Imagine this: The president has a bunch of CEO friends. They often drop by the White House to chat. What they discuss isn’t exactly clear, but a pattern emerges: In the days and weeks following the powwows, the lucky executives see their companies’ shares rise.
The president we’re talking about here is Barack Obama, of course. In a working paper released Monday by the National Bureau of Economic Research (titled, cutely, “All the President's Friends”), researchers charted what happened to S&P 1500 stocks after executives at those companies dropped into the Obama White House.
Unsurprisingly, the stocks went up. On average, shares exhibited abnormal returns – i.e., gains over the market – of about 1.2 percent in the 2 months after a presidential visit, with most of the gains occurring in the first 20 days. When the meetings were with the president himself or his top few aides, returns after two months rose to 2.5 percent.
Who benefited? As a courtesy, the researchers included a list of every corporate executive who visited the White House more than 10 times. The Obama all-stars include Jamie Dimon (18 visits), Larry Fink (16), EverCore’s Roger Altman (21) and Lloyd Blankfein (14). Honeywell chief executive David Cote topped the list at 30 White House dates. The Obama White House entertained executives some 2,286 times over his eight years.
Stock prices weren’t the only variable in the equation. Focusing on campaign donations, the researchers found that “firms that contributed more to Obama’s presidential election campaigns are more likely to have access to the White House.” Companies granted a White House audience were more likely to win government contracts and less likely to take a regulatory hit in the months afterward.
If all of this still leaves you unconvinced, the researchers also looked at stock movements after Donald Trump won the presidential election to see how such a shock would affect the companies that had invested so much in the Democratic party machine. Sure enough, in the three days after Trump won, companies with close ties to the Obama administration underperformed their broader industries by 1.3 percent (0.8 percent after you control for other variables).
The findings are inconvenient for those who’d like to juxtapose a transactional President Trump prone to play the dealmaker – which is fair – with an upright Obama insulated from undue influence – which is far-fetched. DC, it turns out, is DC.
Politics aside, though, there is a logical response to data confirming the fact that the White House has a price of admission, and that is to set up an ETF exploiting the relationship. You could even donate your excess returns to good government groups if you feel so inclined.
But the current administration isn't going to make it easy. Trump has decided to walk back the Obama administration’s policy of releasing White House visitor logs and keep Oval Office confabs. But in the absence of regular data, you could probably do worse than simply mirroring Carl Icahn’s portfolio.