‘Shocking’. Just ‘shocking’. What a shocking surprise to exactly nobody.
– Lobbying Works! Big Spenders Reap Big Stock Gains Says Trennert (Yahoo Finance, July 23, 2012):
“Follow the money,” the simple but famous instruction whispered to Washington Post reporter Bob Woodward by his “Deep Throat” source, was enough to crack the Watergate scandal. Today, 40 years later, those very same words appear to have blown the lid off of another political outrage in our nation’s capital: the corrupting influence of money in politics.
While this financial connection, in and of itself, is hardly a great revelation, new analysis from Strategas Research Partners shows irrefutable evidence that companies are getting a real bang for their buck on the money they spend trying to influence lawmakers. By tracking the 50 companies that spend the most money — as a percentage of their total assets — on lobbying, the so-called Lobbying Index proves it’s a darn good investment.
How good? The Lobbying Index has now beaten the S&P 500 for 12 years in a row.
“It’s almost in the statistically hard-to-believe category,” says Jason Trennert, Managing Partner at Strategas Research Partners, of the benchmark’s unbeaten string. “Remarkably, it seems to work. The companies that spend more, tend to outperform,” he surmises in the attached video.
The Lobbying Index itself is not available for investing, and Strategas doesn’t release the actual list of the 50 names that make up the basket, but they do provide performance statistics as well as insight into industry trends. Not surprisingly, Trennert says the 50 big spenders include many defense names and other government contractors, like Raytheon or L-3 Communications, and include firms in “heavily regulated industries,” such as pharmaceuticals. More recently, he says the list is not only undergoing more annual turnover, but it has also seen the banks drop from the ranks in the wake of the financial crisis.
“I think it speaks to the fact that government is a much bigger part of the economy,” Trennert points out, adding that many companies now actually view their lobbying expenditures along the same lines as R&D (research and development) or equipment spending. “Companies are understanding better the idea that it is important…that it is a fiduciary duty to spend money and make sure your voice is heard,” he says.