U.S. politicians tend to secure outsized returns on their stock market investments. While many consider this to be a clear conflict between private interests and oaths of office, little headway has been made in curtailing the practice.
More of the point, however, is the fact that committee assignments give lawmakers an even higher level of access to potentially market-moving information.
In one such instance, Tommy Tuberville, the senior U.S. Senator from Alabama made a tidy profit off of a little-known small-cap biotech stock
Picks for you
The Alabama Senator invested tens of thousands into this small-cap biotech stock
Tuberville had originally purchased the stock on March 21, when HUMA shares were priced at $3.6. The trade was disclosed on April 15, and in short order, Humacyte stock rallied by 40%, up to a price of $4.02.
The Alabama Senator has since fully exited his position. He made three sales in total — the first took place on April 30, while the latter two were executed on May 3.
At the time of Tuberville’s first liquidation, HUMA stock was trading at $3.92. By the time of his later sales, the price of Humacyte shares had risen to $4.41.
Disclosure rules governing the filing of congressional trades use wide reporting ranges, which tend to make estimating exact returns difficult. We do know that the Senator’s April 30 sale was valued between $50,001 and $100,000 — while his May 3 sales were valued at $1,001 to $15,000 and $15,001 to $50,000, respectively.
From the time of Tuberville’s original purchase to the first sale, the small-cap biotech stock had rallied by 8.88%. When we compare the purchase price to prices at the time of his second sale, we find a 22.5% increase.
Averaging out the two figures leaves us with a figure of 15.69% for returns — but as mentioned, due to disclosure rules, it’s even impossible to conclusively ascertain which of the trades was larger.
Why Tuberville’s Humacyte stock trades caught our eye
Tuberville is the only U.S. politician who invested in this low-profile, small-cap biotech stock. What’s more, his purchases were made shortly before the company released its Form 8-K filing.
The filing revealed that the Food and Drugs Administration (FDA) granted priority review to Humacyte’s Human Acellular Vessel (HAV) following promising results seen under a humanitarian aid program in Ukraine. Tommy Tuberville was (and still is) a member of the Senate Committee on Armed Services.
Interestingly enough, although Tuberville failed to optimally time the market, as the small-cap biotech stock would surge to levels beyond $9 on two occasions following his sale, he did manage to lock in his profits.
Following a $9.46 high in August, Humacyte stock has been on a consistent downward trajectory. At press time, HUMA shares were changing hands at a price of $3.18, and have marked a 36.95% loss since the start of the year.
The company has posted negative, double-digit earnings surprises for the last 3 quarters in a row. In addition, it faces several class action lawsuits, as well as scrutiny from the FDA on account of allegedly lax quality controls.
Readers interested in mirroring some of Tuberville’s more recent stock market moves should note that the Senator has turned quite bearish — as he dumped roughly $530 million worth of stocks back in November.
Featured image via Shutterstock
