Why the Trump Administration is Now Taking Equity Stakes in American Companies
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Why does the Trump administration want equity stakes in companies like Intel and MP Materials?
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Hello and welcome to another episode of the Oddlots podcast. I'm Joe Weisenthal.
And I'm Tracy Alloway.
Tracy, isn't it you who said for a long time that whenever the government does some of these deals like with chips or maybe the early backing of Tesla, et cetera, aren't you always like, Why didn't the government get equity stakes in these companies? Why are we just getting back sort of loans that are more or less the same amount of money we put in?
Yeah, I think I have said that.
Yeah.
I mean, it seems like this weird sort of half ground where you are investing in a company without asking anything in return.
Yeah. To be fair, they do have milestones and provisions and so forth. But yes, it does feel like some of these uh funding structures have been, I would say, at least incomplete to uh say the least, and the effectiveness has been inconsistent. All that being said, the Trump administration, apparently big fan of yours, uh listening to you over the years on the podcast with some recent deals is sort of getting into the uh the equity business. In some way.
Yeah, so I've seen people describing this as more activist uh industrial policy or state interventionist industrial policy. One thing I will say, for a president who seems to uh like calling other people communist quite a lot, he sure does enjoy owning the means of production.
Yeah, there's certainly some scrambling, right?
Well, this is the other thing. The ideological scrambling has been interesting to watch because you had people like Bernie Sanders who were saying, Well, the Intel deal is a great return for the American people. And then you had, I can't remember the name, but you had a Republican going like, Oh, this is the end of capitalism. So it's kind of funny to watch.
It's super interesting, super confusing time. I'm not personally as bothered by the lack of quote taxpayer return on this stuff, mostly because I view the goal or failure is: is there gonna be a public benefit? Are we gonna have security because we can produce chips? Are we gonna have security because we finance domestically mining of rare earth minerals and so forth? But these are like the big questions, and I think we should learn more about this sort of new. new approach and what's a continuation of what we saw under Biden, what's different, et cetera, whether any of this will work. Of course, by the way, you know, we're talking about an Intel. Mm-hmm. So Intel specifically, the government has taken some sort of warrant or something.
I'm not totally sure on
They took shares, I think. Almost uh ten percent stick.
Yeah. And also MP, which is of course the great hope for whether the US could also mine rare earth metals such as China. So pretty big deals. And I think uh we should talk about them all.
Can I just say if you look at the HDS function on Bloomberg, you can see that the United States government is now listed as a top shareholder. And if you click into it, it says US Department of Commerce. I don't know why. I just find that so amazing. I I had
not looked at that.
Yeah, it's kind of funny. And I don't know, I just have this vision of like Howard Lutnick like checking on his portfolio of interesting. We're gonna get well they're
the you know, we're gonna get an ETF. Actually Unironically, our old friend uh Luke Kawa at Sherwood, he had a really good post yesterday pointing out the fact that, and it's very important, the shares of Intel and MP and one other one have done very well. So a lot of people are sort of making this trade of why would you not be in the same trade as the US government?
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Chapters
3 chapters
1
Why does the Trump administration want equity stakes in companies like Intel and MP Materials?
0:00–12:18
2
How did the government’s historic use of loans and grants differ from taking equity stakes?
12:18–46:16
3
How are the Intel and MP Materials equity deals structured and what obligations do the companies have?
46:16–48:44
Speakers
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