Speaker of the House Nancy Pelosi has been one of the most high-profile members of Congress when it comes to buying and selling stocks and options thanks to her husband Paul Pelosi, a venture capitalist.
One 2022 transaction was highly scrutinized thanks to a trip to Taiwan by Pelosi and her support of a bill that could benefit a sector in which she is invested.
A transaction related to NVIDIA Corporation (NASDAQ: NVDA) saw the Pelosis call it a losing trade, but that could be far from the truth given recent events.
What Happened: In July, Pelosi announced the sale of a portion of Nvidia shares in a filing. The transaction saw the Pelosis sell 25,000 shares of Nvidia on July 26 valued between $1 million and $5 million.
In the comment line of the filing, Pelosi said the shares were sold at an average price of $165.05 for a loss of $341,365.
The sale by Pelosi came after public scrutiny over exercising calls of the semiconductor company ahead of a vote on the CHIPS Act by Congress, which Pelosi publicly supported. The CHIPS Act could directly benefit Nvidia.
Pelosi also traveled to Taiwan and met with semiconductor leaders including executives from Taiwan Semiconductor Company (NYSE: TSM), a leading chip company.
Pelosi's filing was unusual due to the release one day after the transaction and a comment, two items that are not typical of the House speaker.
“It is surprising to see the sale. Also, what’s surprising here is that she sold and reported one day later. Usually she takes a couple of weeks. She wanted the public to know she cleared the books of this conflict of interest immediately,” the founder of Congresstrading.com, who asked to remain anonymous due to the sensitive nature of his site, has previously told Benzinga.
The sale came after it was revealed that Pelosi exercised 200 options good for 20,000 shares in a transaction valued at $1 million to $5 million in the filing.
The transaction came before Congress was set to vote on the CHIPS Act. The value of the shares rose after disclosing the exercise. The filing showed a loss on the shares based on the purchase price of the options and selling the shares after they dipped a bit post CHIPS Act run-up.
Why It’s Important: While the sale of Nvidia shares could have been done for numerous reasons, including public pressure over a potential conflict of interest, another possibility is being circulated as the semiconductor company faces a potential hurdle.
Nvidia shares fell Thursday on news the company’s China sales are being restricted by the U.S. government. Nvidia said in a filing that the company was informed that future exports to China need a new license due to the risk of being used for military purposes in China and Russia.
Nvidia said the new license requirement could result in a loss of $400 million in sales in the present quarter due to the impact of its China business.
Shares of Nvidia are down 18.3% since Pelosi sold them for an average of $165.05, dropping $30.13 per share. The 25,000-share stake that was sold by Pelosi in July would be down another $753,250 through today if it was still held.
Pelosi has been asked if her husband gets any information based on activity in Congress.
“Has your husband ever made a stock purchase or sale based on info received from you?” a reporter asked Pelosi.
Pelosi responded “No, absolutely not.”
Trading based on non-public information is illegal, and it is one of the reasons there have been calls from the public and members of Congress to ban trading of stocks and options by members of Congress and their spouses.
Only the Pelosis know the reasoning for the timing of the trade.
Pelosi still reportedly owns 50 options on Nvidia with a strike price of $100 and expiration of Sept. 16, 2022 that were purchased back on July 23, 2021. Nvidia shares traded around $195 at the time, putting the value of these options at a loss.
NVDA Price Action: Nvidia shares lost 7.67% Thursday, closing at $139.37 and hitting new 52-week lows intraday. Nvidia shares have traded between $132.71 and $346.47 over the last 52 weeks.
