There is little doubt that it pays for a corporation and its stakeholders to contribute to the campaigns of politicians whose platforms help them become more profitable. For example, a candidate who is pro-military could definitely help the bottom line of an arms manufacturer should he or she be elected, while a candidate who supports alternative energy could provide a boost to solar manufacturers and other green energy producers.

In a study by Michael Cooper, associate professor of finance at the University of Utah, along with assistant professors Huseyin Gulen of Purdue and Alexei Ovtchinnikov of Vanderbilt University, it was found that the stocks of companies that contributed to congressional candidates had better share price returns than those that didn't. The difference was significant, with an average premium in returns of 6% per year.

Based on the theory that a company (or its stakeholders) will contribute to the campaign of the candidate whose platform will help its business, it makes sense to invest in the companies that have, either directly or indirectly, made contributions to the candidate that you believe will win. If Senator Barack Obama becomes president, the companies that back him will, theoretically, do better than the companies that made contributions to Republican nominee John McCain. For Obama-backers, we have created the "Barack Obama Stock Index", which is made up of five companies whose major stakeholders have made contributions to Obama's campaign. We have used contributors from the 2007 Forbes 400 list to ensure that we are using contributors with influence. (To see how the other half lives and invests, read Five Stocks If McCain's Your Man.)

The Obama Stock Index

Contributor Forbes 400
Position at Company
Lester Crown 68 Co-Founder of General Dynamics (NYSE:GD)
Wilma Tisch 161 Widow of Loews Corporation (NYSE:LTR) Founder
John Morgridge 220 Former CEO of Cisco Systems (Nasdaq:CSCO)
Pat Stryker 271 Granddaughter of Stryker Corporation (NYSE:SYK) Founder
Vinod Khosla 317 Co-Founder of Sun Microsystems (Nasdaq:JAVA)
* As of the 2007 Forbes 400
Italics signify ranking is a tie

Platform Highlights
To be able to choose which presidential candidate you think will win, you must first understand their platforms. Here is a quick overview of Obama's presidential platform as provided by This will help you to decide whether to invest in the companies listed in the index above.


If elected as president, Obama proposes an immediate phased withdrawal of troops from Iraq, with the goal of being fully removed by the end of this year. He is also focused on revamping energy policies to look for increased efficiencies and alternative energy technologies. (For more on investing in alternative energy, check out Five Companies Leading The Green Charge.)

He would also like to see expanded healthcare coverage. By expanding the earned income tax credit and increasing the minimum wage, Obama also hopes to help the nation's poor.

Stryker Corporation
Stryker has fallen 16% this year from $73.60 on the first day of trading in 2008, to close on June 24 at $62.06. These losses come as a little bit of a surprise, as the sector (as measured by the DJ U.S. Medical Supplies Index) has only dropped about 4% in the same time period. Despite this, the company is in good financial shape, as noted by Stock Picking Community member bankinbenjees in a recent stock pick:

"great company, no debt. excellent management. industry leader in R & D. holds rights to many surgical and healthcare related devices and tools. company is also in great location near several excellent engineering schools from which to pull employees. great future and wonderful pick for any long-term portfolio."

I have to agree with bankinbenjees, especially when looking at the company's situation compared to its competitors. With revenues 114% above the industry average and operating margins of 22% (compared to the industry average of -8%), Stryker seems to have been beaten down this year a bit more than it deserves. As long as it continues to grow its quarterly revenue at about 15% (year-over-year) as it has been doing, and it continues to keep its tight margins, the future looks good for this diamond in the rough.

Add Your Two Cents
Who do you think will win the presidential race? Will campaign contributions pay off with higher share prices for Stryker and the other companies in our Barack Obama Stock Index if Barack Obama gets the vote? Be sure to join me (aytonmm) in the FREE Stock Picking Community to share your thoughts and see what other investors are saying.

Related Articles
  1. Investing

    Build a Retirement Portfolio for a Different World

    When it comes to retirement rules of thumb, the financial industry is experiencing new guidelines and the new rules for navigating retirement.
  2. Stock Analysis

    Net Neutrality: Pros and Cons

    The fight over net neutrality has become an amazing spectacle. But at its core, it's yet another skirmish in cable television's war to remain relevant.
  3. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  4. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  5. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  6. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  7. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  8. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  9. Professionals

    What to do During a Market Correction

    The market has what? Here's what you should consider rather than panicking.
  10. Mutual Funds & ETFs

    ETF Analysis: Vanguard Mid-Cap Value

    Take an in-depth look at the Vanguard Mid-Cap Value ETF, one of the largest and most popular mid-cap funds in the U.S. equity space.
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  3. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  4. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
  5. Ltd. (Limited)

    An abbreviation of "limited," Ltd. is a suffix that ...
  6. BHD (Berhad)

    The suffix Bhd. is an abbreviation of a Malay word "berhad," ...
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!