We recently compiled a list of the 10 Stocks That Members of Congress Own. In this article, we are going to take a look at where Netflix, Inc. (NASDAQ:NFLX) stands against the stocks that members of Congress own.
Members of the US Congress have historically been permitted to own and actively trade stocks, a practice frequently scrutinized and critiqued for potential conflicts of interest and ethical concerns related to insider trading. Although this issue has periodically surfaced in public debate, significant legislative action took place with the introduction of the Stop Trading on Congressional Knowledge Act in 2012, which explicitly prohibited members of Congress and federal employees from using non-public information for personal profit and required prompt disclosure of stock trades. Nevertheless, the enforcement of the act has been unclear, as numerous lawmakers have drawn criticism for late or incomplete reporting of transactions.
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Most recently, in December 2024, President Biden publicly endorsed a full ban on stock trading by members of Congress, asserting that lawmakers should not be able to profit from the stock market while serving in office. The newly inaugurated President Trump has had a similar stance for many years, as he famously stated the following:
“We want a ban on members of Congress getting rich by trading stocks on insider information.”
While it is clear that any US administration has publicly positioned itself against stock trading by high-ranked public officials and members of the Congress, the reality is often much more complex and difficult to enforce. It is even more difficult to prove whether a public official did use non-public information in making his/her investment decisions – particularly because the official may invoke the Mosaic approach, arguing that their trades were based on many pieces of publicly available information and personal analysis and reasoning. The key takeaway for investors is that we may never witness a perfect world in which members of the Congress do not own and profit from their stock investments.
The topic of stock trading by the members of Congress or other highly ranked officials has been widely discussed by investors and market enthusiasts for many years, driven by the perception that lawmakers’ trades might offer insights into upcoming market-moving policies or future legislation. This ongoing scrutiny has even led to the creation of thematic ETFs that track the disclosed trades of US legislators and weigh the stocks by their popularity among the members of the Congress. This allows retail investors to replicate congressional investment strategies and potentially profit. Anecdotal portfolios of individual Congress members or high rank officials emerged as well, some of which even managed to outperform the broad US market. These products highlight how public attention has evolved from merely ethical considerations to practical investment opportunities, reflecting investors’ belief in Congress members’ informational advantage or superior market timing.
We believe that monitoring the trades of lawmakers may be especially useful during times of rapid change, such as a drastic regime change during which the views of the new administration significantly diverge from those of the old one. The Trump 2.0 administration has given investors vertigo so far, as it becomes more and more difficult to predict the next moves related to tariffs, immigration, public spending, healthcare budgets and defense. We believe such periods of massive change would bring significant opportunities for people knowing (or inferring using the Mosaic approach) the next moves of the US administration: for instance, any sudden cuts in Medicare/Medicaid reimbursement policies may drastically hit the Healthcare sector, favoring thematic put options; Defence stocks may witness uplift if President Trump shifts his stance regarding the continuation of military aid to Ukraine; government contractors and consultants, which are currently beaten down, may witness a surge in stock price if the new Government announces any major new projects. All in all, we advise to exercise cautiousness when interpreting congressional trading data, as inferring actionable insights from lawmakers’ investments may lead to misleading conclusions or overlooked risks.
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Our Methodology
We used the Periodic Transaction Reports that US politicians are obliged to file, as well as thematic ETFs to pick the most widely owned stocks by the members of the US Congress. We then compared the list with Insider Monkey’s proprietary database of hedge funds’ ownership as of Q4 2024 and included in the article the top 10 stocks with the largest number of hedge funds that own the stock.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 144
Netflix, Inc. (NASDAQ:NFLX) is a global streaming entertainment company that offers a subscription-based platform for movies, TV series, and original content. It provides on-demand streaming services across various devices, including smart TVs, smartphones, and computers. The company produces and distributes original programming under Netflix Originals, spanning films, series, documentaries, and stand-up specials.
Netflix, Inc. (NASDAQ:NFLX) has demonstrated significant business acceleration, achieving nearly 20% top-line growth and adding 6 points of margin in 2024. The company’s growth strategy has focused on two key tactical moves: implementing a solution for account sharing and building an incremental revenue stream through advertising. The company has successfully scaled its advertising reach, with approximately 55% of new sign-ups coming from the ads tier in Q4, and expects to double its advertising revenue in 2025. NFLX maintains a strong market position with over 300 million paying members and an audience of over 700 million viewers worldwide, yet still sees significant growth potential as it only captures about 6% of its addressable revenue market and less than 10% TV view share in major markets.
Netflix, Inc. (NASDAQ:NFLX) is expanding its entertainment offering across multiple fronts, including film, TV, games, and live events while focusing on improving its service faster than the competition to drive its growth flywheel of more entertainment, engagement, revenue, and profit. In terms of content strategy, NFLX is producing in more than 50 countries and emphasizes authentic storytelling with local impact, while also investing in live events and exploring gaming opportunities. The company maintains a culture focused on excellence and continuous improvement, which has enabled its evolution from a DVD service to a global streaming platform with expanding entertainment offerings across multiple formats. With that being said, NFLX is also one of the stocks owned by Congress.
Overall NFLX ranks 6th on our list of the 10 stocks that members of Congress own. While we acknowledge the potential of NFLX as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NFLX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.