The HALO Effect
April, 2026
The threat of disruption has sent shockwaves through the investing world. Many companies face heightened risk of being disrupted by Artificial Intelligence (AI) as the technology upends traditional business models. Within the technology industry itself, participants have formed a circular firing squad of sorts. The definition of “winners” and “losers” seems to change monthly with many incumbents under assault and traditional software companies threatened. As investors grapple with these new challenges, the term “HALO”, an acronym for “Hard Assets Low Obsolescence”, has gained attention and popularity. Though we cannot claim to have coined the term, we’ve been applying the concept to our process for some time now. To be sure, we are always working hard to identify and emphasize businesses with durable, scarce assets that generate strong returns and are unlikely to be replicated/disintermediated. Below, we highlight a few areas where “HALO” has taken a more prominent role across the various DAM strategies:
Timber: ChatGPT can’t grow trees! Yet… Jokes aside, we are attracted to the massive disparity between public and private market valuations across the sector, and view ties to the floundering housing market as a free “call option” of sorts. Timber is an asset that literally grows every year and appears to carry lower risk given historically low valuations across the space.
Live Events: Where appropriate, various portfolios have been buying companies that own/operate live events including concerts, combat sports and racing. These assets are scarce, can’t be replicated and are exceptionally authentic while other forms of media are being disrupted.
Real Estate/Infrastructure: To us, “real” assets are as “hard” as they come. Whether it’s buildings, dams, towers, railroads or just good old fashioned “dirt”, all are durable and productive assets that we believe are unlikely to be “vibe-coded” into oblivion.
Power: Though undoubtedly tied to the AI theme, electricity generation infrastructure is a theme that also benefits from secular tailwinds such as electrification and re-shoring/re-industrialization. We have meaningful exposure to companies that play in the construction, maintenance, operations and financing value chains of this powerful multi-year cycle.
HVAC: Death, taxes and AC. Anthropic might be able to do your taxes at some point, but you’ll still have to fix your AC when it breaks on a hot July day. We have exposure to various original equipment manufacturers and distributors in the space that stand to benefit from steady demand, pricing power and innovation.
The power and promise of AI has already set in motion one of the most meaningful investment cycles in history. Though this phenomenon creates great opportunity, it also carries with it new risks. As we navigate these new risks, we will continue to focus on attributes like durability, quality and scarcity – characteristics that we believe can stand up to ever changing times.
Important Disclosures: The statements and opinions expressed in this article are those of the authors as of the date of the article, are subject to rapid change as economic and market conditions dictate, and do not necessarily represent the views of Davenport & Company LLC. This article does not constitute investment advice, is not predictive of future performance, and should not be construed as an offer to sell or a solicitation to buy any security or make an offer where otherwise unlawful. Investing in securities carries risk including the possible loss of principal. Individual circumstances vary. This information has been compiled from sources believed to be reliable; however, there is no guarantee of accuracy or completeness. Diversification and asset allocation does not ensure a profit or guarantee protection against a loss. Performance shown is historical and is no guarantee of future results. Small and mid cap company stocks may be more volatile than stocks of larger, more established companies. International investments are subject to additional risks such as currency fluctuations, political instability, and the potential for illiquid markets, among others.