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Dining With Obama Puts Bezos, CEOs in Winning Circle as Shares Outpace S&P
Money managers tout their investing strategy in books, at seminars and on blogs. Some call it a science, others an art form. And then, of course, there is luck. In that spirit, here is one more stock-picking technique to add to the list: Take a look at who is lunching at the White House.
Since becoming president, Barack Obama has held seven lunches with small groups of chairmen and chief executive officers, including Jeff Bezos of Amazon.com Inc., Ken Chenault of American Express Co., Ursula Burns of Xerox Corp. and Howard Schultz of Starbucks Corp., Bloomberg Businessweek reports in its July 26 issue.
In four of the lunches, the guests’ companies, as a group, outperformed the Standard & Poor’s 500-stock index 30 trading days after the repast. In two cases, the groups’ shares underperformed the S&P 500 a month after lunch with the president. Altogether, the six lunch groups outdid the S&P by more than 2 percentage points. Thirty days haven’t elapsed since a seventh lunch held on July 1.
Just a coincidence? Only partly, says Barry Ritholtz, CEO of equity research firm Fusion IQ. Losers don’t get asked to hang out with the president, he says. The White House likely is putting together invitation lists so that the president is dining with executives at the top of their games and not associating with companies in decline or under investigation.
“If the captain of your team gets a phone call from the White House, it probably means your team is about to win the World Series or already has won,” Ritholtz says.
Ties to Winners
Adds CEO Andrew Rudd of Advisor Software: “Obama is trying to associate himself with winners and it’s sort of potentially reinforcing.”
Not every one of the 33 publicly traded companies’ share prices rose. Eastman Kodak Co. fell 8.4 percent in the 30 trading days after Chief Executive Antonio Perez dined with Obama on Oct. 8, 2009. The company reported its fourth straight quarterly loss later that month.
On the plus side, Amazon rose 40 percent after Bezos attended the Oct. 8 lunch.
Rudd, whose Lafayette, California, company provides analytical tools to wealth managers, cautions against building an investment strategy around the president’s guest lists. The sample size is too small, Rudd says, and the shares’ performance is probably a statistical anomaly.
Still, he says: “I’m sure people will bet on this, just as certain people pick companies with stock prices at 9.99 or the same names as their aunts.”
The president’s stock-picking magic is still working. On July 1 he had lunch on a patio outside the Oval Office with the heads of Walt Disney Co., Ford Motor Co., Comcast Corp. and Archer Daniels Midland Co. Thirteen trading days later, as of July 20, their companies’ shares had risen an average of 9.3 percent vs. 4.8 percent for the S&P.
To contact the reporter on this story: Nicholas Johnston in Holland, Michigan at njohnston3@bloomberg.net
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