U.S. Congressional stock trading continues to remain a hot topic among the trading community, with many traders seeking to replicate success from politicians who potentially trade using insider information.
Recently, Senator Markwayne Mullin from Oklahoma made headlines about his stock purchase, which seems suspiciously related to insider knowledge.
On July 12, Senator Mullin reported purchasing Parker-Hannifin (NYSE: PH) stock, worth up to $50,000, and has risen as much as 6% since the June 12 purchase date. This represents a smaller volume trade compared with other trades that can reach hundreds of thousands of dollars.
What makes this trade interesting is that PH stock reached a new all-time high of $574 less than a month after Mullin’s purchase, thanks to an impressive earnings report on August 8, which saw aeroparts producer report adjusted earnings per share (EPS) of $6.77 and revenue of $5.19 billion. Both results surpassed analysts’ expectations, which had predicted EPS of $6.23 and revenue of $5.08 billion.
A post-earnings surge in the price of PH stock of more than 10% was followed by several positive analyst upgrades that rate this stock as an overall “strong buy” based on 12 buy ratings from TipRanks, which include analysts from Bank of America, Wells Fargo, and Barclays and see a potential 8.02% upside from the current price level.
PH stock 30-day price chart. Source: Finbold
What makes Senator Mullin’s purchase of PH stock suspicious?
Parker Hallifin is a company that specializes in aero parts and is occasionally contracted by the U.S. military to produce parts and provide subsequent service for the procured parts.
Senator Mullin sits on the Armed Services Committee of the House of Representatives, which generally has jurisdiction over defense policy, ongoing military operations, and acquisition and industrial base policies, meaning that Mullin potentially has insider information about confidential U.S. government agreements with defense contractors such as Parker Hallifin.
Mullin claims that he doesn’t oversee his stock trades
The Senator from Oklahoma claims that two different managers manage his stock portfolio and that they carry out stock trades in his name, according to Vanity Fair’s reporter Pablo Manriquez.
Usually, the reported stock trades are conducted by the U.S. politicians themselves or members of their immediate family, such as spouses and children.
However, suspicious trades such as this, which include defensive industry stocks on which Mullin potentially has insider information, cast doubt on his claims about his impartiality in stock trades that portfolio managers carry out.
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