U.S. Sen. Sheldon Whitehouse Just Bought Crown Castle Stock and Unloaded Diageo Stock. Should You Do the Same?

On May 8 and May 10, U.S. Sen. Sheldon Whitehouse (D-RI), sold shares of Diageo (DEO -0.09%) and bought shares of Crown Castle (CCI -0.64%), respectively, according to June 6 filings.

Although it's unclear how many shares were involved in the trades, the amount reported for the Diageo transaction was between $15,001 and $50,000, while the Crown Castle transaction was between $1,001 and $15,000. Since May 8 through the close of trading on June 7, Diageo stock had fallen 3.4%. From the time of the Crown Castle trade on May 10 through the market's close on June 7, Crown Castle had risen 1.1%. Whitehouse sits on several Senate committees including Budget, Finance, and Judiciary.

While any individual can sell any stock for any reason, investors may wonder if they should continue to hold their Diageo shares, or if now's the time to buy Crown Castle stock.

What to know about Whitehouse's trades

It's unclear why Whitehouse sold his Diageo shares, a global alcohol industry leader, but the stock has seriously underperformed the S&P 500 for years. For the five-year period ending on the day of Whitehouse's trade, Diageo stock was down by 22% while the S&P 500 had soared 86%. In November, management projected a weak first half of 2024 due to an expected poor performance in Latin America and the Caribbean.

By contrast, Crown Castle -- a premier name among infrastructure REITs (real estate investment trusts) -- exceeded analysts' estimates in the first quarter. While analysts expected Crown Castle to report revenue of $1.63 billion, the company booked sales of $1.64 billion.

Should investors follow Whitehouse's moves?

Although Whitehouse moved Diageo out of his portfolio, investors shouldn't feel compelled to do the same. As the owner of a slew of premier alcohol brands, Diageo retains a competitive advantage and is worthy of consideration by income investors.

Crown Castle stock, meanwhile, is trading at 12.8 times operating cash flow -- a discount to its five-year average multiple of 19.4 -- and looks like an attractive way for investors to supplement their passive income streams.