White House Investment in Public Companies
Recently, the White House has stepped into the investment arena by buying stakes in various publicly traded mining and technology firms. This marks a shift from the U.S. government’s long-standing avoidance of direct ownership in public companies, a practice intended to uphold free market principles and avoid biases. Traditionally, support for industries was offered through grants, tax breaks, and regulatory assistance.
Under President Trump’s administration, this approach has changed. The focus has been on critical minerals and national security, often relating to specific situations where direct investments in public companies seem justified. Such cases are usually tied to crises or align with national strategy.
It might seem unusual, but the only significant precedent for government investment in public companies was during the 2008 financial crisis, when the U.S. acquired stakes in banks and automakers to keep them afloat.
As a result of this new direction, stocks given special attention are now booming, reaching or nearing 52-week highs.
Technology and Security
Intel – INTC: The biggest name on the list is Intel, which gained significant attention lately after the government acquired a 10% share, making it the largest shareholder. This investment aims to boost domestic chip production, aligning with national security goals against competitors like China. Interestingly, the government converted Intel’s CHIPS Act grant funds into equity, with the company benefiting from around $11 billion in subsidies for both commercial and military chip production.
The struggles of Intel have been well documented, making this government support akin to a crisis response. On a positive note, INTC’s stock hit a new 52-week high of $38, climbing roughly 60% in just three months. Intel also benefited from a $2 billion investment from SoftBank and an additional $5 billion from Nvidia, aimed at collaborative development of data centers and PC chips.
Mining and Critical Metals
Lithium America – LAC: The government has taken a 5% stake in Lithium Americas along with a $435 million loan for its Tucker Pass lithium project in Nevada. This project is crucial for electric vehicle production and is expected to become a leading source of lithium in North America. Over the past three months, LAC’s stock has surged by more than 200%, recently hitting a record high of $9 per share. Interestingly, while based in Canada, there have been some surprising comments from President Trump about Canada potentially becoming the 51st state.
MP Materials – MP: This Nevada-based company produces rare earth minerals. Here, investment largely depends on the Department of Defense’s discretion. In a bid to challenge China’s dominance in this sector, the Pentagon invested $400 million, thereby becoming the largest shareholder with a 15% stake. Using the Defense Production Act, the Pentagon aims to secure a domestic supply chain vital for defense systems, such as the advanced F-35 fighter jet. In just 90 days, MP’s stock has risen by 130%, approaching a high of $82 per share.
Trilogy Metals – TMQ: Another Canadian mining firm, Trilogy Metals, saw the White House acquire a 10% stake to aid the development of Alaska’s Ambler mining district rich in copper, cobalt, and gallium. The stock price has increased over 300% in the last three months, with TMQ reaching a one-year high of nearly $7 per share.
Conclusion
These “White House” stocks currently hold a Zacks Rank #3 (Hold), hinting at potential favorable shifts in outlook. Given the strong investor interest, it wouldn’t be surprising to see continued upward movement, though their rapid ascension may present even better buying opportunities later on.
Beyond Nvidia: The Second Wave of AI
The AI revolution is creating billionaires, but it’s questionable whether the most well-known stocks will keep providing substantial returns. Lesser-known AI companies addressing major challenges may yield even greater profits in the near future.
