3 Hot Stocks Bought by Members of Congress: Follow the Money

 | Mar 01, 2024 08:30AM ET

  • Nancy Pelosi bought Palo Alto Networks before and after the 27% stock price implosion.
  • Victoria Spartz is buying into Simon Property Group's long-term appeal.
  • Kevin Hearn is an active investor; he bought JPM and sold these two stocks analysts are bullish on.

    • The STOCK Act of 2012 was supposed to halt insider trading by members of Congress, but let’s be honest. The STOCK Act can’t really stop Congresspeople from trading on insider knowledge; they’re in a position to get it, which will influence investment decisions. What the act did accomplish was shining the light on what members of Congress are buying and selling, which can be a treasure trove of information for investors. Today, we’re looking at the three stocks most bought by Members of Congress in February and whether they might be a good investment for their constituencies.

    h2 Nancy Pelosi Buys Palo Alto Networks /h2

    Representative Nancy Pelosi (D-CA) bought Palo Alto Networks (NASDAQ:PANW) in February not once but twice, which is a telling indicator. The first purchase was before the Q4 release, the 2nd after, so she and her investment advisors viewed the post-release plunge as a buying opportunity and time to leverage the position. Her first purchase, reported in a range of $500K to $1 million, lost 27% after the release, so it took courage to double down on the position.

    The good news for her and her constituency is that PANW shares are rebounding solidly. The 27% stock price implosion was a knee-jerk reaction to a strategic decision that will drive long-term value for shareholders. Palo Alto Networks will offer free or reduced services to attract new clients. The takeaway from the report is that the business is solid, growth is still in the double-digit range, and the cash flow and balance sheet are strong enough to weather the brief interruption. Analysts have forecasted that the impact on this tech stock will last twelve to eighteen months.

    Palo Alto’s market was right-sized by the strategy shift. The news sparked a round of analysts' downgrades that aided the stock price implosion, but some analysts raised targets and the rebound has the market aligned with consensus. Investors should expect volatility, but Palo Alto Networks' stock price will recover. Recovery could gain momentum later this year if the shift bears fruit.