/Equity and Free Cash Flow are neither positive nor negative standouts. Positively, the stock is currently yielding 3.2%, and has a beta of 0.5.

3. Bank of America (BAC)

Members invested: 57
Total value of holdings: $2.83-5.41 million

  • Rodney Frelinghuysen (R-NJ): $1.02-1.08 million
  • John M. Spratt Jr. (D-SC): $500,001 to $1 million
  • Dianne Feinstein (D-CA): $500,001 to $1 million

BAC Stats

Bank of America’s stock plunged 61% in 2011. BAC’s stock has been especially hard hit as the company controlled 20-25% of the home mortgage market in the U.S. when the sub-prime mortgage market blew up in 2008. The stock is trading at just over $7 per share after peaking at almost $54 in October 2006.

Financial stocks are evaluated somewhat differently than the stocks of most other companies. Click here to view key stats.

4. Microsoft (MSFT)

Members invested: 56
Total value of holdings: $3.22-6.43 million

  • John Kerry (D-MA): $1.77-2.55 million
  • Michael McCaul (R-TX): $515,003 to $1.05 million
  • Jane Harman (D-CA): $130,003 to $350,000

MSFT Stats

The stock lost 7.2% in 2011. Operating and profit margins are about 38% and 32%, respectively. Last quarter’s revenue growth was 4.7%, while earnings were flat. P/E is 10.6.

Microsoft has a hefty 41% ROE, a $50 billion hoard of cash and pays a 2.7% dividend.

5. Cisco Systems (CSCO)

Members invested: 56
Total value of holdings (range): $1.27-3.24 million

  • John Kerry (D-MA): $602,005 to $1.28 million
  • Richard L Hanna (R-NY): $100,000 to $250,000
  • Jane Harman (D-CA): $100,000 to $200,000

CSCO Stats

The stock was down 11.8% in 2011. Operating and profit margins are about 20% and 14.5%, respectively. Last quarter’s (Oct. 29) revenue growth was almost 5%, while earnings decreased about 8%. P/E is 16.

Margins are decent and ROE is fair. The standout number is Cisco’s cash position: It has an equivalent of $8 per share in cash (the stock is trading at almost $20).

6. Pfizer (PFE)

Members invested: 51
Total value of holdings (range): $2.04-4.61 million

  • John Kerry (D-MA): $752,004 to $1.53 million
  • F. James Sensenbrenner Jr. (R-WI): $507,005 to $1 million
  • Kurt Schrader (D-OR): $265,002 to $550,000

PFE Stats

The stock, returning 22.4%, was just what the financial doctor ordered for healthy portfolios in 2011. Operating and profit margins are almost 28% and 17%, respectively. Last quarter’s (Oct. 2) revenue growth was 7.5%, while earnings grew 331%. P/E is 15.

The stock’s dividend yield is currently 4.1%.

7. Intel (INTC)

Members invested: 47
Total value of holdings (range): $1.28-3.21 million

  • John Kerry (D-MA): $602,005 to $1.28 million
  • Michael McCaul (R-TX): $200,002 to $500,000
  • Jane Harman (D-CA): $130,003 to $350,000

INTC Stats

The stock returned 16.3% in 2011. Operating and profit margins are almost 32% and 24%, respectively. Last quarter’s (Dec. 31) revenue growth was about 21%, while earnings grew almost 6%. P/E is 11.1.

ROE is a solid 27%, and the dividend yield is 3.1%.

8. Wells Fargo (WFC)

Members invested: 45
Total value of holdings (range): $1.71-4.28 million

  • John Kerry (D-MA): $351,003 to $765,000
  • Sander Levin (D-MI): $250,001 to $500,000
  • David Vitter (R-LA): $126,007 to $365,000

WFC  Stats

The stock lost 15.4% in 2011, which is not nearly as bad as the losses suffered by other big banks, such as Bank of America (#3 on list) and Citigroup (45% loss). Click here to see key stats.

9. AT&T (T)

Members invested: 44
Total value of holdings (range): $2.23-4.08 million

  • John Kerry (D-MA): $1.52-2.07 million
  • F. James Sensenbrenner Jr. (R-WI): $105,877 to $255,876
  • Richard L Hanna (R-NY): $100,001 to $250,000

T Stats

The stock returned 1.9% in 2011. Operating and profit margins are 16.2% and 9.3%, respectively. Last quarter’s (Sept. 30) revenue growth was flat, while earnings dropped 71%. P/E is 15.2.

There are no standout positive numbers, except the 5.8% dividend yield.

10. Exxon Mobil (XOM)

Members invested: 42
Total value of holdings (range): $2.74-11.09 million

  • John Carter (R-TX): $1-5 million
  • F. James Sensenbrenner Jr. (R-WI): $551,185 to $1.05 million
  • Michael McCaul (R-TX): $500,002 to $1 million

XOM Stats

Exxon, the biggest of Big Oil, gushed a big return of 13.7% in 2011. Operating and profit margins are 12.9% and 9.8%, respectively. Last quarter’s (Sept. 30) revenue growth was 31%, while earnings grew 40%. P/E is 10.4.

Exxon has a reasonable debt load, a solid 27% ROE, and pays a 2.1% dividend.

It appears that following the money of members of Congress should give you an edge in helping to increase your bottom line.

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