Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Investors Should Care About General Electric Company's Lobby Hobby

By Aimee Duffy - Mar 21, 2014 at 5:45PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Does lobbying play a role in your investment thesis? Maybe it should.

It's Sunshine Week 2014! For those unfamiliar, Sunshine Week aims to raise awareness and bring about more disclosure to the U.S. government. Given that this is an investing site, our focus is on publicly traded companies and the money they spend lobbying Washington. All of the data in this article comes from and the Senate Lobbying Disclosure Act database.

Today, our focus is on General Electric ( GE 0.75% ). The conglomerate was one of the top five lobbying spenders out of all publicly traded companies in 2013. Of the $3.21 billion spent on lobbying last year, $16.1 million of it came from GE.

On the face of it, $16.1 million is a huge amount of money to spend on advocacy, but how does it compare to GE's lobbying record over time? Is this kind of spending a one-time occurrence or an annual tradition?

Source: Dollar figures in millions.

At first glance, it looks like GE has driven down its lobbying expenditures significantly in recent years, but it has still spent no less than $15 million on lobbying each year for the past decade.

But what exactly is GE trying to achieve by spending all this cash currying favor in our nation's capital? As a conglomerate made up of extremely varied business segments, the opportunities are endless. Here's a look at its lobbying record broken out by the number of reports filed by specific issue code:


Believe it or not, GE is the only one of the five top spenders to have the "taxes" category fill the No. 1 slot. After that, the issues break down into the company's primary operations. Clearly, there is a lot of emphasis on defense and budget appropriations, two issues that go hand in hand, and that is something that investors might want to research further. For a closer look at the specific sub-issues present in GE's lobby story, you can click here.

If you are just getting to know General Electric from a shareholder's perspective, this information is invaluable for getting a true sense of what matters to the company today and where its business is heading.

How this affects your holdings
Now that we've flushed out GE's lobbying profile, it's fair to ask what it all means in relation to shareholders. Does lobbying really matter to investors? Does it affect the returns of our stocks?

As it turns out, it absolutely does.

Academic research has turned up a direct link between lobbying activity and shareholder wealth, illustrating that publicly traded companies that spend money lobbying post better market returns than companies that do not. In a study published last summer by researchers at the University of Mississippi, the authors wrote, "Our results suggest that stocks of lobbying firms significantly outperform non-lobbying firms."

An investment research firm called Strategas has taken it one step further, creating an index that tracks the 50 companies that spend the most money on lobbying every year. It claims its index has beaten the S&P 500 for the last 15 straight years, implying the market is not properly valuing lobbying expenditures.

Lobbying is not necessarily viewed as an investment opportunity in the minds of most shareholders, but maybe it should be. In the spirit of Sunshine Week, it's time to celebrate disclosure and shine a little light on the lobbying activities of your stock holdings.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

General Electric Company Stock Quote
General Electric Company
$98.28 (0.75%) $0.73

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/09/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.