Now That Nancy Pelosi Is Dumping Visa Shares as a Key Bipartisan Legislation Moves Through the House, Chamath Palihapitiya’s Short Call Might End up Being Right

Rohail Saleem
Nancy Pelosi Chamath Palihapitiya Visa

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Never doubt the stock-picking skills of Nancy Pelosi. This golden rule of investing in contemporary America should be taught as a maxim in business schools. After all, the current speaker of the House of Representatives continues to exhibit a unique ability to time her stock trades – all conducted through her husband, Paul Pelosi, of course – in anticipation of key pieces of legislation that the House must consider under her auspices.

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The tweet above details Nancy Pelosi's Visa-related moves in chronological order. Until recently, her liquidation of Visa shares was only considered an aberration rather than a meaningful attempt at timing the market. After all, as a recession draws nearer and consumers max out their credit cards, companies such as Visa and Mastercard benefit from this roaring business.

However, it was only recently that a key bipartisan legislation began to attract substantial notice. The Credit Card Competition Act of 2022 was introduced back in July by Senators Dick Durbin (D-IL) and Roger Marshall, M.D. (R-KS). House members Peter Welch (D-VT) and Lance Gooden (R-TX) then introduced a companion version of this bipartisan legislation in September. The bill aims to break up the Mastercard-Visa duopoly by requiring major banks to "allow electronic credit transactions to be processed on no fewer than two unaffiliated networks, at least one of which must be outside the Visa-Mastercard duopoly." For obvious reasons, should this legislation turn into a law, the negative ramifications for Visa and Mastercard shares cannot be understated.

Source: https://disclosures-clerk.house.gov/public_disc/ptr-pdfs/2022/20021374.pdf

Interestingly, Nancy Pelosi sold a significant chunk of her stake in Visa back in June, ahead of the introduction of this bipartisan legislation in the Senate in July. As part of this process, Pelosi sold 10,000 Visa shares, netting between $1 million and $5 million in the process.

Source: https://disclosures-clerk.house.gov/public_disc/ptr-pdfs/2022/20022063.pdf

Then, earlier in November, Nancy Pelosi embarked on another significant liquidation spree following the introduction of a House version of this legislation in September. In this instance, the Pelosis liquidated 20,000 Visa shares, again netting between $1 million and $5 million.

In total, using a market price-based interpolation, Nancy Pelosi is estimated to have netted around $7 million by dumping around 35,000 Visa shares since 2020. The Pelosis, however, still retain a significant chunk of Visa shares, including around 80,000 shares that were acquired at a pre-IPO price of $11 per share, as per the tabulation by the Twitter account Nancy Pelosi Stock Tracker.

As the House Speaker, Nancy Pelosi exercises substantial powers over when and how a particular bill is introduced on the floor. It is for this reason that her Visa-related trades have been garnering so much attention.

The billionaire investor Chamath Palihapitiya had issued a controversial short call on Visa and Mastercard toward the end of 2021, noting during an episode of the "All-In Podcast":

"My biggest business loser for 2022 is Visa and MasterCard and traditional payment rails and the entire ecosystem around it."

He had gone on to note:

"Be short these companies and anybody that basically lives off of this 2 or 3% (transaction) tax, and be long well-thought-out, Web3 crypto projects that are rebuilding payments infrastructure in a completely decentralized way."

Of course, just like his SPACs, Palihapitiya's bullish view on "Web3 crypto projects" has been utterly eviscerated during the current bear market. However, his bearish call on Mastercard and Visa just might end up being right should the bipartisan credit card competition bill end up becoming a reality in 2023. After all, the legislative agenda for the current calendar year is almost at an end.

Even without considering the nuances of this bill, if Nancy Pelosi is dumping Visa shares now, the stock's bulls should pay attention, given her impeccable market-timing skills.

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