With the 2022 midterm elections quickly approaching, most political news is centering around the expected results right now. But while investors prepare for the market volatility that often follows a midterm cycle, some politicians are loading up on stocks.
House Speaker Nancy Pelosi has gained notoriety in financial circles for her investments, often in high-growth tech stocks. But she’s far from the only political leader exploring profitable investment opportunities lately. Market research firm Quiver Quantitative has been tracking the investments of sitting politicians for months. According to recent findings, energy stocks have received considerable attention from political figures of late.
Let’s take a look at where politicians have been putting their money and why other investors should be watching closely.
Capitol Hill’s Favorite Energy Stocks
Since April 2020, Quiver Quantitative has been investigating a pressing question: Do members of some Congressional committees have better trading performance than others? To find the answer, it has been conducting an in-depth analysis of four House and Senate committees. These include the Homeland Security Committee (Senate), the Energy and Commerce Committee (House), the Transportation and Infrastructure Committee (House) and the Natural Resources Committee (House). The results have highlighted a focus on energy stocks.
For example, Quiver tweeted on Sept. 15 highlighting three energy stocks purchases by Oklahoma Rep. Kevin Hern.
This focus on energy stocks is hardly surprising, given President Joe Biden and his administration’s recent focus on alternative energy development. However, none of the companies mentioned in the tweet fall into the category of renewable energy stocks.
On the contrary, Coterra Energy (NYSE:CTRA), Oneok (NYSE:OKE) and Magellan Midstream Partners (NYSE:MMP) are coming off a difficult year. The oil and gas industry has faced significant economic headwinds as the U.S. works to transition away from its dependence on fossil fuels. However, the part of the energy sector with ties to fossil fuels is actually likely to get a boost if Republicans take back the House in November.
The Bottom Line
As Quiver Quantitative notes in a recent blog post, “all members of Congress have access to non-public information that can be used to make better trading decisions. However, some have more access than others.” Rep. Kevin Hern’s trading patterns don’t necessarily mean he has access to better information than his peers. What they do suggest, though, is that Hern is betting on a Republican midterm victory. After all, that would likely lead to a boost for oil companies.
Recent polling statistics indicate that the GOP is indeed likely to take back the House. That makes this an opportune time to load up on beaten-down energy stocks with ties to that portion of the energy sector.
None of Hern’ top energy stocks have seen any company-specific growth catalysts recently. However, both CTRA and MMP stock have been flagged as buys for the months ahead. Both are likely winners of the coming Fed rate hike markets are already bracing for. And as InvestorPlace contributor Josh Enomoto recently said, MMP may excite investors looking to profit in the fourth quarter:
“Aside from its tremendous relevance, Magellan may attract investors because of its massive payout. According to Dividend, MMP features a . Notably, the energy sector average yield stands at 4.24%. As well, Magellan commands 19 consecutive years of dividend increases.”
All told, all three of these energy names are worth watching as markets prepare for a different type of energy boom following the 2022 midterms.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.