How the shift to state capitalism is panning out for America LLC
It has been nine months since the new leadership team took charge of America on January 20th. As we head towards the holidays, we are pleased to update you on the strong performance of the flagship White House Opportunities Fund (), established by our new .
Critics in the investment industry and financial press complain that our new approach to investment is distorting capital markets and “picking winners”. To that we say: it beats being haters and picking losers. Our approach is a unique blend of corporate activism and state capitalism at home, supplemented by carefully chosen special investments abroad. It is already paying dividends. Our early bets in semiconductors and mining have produced beautiful returns. Several of our core investments have almost doubled in value, far outstripping the 14% rise in the 500 since the fund’s inception.
Our holding in Intel, bought in August, remains the anchor of the portfolio. At our official purchase price of $20.47 per share, the value of our stake in the semiconductor manufacturer has risen by 98%. A continuing strategic dialogue with Lip Bu-Tan, who took over as in March, allows us to confirm that he is not conflicted by his investments in Chinese technology firms, as we may have suggested in August. We are excited about his leadership.
Investments in metals and mining firms, via our sub-funds, Pentagon Ventures I and the Department of Energy Alpha Fund, have also struck gold. The share price of Materials has risen by 115% since we invested in July, and the value of our 5% stake in Lithium Americas has gone up by 90% since we bought it in September. Our investment in Canada’s Trilogy Metals has more than doubled since it was made in early October. We are interested in further, similar investments. In particular, Greenland remains a potential target for hostile takeover.
We remain excited about opportunities in Argentina. Recent purchases of Argentine pesos by Scott Bessent, our experienced head of foreign-exchange portfolio management, yielded short-term profits after President Javier Milei’s party, Liberty Advances, won midterm elections on October 26th. We have supported this trade with a $20bn currency-swap arrangement with the Argentine government, and are keen to expand it through partnerships with other investors.
Some of you may be concerned about our exposure to Argentina, given the losses suffered by many foreign investors there in the past century or so. But we believe the recent performance is an endorsement of the ‘s strategy. Rather than hiding from political risk, as many portfolio managers do, we consider ourselves participants in the democratic process, at home and abroad. We are political price-makers, not price-takers.
Our portfolio managers are still on the lookout for openings in the digital-asset universe. The creation of the Strategic Bitcoin Reserve in March represented a clear break with the over-cautious, even sleepy, approach to cryptocurrency of the former . Today, we are committed to more actively realising the value of the digital assets on our balance-sheet. The value of the roughly 200,000 bitcoin we hold has risen by 23% since the establishment of the reserve. (Disclaimer: the takes no responsibility for the personal investments of the current , nor for any coins associated with his name. But since you ask, they’re doing brilliantly.)
Critics of America claim there are risks to the outlook, notably in the macroeconomy. They argue that signs of stress in American corporate borrowing and weaknesses among lower-income households pose a threat to the fund’s performance. Frankly, they’re making it up. And in any case, management is in the process of forming a closer relationship with the Federal Reserve, which we expect to be strengthened by a change of personnel there. A full takeover is possible. We are especially keen to acquire the Fed’s money-printing machine.
The fund faces idiosyncratic threats. America ‘s unique corporate structure requires that the executive team be rotated out every four years. We feel that this unduly constrains our long-term approach, and that an extension to the ‘s term may be necessary. He has indicated that he sees no need to amend America ‘s founding documents. But we will update you in due course.
