Tommy Tuberville Is a Terrible Trader

Former House Speaker Nancy Pelosi helped create a cottage industry that tracks the trading of politicians back in 2008. Pelosi’s husband, Paul, received a large allocation of the Visa V IPO at the same time that Congress was considering new credit card regulations.

Paul Pelosi is a very sophisticated investor and has had several other very well-timed trades. His purchase of Nvidia NVDA calls in December 2023 was particularly timely and helped to create the widespread belief that she was acting on nonpublic inside information.

Members of Congress can legally buy and sell stocks but are required to report their trades to the public within 45 days of the transaction. The law explicitly prohibits politicians from using nonpublic information gained in the course of their official duties for personal profit.

There is no easy way to determine whether a politician has nonpublic information, but when they make some very well-timed investments, it is easy to be suspicious.

Back on March 30, 2022, Senator Tommy Tuberville of Arkansas bought between 15,000 and 50,000 shares of Humacyte HUMA when the price was around $7.25. This raised eyebrows for a number of reasons. First, Tuberville served on the Armed Forces Committee, and Humacyte worked with the Department of Defense on developing an artificial vein to treat battlefield injuries.

It was also unusual for a Senator to buy a small-cap stock like this. HUMA was a SPAC, and Tuberville bought it near the top of the SPAC frenzy. The stock drifted lower for months after his purchase, and Tuberville eventually made another buy of 1,000 to 15,000 shares on July 25, 2023, at around $2.87. He must have grown frustrated because six months later, on January 19, 2024, he sold 1,000 to 50,000 shares at around $2.67, which would have produced a loss.

Tuberville must have still liked the stock, though, because he then made additional buys in February and March 2024 at prices around $3.60 to $3.87 before closing the transaction in April and May at prices from $3.90 to $4.40 or so.

Depending on the exact size of each trade and the precise sales amount, Tuberville may have suffered a loss or managed a small gain.

What is particularly interesting about this poor trading is that the reports about these trades created a frenzy in the stock even though Tuberville had already sold his position. Various services posted dozens of notes about the "fantastic" Tuberville trade as HUMA ran all the way up to $10 even though Tuberville had sold weeks earlier at less than $4.50 per share.

Traders were given the impression that the Senator must have some special inside knowledge about the stock, and they tried to follow his buying decision even though he no longer owned it. The delay in reporting these trades was a very ugly trap for small traders that didn’t understand the reporting requirements.

I have followed HUMA for years, and it is one of my favorite long-term investments, but the Tuberville speculation created crazy volatility and cost some short-term traders substantially. The reality was that Tuberville was a very poor trader regardless of whether he had any special inside knowledge or not.

We had very dull trading action on Tuesday morning following weaker-than-expected retail sales data, but lately, the pattern has been a strong close, after lackluster trading in the morning. The market needs a series of weak closes before there is any chance of a shift in trend.

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At the time of publication, Rev Shark was long HUMA.