The Greatest Trader In History?

Sometimes if you can’t beat ’em, you just have to join ’em. That might well be the case when it comes to Nancy Pelosi’s investment portfolio.

In online forums, her extraordinary outperformance has received enormous attention. How did Nancy Pelosi generate so much wealth on a politician’s salary is a common refrain.

Recently, some have pointed out that Pelosi made over $1,000,000 buying call options on Nvidia, before the share price soared.

Does Pelosi have inside information as to what is going to happen to which companies ahead of time? Surely that would be insider information and trading on it is the type of thing that puts wholesome people like Martha Stewart in jail.

But alas, it’s not so simple. Politicians did themselves a favor by excluding themselves largely from being punished for such practices. The argument went that they had so much information flowing past their desks it would be impossible to avoid trading on such information.

And so the back and forth began between the public and politicians, who make the rules. And somewhere along the way Pelosi ended up with not a small fortune but a large fortune.

One person recently posted a picture of her with George Soros and the caption, the greatest trader in history, and George Soros. Arguably, Pelosi’s husband is the true architect of her portfolio and is an amazing trader. The truth will never be known. So in the meantime, rather than pontificate on what should or could be done, perhaps it’s best just to follow her portfolio, and her latest moves are very intriguing indeed.

Key Points

• Nancy Pelosi’s portfolio has a track record that has been nothing short of exemplary.
• In the past year, her portfolio featured a purchase of call options on Nvidia that soared to produce more than $1,000,000 in gains.
• Her latest moves in a cybersecurity company may bode very well for its future prospects.

What’s Nancy Buying

The criticism Pelosi has widely received is that she passes inside information to her husband, who trades on that information. Keep in mind, again, that such activity is perfectly legal for politicians, so technically by the letter of the law, if she is doing so, she’s not actually guilty of any crimes.

For the sake of the story, let’s make the assumption that inside information is being capitalized upon. What then does it say about her most recent purchase and where it’s likely to go?

Does she know something about Palo Alto Networks that others do not?

Recently, her portfolio featured a purchase of call options on Palo Alto Networks prior to earnings, when the share price tumbled dramatically.

The portfolio manager did not sell the position, though. Instead, they added to it on the plunge. And there may be a reason for it. Soon after the dip, it was announced that a major Fortune 50 company would be selecting Palo Alto Networks for its cybersecurity protection.

As expected, the stock rallied on the news, so what now?

Will Palo Alto Networks Keep Rising?

If there is indeed an opportunity to follow Nancy Pelosi’s portfolio and to track her moves in expectation that they are going to be profitable for the most part, then the interesting thing about the current position is there may still be an opportunity for ordinary traders.

That’s because Palo Alto Networks is still trading well below where the first batch of call options were purchased. Given that these options lose value due to time decay, it’s clear that whoever bought them expected not only that the stock would rise but that it would do so before the effects of time decay were fully felt.

And since the calls were not sold, they must feel confident in that same thesis playing out, which in turn would mean an opportunity still exists for the regular Joe or Jane trader to get in on the action.

We should highlight that this is all highly speculative and best followed in a simulated trading environment where play money is used. While Nancy may have the inside track, the best the rest of us can do is surmise what may be known. And trading on suspicion is not a wonderful long-term strategy, just an opportunity to have fun.