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Nancy Pelosi’s stellar stock-picking skills have continued to garner attention in the recent past, boosted by the perception that the current Speaker of the US House of Representatives often ends up on the winning side of stock trades. Against this backdrop, Pelosi’s recent moves related to the NVIDIA stock naturally attracted a lot of attention, as flagged in our post last week.
To wit, as per a recent Periodic Transaction Report filed by Nancy Pelosi, her husband Paul Pelosi exercised 200 call options related to 20,000 NVIDIA shares. These options were purchased back in 2021 and carried an exercise price of $100.
The fact that this transaction came on the heels of renewed momentum on the CHIPS bill raised quite a lot of eyebrows. As a refresher, the Creating Helpful Incentives to Produce Semiconductors for America (CHIPS) Act aims to unlock around $52 billion in federal investments for the domestic semiconductor research, design, and manufacturing provisions as laid out in the US Innovation and Competition Act (USICA).
Of course, NVIDIA does not manufacture its own chips. However, the company does stand to attract some federal funding to boost the domestic chip industry’s research and design capacity.
This Tuesday, as the CHIPS Act-related momentum waned in the House, the Senate voted to advance its own version of the $52 billion bill, dubbed the “Chips and Science” bill by Senate Majority Leader Charles E. Schumer. Should this bill clear its final vote in the Senate, it would then head to the House, where Pelosi has already pledged support for its passage.
This brings us to the crux of the matter. As per the latest Periodic Transactions Report filed with the Clerk of the US House of Representatives, Pelosi has sold 25,000 NVIDIA shares at a loss of $341,365.
The following tweet by @PelosiTracker_ details the entire chronology of the House Speaker’s NVIDIA-related moves.
5/21/21 - Purchased 200 LEAPS with an exp date of June 2022
7/23/21 - Purchased 5,000 shares at $195.58
7/23/21 - Purchased 50 LEAPS with an exp. date of Sept. 2022
6/17/22 - Purchased 20,000 shares at $100 (exercised 200 calls)
7/26/22 - Sold 25,000 shares at $165
— Nancy Pelosi Stock Tracker (@PelosiTracker_) July 27, 2022
Crucially, Pelosi still owns 50 NVIDIA LEAPS with a strike price of $100 and expiring on the 16th of September. These LEAPS were bought on the 23rd of July 2021 when NVIDIA was trading at $195. For reference, the semiconductor stock is currently trading at $173. This means that the House Speaker is likely to lose money on the intrinsic value of these LEAPS if she were to exercise these contracts today.
Update: US Senate Sends the CHIPS Bill to the House
The US Senate has now passed the bipartisan semiconductor-focused legislation, paving the way for the House to take up the bill. NVIDIA shares are up around 5 percent at the time of writing.