The Trump Inc ETF: A Dealbreaker Exclusive

Trump's vast array of conflicts of interest provide a profit opportunity for the savvy investor.
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(Trump image courtesy Flickr user Gage Skidmore)

(Trump image courtesy Flickr user Gage Skidmore)

No president in history has ever come into office so swathed in financial entanglements as Donald Trump. His real estate and branding empire spans the globe. His personal disclosure form lists more than 500 businesses under his control. He plans to insulate himself from conflicts of interest by putting his company in the disinterested hands of his biological children.

Not even in office yet, Trump is already apparently mixing of business and statesmanship. Last week, Trump reportedly entertained a trio of Indian businessmen looking to slap the Trump name on a luxury apartment complex. On Monday, Argentine media reported that Trump, on a call with Argentine president Mauricio Macri, requested a favor for his business projects there (a claim Macri’s people have since disputed).

Trump is clearly in no mood to distance himself from any of this.

Let’s set aside for the moment the ramifications of this deepening swamp for our nation’s integrity. Whether Trump keeps up his wheeling and dealing as commander in chief or finds himself somehow restrained, it’s not unlikely that some companies might get a special boost out of Trump’s tenure in office. Investors already reward companies connected to powerful figures in government. See Tim Geithner’s appointment.

So why not make an ETF?

Dealbreaker, of course, lacks the financial resources, securities know-how, or necessary paperwork to create an exchange-traded fund. But the least we can do is suggest what public equities a Trump Inc ETF might hold. While most of Trump’s major interests reside within the privately held Trump Organization, some public equities might get a Trump bump.

Here they are – at least it's a start.

Deutsche Bank

Over the years, Trump has welshed on enough banks and investors that many creditors refuse to do business with him. But Trump has managed to maintain a line of credit with the largest lender of his ancestral homeland: Deutsche Bank. According to the Wall Street Journal:

Since 1998, the bank has led or participated in loans of at least $2.5 billion to companies affiliated with Mr. Trump, according to a Wall Street Journal analysis of public records and people familiar with the matter. That doesn’t include at least another $1 billion in loan commitments that Deutsche Bank made to Trump-affiliated entities.

So Deutsche has some leverage. What does Trump have to give? Leniency, for one. The bank is currently facing a potential multibillion-dollar fine for its role in hawking mortgage-backed securities in the leadup to the financial crisis. A lighter touch from the Justice Department could save Deutsche from a potentially crippling hit. No wonder that DB’s stock rose more than 16 percent in the week after the election.

Goldman Sachs

Though Trump’s campaign rhetoric dabbled in a bash-the-bankers vibe, the news post-election has been mostly sunny for Wall Street. Not only has Trump continued his promise to toss out the regulatory rulebook devised after the financial crisis, he has surrounded himself with Wall Street veterans – among them former Goldman partner Steve Mnuchin and Steve Bannon, Trump’s senior adviser and one-time Goldman vice president.

Those aren’t Trump’s only ties to the vampire squid. Trump shares an investment in the building at 1290 Avenue of the Americas with Goldman Sachs, a holding that brings in more than $5 million a year for Trump (though it’s not clear whether that’s net or gross income).

Goldman’s stock has risen more than 10 percent since election night, alongside the rest of the banking sector. In fact, it's worth throwing in other financial institutions – JPMorgan, Barclays, BlackRock – that hold Trump's brokerage accounts or otherwise manage his funds. 

Oil Drillers

Somehow, Trump has yet to chime in on the protests going on around the Dakota Access Pipeline, a North Dakota natural gas project that has become the site pitched confrontations between Native American protesters dubbing themselves “water protectors” and the security forces hired by the contractors.

But his silence isn’t out of a lack of (financial) interest. Trump owns a stake in the company behind DAPL, Energy Transfer Partners, valued at between $500,000 and $1 million. On Monday the company announced a $20 billion merger with Sunoco Logistics, a natural gas storage and transport business.

Not to mention Trump’s energy platform is basically the policy equivalent of former Texas Rep Steve Stockman’s infamous tweet: “The best thing about the Earth is if you poke holes in it oil and gas come out.” Pipelines will be approved, oil will flow, and even coal is supposed to come roaring back. That won’t hurt Trump’s other energy holdings, which include Kinder Morgan, Transocean, ConocoPhillips and others. They all get a spot in the ETF.

Pharma

In the days after Trump’s election, only one sector came close to matching banks for stock gains: pharmaceuticals. In large part that was a reaction to the defeat of Hillary Clinton, who had promised to go after price-gouging companies.

Trump, we might assume, will take an easier tack with drugmakers. But that’s not the only reason to load up on pharma in our Trump ETF. Drug manufacturers make up a significant portion of Trump’s many and varied financial holdings. Trump has millions of dollars worth of shares in Bristol-Myers Squibb, Regeneron Pharmaceuticals, Gilead Sciences and others.

Another potential benefit to pharma stocks: Trump’s intention to announce a tax repatriation holiday, during which U.S. companies can bring back foreign profits at a special, one-time discount. That’s good news for the likes of Pfizer and Merck, which have billions of dollars stashed overseas.

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