Winners Win and Losers, Well, er, Lose: Presidential Contributions From Non-Financial Companies

By Maxwell Kirchhoff - January 8, 2012 | Tickers: T, CMCSA, EMC, FDX, GOOG, MAR, MSFT | 0 Comments

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With the 2012 presidential elections rapidly approaching, uncertainty concerning the economic enviornment from 2013-2016 will emerge as a key focal point for investors, hedge fund managers, and employers nationwide.  Historically, Alesina and Rosenthal (1995) discovered that Republican presidents focus on keeping inflation rates low, while Democratic presidents seek to establish lower levels of unemployment.  

While Friday's jobs data serve to further this hypothesis, I would like to examine company-to-president relationships instead of macro-level forecasts for the remainder of this brief commentary.  Specifically, I will look at the largest non-financial campaign contributors for Obama and McCain from 2008, offer my opinions, and conclude by showing the leading contributors for the coming election's probable candidates, Obama and Romney.  The reason this commentary will focus on non-financial publicly traded contributors is because most financial backers such as JPMorgan Chase & Co. and Citigroup have historically funded both parties.  On the other hand, there are substantial differences among non-financial contributors and our political parties.

The Top Two 2008 Donors for Obama and McCain

The table below displays the top two non-financial, publicly traded donors for then candidates Obama and McCain and their appreciation from Obama's inauguration.

As can be seen, Obama's haul from non-financial public companies dwarfs McCain's.  Also, Obama's top two are industry leading tech companies, Google (NASDAQ: GOOG) and Microsoft (NASDAQ: MSFT), and McCain's are large-caps in more competitive sectors, AT&T (NYSE: T) and FedEx (NYSE: FDX).  The table below demonstrates the stock value of each company and their leading same-sector competitor over the same time-frame.

For Obama, Google has been an outright win during his presidency.  In terms of Microsoft, there are two caveats: 1) No other company is truly equivalent in its operations, that is, as diverse (think XBOX, Windows, Office, Bing; versus Oracle's more narrow software and hardware focus); and 2) When controlling for dividends, Microsoft's returns become much more comparable (+17.54% annualized growth with dividend reinvestment vs. +20.22% annualized growth with dividend reinvestment for Oracle).  

On McCain's ledger, Verizon has simply outperformed AT&T.  Further, when dividends are utilized for the FedEx/UPS comparison, UPS appears to have delivered more than meets the eye to its shareholders (+21.08% annualized growth with dividend reinvestment vs. +17.44% annualized growth with dividend reinvestment for FDX).  To add to stock performance, during Obama's tenure, AT&T had its T-Mobile acquisition bid stymied, and Obama's cost-cutting initiatives with respect to the USPS should result in heightened long-run federal competition for both FedEx and UPS.  Everything considered, the top two non-financial publicly traded donors to our last presidential winner have outperformed the non-financial publicly traded donors to our last presidential loser.  

2012

For the coming elections the top two non-financial publicly traded donors to Obama and Romney are presented below.

Although this article does not establish causation, if the current rates of contribution from the above mentioned companies continues, investors are advised to examine Microsoft and Comcast (NASDAQ: CMCSA) with an Obama re-election, and EMC (NYSE: EMC) and Marriott (NYSE: MAR) with a Romney victory.

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