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Five Stocks For Obama Backers

Posted: Jun 11, 2008 16:17 PM by Ayton MacEachern

Tickers in this Article: QCOM, VIA, GGP, BOKF, BRK.A

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 that is pro-military could definitely help the bottom line of an arms manufacturer, should he or she be elected; while a candidate that is pro-alternative energy, would help the bottom line of solar manufacturers, and other green energy producers.

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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, from 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 as well, 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 a candidate that would 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 wins, companies who backed him would theoretically do better than the companies that made contributions to Republican nominee John McCain. To help with this, we have created the "Senator Barack Obama Stock Index", which is made up of five companies whose major stakeholders have made contributions to Senator Obama's campaign. We have used contributors who made the 2007 Forbes 400 list, to make sure 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 Ranking*	Position at Company
Warren Buffett	2	CEO @ Berkshire Hathaway (NYSE:BRK.A)
George Kaiser	26	Chairman @ BOK Financial Corporation (NYSE:BOKF)
Matthew Bucksbaum	105	Shareholder @ General Growth (NYSE:GGP)
Steven Spielberg	117	Dreamworks Principle @ Viacom (NYSE:VIA)
Irwin Jacobs	297	Founder @ Qualcomm (Nasdaq:QCOM)
* 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 understand their platforms. Here is a quick overview of Senator Obama's presidential platform provided by Forbes.com, which will help you decide whether to invest in the companies listed in the index above.

Source: Forbes.com

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

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

Add You Two Cents
Who do you think will win the presidential race? Will campaign contributions pay off with higher share prices for the above companies if Senator 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.

By Ayton MacEachern

Ayton MacEachern is an Equity Trader, previously working as the Senior Financial Editor at Investopedia.com. After receiving his bachelor's degree in financial services from Mount Royal College in Calgary, Alberta, MacEachern began his career at an international securities trading firm. MacEachern has worked in a variety of roles in the financial industry, including workers' compensation insurance underwriting, financial planning, and equity, currency and options trading. MacEachern is also Co-Founder of theskipper.ca, a source for online outdoor education.

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