Friends in High Places
Updated: Nov 4, 2020
By Evan Boyle, Investment Analyst at University College Dublin Student Managed Fund
In a Twitter video following his release from Walter Reed Medical Centre, US President Donald Trump heralded Regeneron’s REGN-COV2 the cure for Covid-19. The President addressed the nation on the White House lawn, appearing to have received Dripping Gold Tan as a subsidiary treatment. He praised the drug cocktail concocted by his golf buddy CEO Leonard Schleifer and his team. Schleifer, or ‘Lenny’ as Trump affectionately refers to him, was the highest paid pharmaceutical executive in 2018 and 2019 and is set to retain the crown in 2020, following the stellar performance of the company’s stock with a 54% year-to-date gain.
In February this year, Lenny exercised options to sell $178 million of stock in a single day, following the announcement of $81 million further funding from the US Department of Health and Human Services which was set to cover 80% of the cost of developing Covid-19 antibodies. More recently in the wake of the aforementioned treatment and Twitter video, Regeneron’s stock soared once again and saw an executive and a board member exercise options for a combined profit of $1 million.
Trump received a large bevy of treatments including, but not limited to, Regeneron. Yet the President claims he personally suggested Lenny’s drug and points to it directly as “the key” and “the cure” — a shining endorsement which led to a shining stock price boost of 7% for his friend’s company.
However, Lenny isn’t the only executive to have profited from ties with the Don (no, not Suzanne Jackson). In April this year, Oracle co-founder and CTO Larry Ellison endorsed Trump in a Forbes interview, having hosted a fundraiser for his re-election efforts on his California compound. In return, Trump administration requested the Supreme Court to dismiss a decade long legal case between Microsoft and Oracle which, if dropped, would see Oracle receive $8 billion in royalties. This mutual scratching of backs continued, blossoming into a beautiful friendship. The two shared a phone call in the initial days of the pandemic, just chatting, which culminated in Ellison developing a federal Covid-19 database and Trump adding Ellison to a tech committee set to advise the President on re-opening America’s economy.
On August 14th, Trump signed an executive order directed at ByteDance, the parent company of TikTok, to sell its US operations in the next 90 days or cease operations entirely. When news broke, the estimated price tag was $30 billion, no measly fee. Few US companies could afford the takeover and less were interested. Microsoft were the first to the table, surprisingly, followed closely by Oracle. Following the announcement of the Oracle bid, Trump stated Oracle was “a great company” and “would be certainly somebody that could handle it”. Another shining endorsement. Ultimately, Oracle won the bid in conjunction with Walmart, entering into a sector completely unfamiliar to either. The announcement of the bid saw Oracle’s stock price rise 4.5% in intraday trading.
Now looking forward to November 3rd, if Trump retains his position in the Oval Office, it would appear that the best stock strategy would follow his friend’s list. Palantir, a company co-founded by Peter Thiel, has recently been awarded a contract to develop a federal tracking tool for Covid-19 vaccines. Thiel has been referred to as “the most famous Trump supporter in tech”, donating $1.25 million towards his initial 2016 campaign and associated political groups and causes. Palantir has experienced a lacklustre first month of trading following its September 30th IPO, with shares trading around the initial $10 mark. However, the company specializes in having a lack of a moral compass and offering big data analytics to government bodies and intelligence agencies, meaning close ties with Agent Orange should lead to further federal contracts.
Boeing came into the spotlight in March of last year, following the crash and subsequent grounding of its 737 MAX airliner. However, in the days that immediately followed the catastrophe, the US F.A.A continued flights of the aircraft — the result of a phone call between President Trump and former Boeing CEO Dennis Muilenburg. The close ties between the company and Trump administration are widely known, with Boeing donating $1 million in funds to the inauguration committee. In 2019 alone, the US Government provided Boeing $28.6 billion in revenue, awarding the company multi-billion dollar defence contracts which span until as late as 2029. Similar to Palantir, it would appear that a Trump re-election can only result in a growth in operations and an increase in share price for the aviation behemoth.
Whether you like him or not, President Donald Trump became and could remain one of the most powerful people in the world. Above depicts only a smattering of the various back scratches and underhanded dealings of his first term, but with federal contracts generally awarded in the billions perhaps its self-serving to invest with the man, not against him.
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