Filtering State-Embedded companies (how to pick)
Assuming that the Controllers can steer markets, what tells them to elevate some state-embedded names while letting others languish - or even pin them down?
I’ve provided more context on my state-embedded portfolio thesis in these 2 articles:
This article goes more in depth in terms of how to select the state-embedded companies with the most upside and avoid the dogs.
The control parameters (what they optimize)
Narrative utility: Does the ticker help sell the system’s next rail (AI lineage, digital ID, programmable money, provenance)?
If yes, it gets air cover and multiples. If it creates heat (war profiteering optics), it’s muted.
Capital formation need: Does the firm need a strong equity currency to fund hyperscale CAPEX/M&A/global rollout now?
If yes, Boost it. If contracts are cost-plus and cash gushing, no need to overpay in public markets; keep it dull.
Recruiting & prestige signaling: Some vendors must look like inevitable winners to attract elite talent and partners across borders; others can hire quietly.
Budget politics: High multiples on defense primes (LMT/NOC/GD/RTX) invite “windfall” hearings and threaten future margins. Low, steady stocks make procurement easier.
Procurement leverage: If the government is still negotiating multi-year pricing, don’t hand the vendor windfall optics via a mooning stock.
Let platform monopolists (policy OS, identity, provenance) run - high market caps create “too central to fail” anchors.
Secrecy/deniability: Sensitive capability providers often stay unglamorous to avoid attention (and price volatility) around classified wins.
Keep niche/black-adjacent vendors under the radar (muted caps) to reduce political scrutiny.
Their value is classified - you don’t want retail staring at it.
Index plumbing: Inclusion in major indices and sector ETFs creates passive bid.
If the system wants broad distribution, it nudges indexability; if not, it lets the name sit outside or in smaller baskets.
Elevate names that the system wants inside every 401(k) - permanent bid from passive.
Starve names they want as low-beta utilities (stable dividends, no retail mania).
Export diplomacy: Some champions must look dominant abroad (deterrence, standards setting).
Others - especially defense primes - must stay “fairly priced” so allies don’t balk at buying.
Consolidation agenda: If the play is to roll up a fragmented space, keep targets cheap and platform acquirers richly valued.
Antitrust heat management: Over-elevate a choke-point and you trigger hostile regulation.
Better to let an essential vendor compound quietly.
Volatility management: For rails that touch payments/identity/critical infra, controlled low volatility is a feature (customers and regulators prefer it).
You can’t have Visa/Mastercard trade like meme stocks.
Paperization strategy: Where the aim is to move users into wrapped exposure (ETFs/managed services), a smooth, credible up-and-to-the-right path beats spikes.
Discipline & Governance Signaling: Knock down champions after scandals or safety failures to show “no one is above rules”, then rehabilitate once housekeeping is done.
Public-facing Elites: The public-facing Elites are the interfaces between the Controllers and the masses. E.g. people like Musk, Altman, Huang, Karp. These are myth-making avatars - “trustworthy human front ends” for systemic agendas.
Generally, you can’t have myth-making avatars whose companies are tanking into the abyss. If the CEO wears a leather jacket, looks like a ninja turtle and is blasted on all news networks, it’s probably a buy.
How those parameters map to real sectors
Likely pushed up (because they sell the next regime)
Palantir (PLTR): AI + decision lineage + admissibility. Narrative utility is maximal (the “policy OS”). Needs high-caliber recruiting and global partner sign-ups. Equity currency helps win/co-build abroad. “Policy OS” for defense/health/finance; emits admissible, audited decisions (lineage, rollback). A steadily rising cap cements procurement default and tells allies “this is the standard”.
Microsoft (MSFT): Default compliance/identity surface (Entra/Defender/Compliance) + Gov clouds. Massive CAPEX for AI/data centers; high multiple lowers Weighted Average Cost of Capital (WACC) and signals inevitability to enterprise buyers and regulators. Legitimizes policy-grade AI in the office suite.
NVIDIA (NVDA): Strategic silicon. Strong valuation funds supply chain control, ecosystem grants, and keeps global AI momentum - deterrence by capability. Obviously, everyone already knows.
Palo Alto Networks (PANW): Platformization of cyber with policy-grade knobs; roll-up agenda favors elevated acquirers vs flat targets. Higher cap = acquisition currency to roll the field and meet minimum-standards checklists.
Visa/Mastercard (V/MA): Payment governance rails; steady multiple supports merchant/issuer migrations and tokenization/ID programs. Money movement “constitution”; steady elevation keeps the MoE rails investable until stablecoin/CBDC migrations finish.
Likely kept stagnant/capped (because budget optics, secrecy, or consolidation)
AT&T / Verizon (T/VZ) — Critical communications infra but treated as regulated utilities; stable dividends, muted equity excitement to avoid tariff/populist flare-ups and preserve pricing pressure. You can’t keep raising the plebs’ phone, internet and TV bills and have your company’s value skyrocketing - it’s bad optics. You have to look poor to keep robbing the plebs.
Defense primes (RTX, LMT, NOC, GD): Cost-plus, Congressional optics, and export diplomacy argue for steady, not flashy. Too high a multiple invites margin claw-backs; lawmakers prefer “responsible profits”.
Big Systems Integrators (SIs) (ACN, IBM services, SAIC/Leidos at times): Negotiation leverage and consolidation aim can favor flat multiples until scopes are locked; then modest repricing.
IBM: Deep gov footprint; price containment maintains procurement leverage and lets it absorb legacy workloads quietly; not the public AI mascot.
Boeing (BA) - State-embedded, yes; but public safety discipline (scary, DEI staff) required a multi-year market penalty. Once contrition/oversight boxes are ticked, rehabilitation follows - but not to meme levels.
L3Harris (LHX) / KBR/Jacobs - Important but B2G (business-to-government) heavy, lower narrative wattage; steady workhorses kept from mania to protect bid/ask power in programs and M&A optionality.
Telco vendors (ERIC/NOK): Keep carrier total cost of ownership palatable; avoid political heat around 5G/6G subsidies; ensure stable - not exuberant - valuations. Telco capex is a political minefield; controlling vendor valuations helps contain 5G/6G program optics and carrier bills.
Fragmented cyber/observability mid-caps: Keep them inexpensive so platform acquirers (PANW/CRWD/MSFT) can buy or out-compete without backlash.
Concrete examples: who’d be nudged up and why
Palantir (PLTR) - to normalize “policy-grade AI”
Why boost: Sell the legitimacy of auditable AI across allies; recruit elite builders; win joint deployments; set templates.
Why not cap: Its revenue mix is diversifying to commercial; regulatory optics manageable compared to defense primes. At the same time, its story is not as clean as NVDA/TSLA (AI innovation/entrepreneurship) which are very heavy consensus. The concept of Overton Window Management (Portfolio Managers can’t write “we’re buying the substrate of technocracy“) is still at play.
Microsoft (MSFT) - to fund the compliance/default surface for AI and ID.
Why boost: Trillion-scale CAPEX; regulators oddly prefer the default they can talk to; CIOs buy the safest vendor.
Nvidia (NVDA) - to anchor the hardware moat while the “AI as governance” narrative scales.
Why boost: Ecosystem lock-in and developer mind-share are strategic; high multiple funds massive supply commitments.
Palo Alto Networks (PANW) - to consolidate fragmented security into controllable platforms.
Why boost: Platform premium eases stock-for-stock deals and keeps the “minimum standard” skews in their direction.
V/MA - to smooth the programmable money migration with trusted brands.
Why boost: Keeps consumer/corporate confidence while adding compliance rails under the hood.
My current outlook in terms of companies: PLTR > MSFT > PANW.
My current outlook in terms of assets: PLTR > Bitcoin > Gold > MSFT > PANW.
More context:
Bottom line
Boost the storytellers and standard-setters (Palantir/Microsoft/AI–security–provenance–payments platforms) to scale the rails;
Keep cost-plus and politically sensitive hardware houses stable to smooth budgets and diplomacy.
Your alpha is to recognize which bucket a name sits in - before the memos can say it out loud.
The prices are optimized to serve policy, not to maximize every vendor’s market cap.
None of this should be considered investment advice.
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