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Why Investors Should Pay More Attention To Lobbying Activity In Washington

|Includes:FB, Herbalife Ltd. (HLF)

The man with the gold makes the rules, so the popular adage goes. This is exactly the case in Washington, as multiple reports show. Corporate America stuffed huge sums of money into DC politicians' pocketbooks in 2013. Herbalife (NYSE:HLF), for instance, spent a record $1.34 million on lobbying in 2013, according to a report on the New York Post. The multilevel marketing company exceeded its former record of $880,000 during the 2008 election year.

Herbalife's history of lavish spending on lobbying is anything but an isolated incident. Online social networking giant Facebook (NASDAQ: FB) spent $1.4 million on lobbying in the third quarter of 2013, up 47 percent from the same period a year earlier. Google, on the other hand, spent $3.4 million during the third quarter of 2013, the largest amount spent on lobbying among consumer technology companies during the period.

While corporate America is moving fast to make friends in congress, one particular industry's lobbying efforts stand out as prominently as the Empire State Building in New York. Pharmaceutical companies and healthcare organizations have by far spent the most on lobbying over the past decade- and continue to do so.

According to a database kept by OpenSecrets, the healthcare industry spent $5.2 billion on lobbying between 1998 and 2012. The insurance industry came in at a distance second with $1.8 billion. This yawning gap signals the healthcare industry's unmistakable inclination toward lobbying relative to other industries. Indeed, for the first six months of 2013, reports from the Center for Responsive Politics indicate that the healthcare industry spent $243 million lobbying. Although this doesn't present any new insight (lobbying has been going on for ages), it is something that investors should look at from a new perspective.

ObamaCare Mints Millions for Selected Investors

Most of the healthcare industry's lobbying activity in the past several years has been directed toward supporting the Affordable Care Act, popularly known as Obamacare. While the debate over Obamacare is a political minefield, the law's effect on health insurance companies and hospitals has been very clear from the onset.

WellPoint Inc. (NYSE: WLP), which owns insurer Blue Cross Blue Shield, has risen 58 percent from 2010, the year ObamaCare was signed into law. Humana Inc. (NYSE: HUM), another top insurer, has risen 126 percent from 2010 to date.

Humana Inc's stock chart (below) presents a visual representation of just how big a boon Obamacare has been for healthcare stocks over the past several years.

Stocks: HLF, FB