3 Stocks The Smart Money is Buying (But Don’t Want You to Know)

Key Concepts

• Congressional Trades: Purchases and sales of stocks by members of Congress, which are publicly disclosed.
• Small-Cap Stocks: Stocks of companies with relatively small market capitalization, often considered more speculative.
• Market Beat Screener: A tool on the Market Beat website that allows users to filter congressional trades by various criteria such as market cap, time period, and trade size.
• RV Industry: Recreational Vehicle industry, including manufacturers of components and systems for RVs.
• Housing Industry: Home building and real estate sectors.
• Insurance and Financial Services: Companies operating in the insurance and financial services sectors.
• REITs (Real Estate Investment Trusts): Companies that own, operate, or finance income-generating real estate.
• Consumer Staples: Companies that produce everyday household goods.
• ETFs (Exchange-Traded Funds): Investment funds traded on stock exchanges, offering diversification.
• Synthetic Covered Call Strategy: An options trading strategy employed by some ETFs to generate income.
• Junior Miner: A mining company that is in the exploration or development stage, not yet in production.
• Commodity Risk: The risk associated with fluctuations in the price of a raw material.
• Paper Trading Watchlist: A simulated investment portfolio used for practice and observation without risking real money.

Congressional Trades and Market Performance in November

This segment of the discussion focuses on stock trades made by members of Congress, particularly examining their performance in November, a month that saw a general downturn in the stock market. The analysis highlights both successful and unsuccessful trades, emphasizing the performance of lesser-known or "obscure" stocks.

Successful Congressional Trades in November

Three stocks are presented where members of Congress made purchases that resulted in significant gains during November, despite the broader market decline.

1. LCI Industries (Ticker: LCI)

   • Company Profile: Manufactures engineered components and systems for the RV, marine, and housing industries.
   • Trade Details: A purchase was made by Congressman Tony Weed (Wisconsin) on October 27th. The trade size was between $1 million and $5 million. It was disclosed on November 10th.
   • Performance: The stock was up 25.9% since the trade was made, equating to approximately a 25% gain in the last month.
   • Potential Catalysts:
     • Earnings Report (October 30th): The company reported strong performance on both the top and bottom lines, beating expectations year-over-year. This positive earnings reaction is considered a likely driver of the stock surge.
     • Analyst Chatter: Some analysts suggest a potential comeback for the RV market after a period of decline.
   • Key Observation: The significant size of the purchase by a member of Congress is noted as a distinguishing factor.

2. LGI Homes (Ticker: LGIH)

   • Company Profile: Operates in the home building industry.
   • Trade Details: A purchase was made by Congressman Tim Moore (North Carolina) on October 30th. The trade size was between $15,000 and $50,000.
   • Performance: The stock was up 23.4% since the trade was made.
   • Potential Catalysts:
     • Strong Guidance: Despite a negative earnings report (down sharply year-over-year on earnings and revenue), the company reported strong guidance for future quarters, including a better 2026 and fourth quarter in 2025. This forward-looking outlook is believed to have driven investor enthusiasm.
     • Order and Backlog Momentum: The company has strong order and backlog momentum.
   • Broader Market Context: The discussion touches upon potential government discussions around the housing market, but the speaker believes current discussions are speculative and not yet concrete enough to significantly impact stock prices. The potential for lower interest rates in early 2026, aligned with a new Fed chair's preference, is seen as a factor that could make housing stocks more attractive.
   • Key Observation: This trade is considered a "head scratcher" due to the negative earnings report, but the strong guidance is identified as the likely reason for the positive stock performance.

3. White Mountains Insurance Group (Ticker: WTM)

   • Company Profile: A holding company for several insurance and financial services companies, headquartered in Bermuda.
   • Trade Details: A trade was made on September 22nd and disclosed on October 10th. The purchase size was between $15,000 and $50,000.
   • Performance: The stock was up 13.6% since the trade was made.
   • Key Observations:
     • High Stock Price: The stock price is over $2,000, which may deter some investors.
     • Limited Analyst Coverage: The company has limited analyst coverage, which is typical for companies of this nature.
     • Obscure Nature: It's described as a company that might not be easily found or considered by individual investors.
     • Gains in a Down Month: The stock's performance in November, when the rest of the market was down, qualified it for the list.

Unsuccessful Congressional Trades in November

The discussion then shifts to three stocks where members of Congress made purchases that resulted in significant losses during November. These are also described as smaller, less mainstream companies.

1. Alexandria Real Estate Equities (Ticker: ARE)

   • Company Profile: A Real Estate Investment Trust (REIT) specializing in developing and managing collaborative life science and technology campuses.
   • Trade Details: Congressman Michael McCall (Texas) made purchases on October 10th ($15,000-$50,000) and October 22nd ($100,000-$250,000). He also made a smaller sale on October 27th ($15,000-$50,000), indicating he likely still holds some stock.
   • Performance: The stock was down 32.6% since October 27th.
   • Potential Reasons for Loss:
     • Earnings Miss on Revenue: While the company had a strong beat on the bottom line, it missed slightly on revenue.
     • REIT Sector Performance: REITs can be sensitive to interest rate environments.
   • Attractive Feature: The stock has a dividend yield of over 10%, which can be appealing in a lower interest rate environment.
   • Key Observation: The significant loss highlights the speculative nature of some smaller-cap companies and the risks associated with REITs.

2. New Brands (Ticker: NWL)

   • Company Profile: A consumer goods company formed by the merger of Newell Rubbermaid and Jarden Corporation, owning brands like Rubbermaid, Sharpie, and Papermate.
   • Trade Details: Congressman Pete Stalber (Minnesota) made a purchase between $15,000 and $50,000 on October 27th.
   • Performance: The stock was down 30% since the trade.
   • Reasons for Loss:
     • Earnings Miss: The company missed on both the top and bottom lines in a recent earnings report.
     • Normalized Demand: Demand for products like Rubbermaid, which was high during the work-from-home period of 2020-2021, has normalized and tapered off.
     • Tariff Issues: The company is facing headwinds from tariffs, and expects ongoing issues from them.
   • Year-to-Date Performance: The stock was down 64% year-to-date prior to the recent decline.
   • Key Observation: Despite owning iconic brands, consumer staple stocks are under pressure, and New Brands faces multiple headwinds. The purchase was made when the stock was already down, suggesting a hope for a turnaround that did not materialize.

3. YieldMax SMCI Option Income Strategy ETF (Ticker: SMCY)

   • Company Profile: A specialized ETF employing a synthetic covered call strategy, designed for investors interested in options trading.
   • Trade Details: Congressman Tim Moore (North Carolina) made a purchase between $15,000 and $50,000 on August 29th, disclosed on September 3rd.
   • Performance: The ETF's share price was down 36.9% since the trade.
   • Key Observation: This ETF amplifies downside risk due to its strategy. Investors need to be aware of the potential for significantly higher losses compared to owning individual components.

Bonus Stock Pick: KTO Gold

As a bonus, the speaker, Bridget, adds a stock to her paper trading watchlist ("Bridget's Buy"). This is a sale from a member of Congress that showed positive gains.

• Company Profile: KTO Gold is a junior miner from Canada, not yet in production but close to it.
• Trade Context: The stock popped up on the congressional trading screener, and the speaker noted positive gains from a sale by a member of Congress.
• Performance: While specific gains from the sale are not detailed, the stock is considered to have positive momentum.
• Potential Catalysts:
  • Gold Market Outlook: Gold is expected to have a good run into 2026, driven by strong demand from central banks and limited supply.
  • Profitability for Miners: The current price of gold (over $4,100) makes mining operations profitable.
• Risks:
  • Speculative Play: As a junior miner, there's risk of not hitting production targets, project delays, or accidents.
  • Commodity Risk: Unlike oil producers, gold miners are currently in a profitable price range for gold, mitigating commodity risk.
• Accessibility for US Investors: KTO Gold is listed on Canadian exchanges, not NASDAQ or NYSE, requiring specific brokerage access.
• Key Observation: This is a speculative play, but the strong outlook for gold and the company's position in the market make it an interesting addition to a paper trading watchlist.

Conclusion and Viewer Engagement

The video concludes by emphasizing that the discussed stocks are obscure and likely not names that most investors would typically consider. The hosts encourage viewers to use tools like the Market Beat congressional data screener for stock ideas and to conduct their own research. They solicit feedback on whether viewers prefer discussions on these lesser-known companies or more mainstream ones.