In recent months, the involvement of United States politicians in the stock market has raised concerns about potential conflicts of interest. Former House Speaker Nancy Pelosi, in particular, has drawn attention for her stock purchases and realized profits from her stake in the semiconductor giant Nvidia (NASDAQ: NVDA).
In the latest disclosure, data from Quiver Quant published on March 8 revealed that US Representative Josh Gottheimer, for New Jersey’s 5th congressional district, made a substantial investment of $27 million in Microsoft’s (NASDAQ: MSFT) call options.
Quiver Quant labeled this purchase as a ‘massive conflict of interest’ on the part of the politician. Notably, a call option gives an investor the right, but not the obligation, to buy an underlying asset at a predetermined price (strike price) before the option expires. Investors aim to profit by exercising the option if the market price rises above the strike price.
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Timing of Gottheimer’s investment
The timing of Gottheimer’s investment is significant, given his prior role as a strategist at Microsoft. While it’s not uncommon for individuals with business backgrounds to invest in familiar companies, the scale of the transaction has raised suspicions of a conflict of interest, although representatives are allowed to engage in stock purchases.
It’s worth noting that in February 2022, Gottheimer publicly pledged to establish a blind trust to manage his assets, a move often employed by politicians to avoid conflicts of interest and maintain transparency.
On the other hand, Gottheimer is an active trader, with data retrieved from Quiver Quant on March 9 indicating that he has executed 2,604 trades, with the information technology sector leading with 715. His total trade volume stands at $264 million.
It’s worth noting that Microsoft’s stock has stood out, particularly due to the company’s foray into the lucrative artificial intelligence (AI) sector. Over the past year, MSFT has experienced a significant gain of approximately 60%, and in 2024 alone, the equity has yielded nearly a 10% return.
Several politicians have similarly enjoyed substantial returns from their stock investments. For example, as reported by Finbold, Pelosi tripled her annual salary through the exercise of Nvidia stock options.
