Here’s how much Nancy Pelosi is up on her Broadcom stock bet

Lawmakers in the United States tend to secure impressive returns from investing in the stock market. The practice is controversial — after all, congresspeople not only legislate and regulate industries — but they also have an insider’s perspective into potentially market-moving shifts before the general public does.

While there are plenty of politicians who have accrued significant profits in this manner, one of them stands out — and that’s Nancy Pelosi. The former Speaker of the House and current representative of California’s 11th congressional district has a history of making well-timed investments in big tech. Her husband, Paul Pelosi, also happens to be a veteran venture capital investor.

Back in late June, Pelosi made an investment in Broadcom (NASDAQ: AVGO). At the time, AVGO stock was trading at $159.22 — and in the following months, it failed to move to the upside. In fact, by early September, Broadcom stock had dropped to as low as $136 — leading many to wonder if Pelosi had lost her touch.

It turned out that the answer to that question was a resounding no. By September 20, the congresswoman was back in the green on her trade — and Broadcom shares have seen quite a surge since then.

As we draw closer to the end of 2024, let’s zoom in on what could end up being one of Pelosi’s most profitable trades of the year.

Pelosi invested millions in Broadcom stock

According to data retrieved by Finbold’s congressional trading radar from a House of Representatives periodic transaction report made public on July 2, Pelosi invested between $1,000,001 and $5,000,000 in the semiconductor company on June 24.

At the time of her purchase, a single AVGO share was worth $159.22 — by press time, the price of Broadcom stock had risen to $239.03, representing a 50.12% surge. On a year-to-date basis, Broadcom shares have seen a 120.22% increase in price — with the latest surge owed to an earnings beat in the company’s Q4 and FY 2024 report.

So, now let’s do the math — at the lower end of the reporting range, an initial investment of $1,000,001 ends up with a value of $1,501,251 — with $501,250 in profit. At the higher end of the range, a $5,000,000 investment in AVGO stock would now be worth $7,506,000 — with gains of $2,506,000.

However, the investment wasn’t made in the form of a direct stock purchase — instead, the representative bought 20 AVGO stock call options with a strike price of $800 — and an expiration date of June 20, 2025.

If you’re perplexed by such a high strike price, here’s a simple explanation — on July 15, exactly three weeks after Pelosi’s trade, Broadcom stock underwent a 10:1 stock split. The strike price for those options contracts is now effectively $80.

Here’s how much Pelosi could be up on AVGO stock

An options contract usually represents 100 shares — since the stock split, each of Pelosi’s call options is now equal to 1,000 shares.

Here’s where things get tricky — as you might’ve noticed, disclosures regarding politicians’ investments aren’t exactly…exact. There’s a potentially fivefold difference in the extent of her trade in the cited disclosure, depending on which figure you go with.

Since we’re not privy to the exact amount, let’s use a hypothetical situation. If Pelosi decided to execute those options today, she would get 20,000 AVGO shares at a price of $80 per unit. In other words, it would set her back $1,600,000.

Accordingly, selling that number of shares would net the congresswoman roughly $4,780,600 at the current price of Broadcom stock.

The difference between those two figures is $3,180,600. If the former speaker’s trade had a value below it, it is in the green. If, however, it was closer to $5,000,000, she hasn’t yet broken even — but with an expiry date so far away, there’s a high probability that she eventually will.

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