HALO

Apollo 13’s record has been broken. Artemis II just set a new benchmark for the furthest distance humans have travelled from Earth on a lunar flyby.

That headline – lost in a sea of news about war, ceasefires, oil and AI disruption – marks a step forward for humanity. Especially as investors have been measuring another kind of distance lately: the gap between current market prices and all-time highs.

Oracle ($ORCL) is trading 57% below its US$345 record. Shares weakened further after Oracle named a new CFO with a giant pay package the same week it laid off 30,000 employees. 

UnitedHealth ($UNH), currently trading at half its peak value, was also back in the spotlight. $UNH rallied 11% in Monday’s post-market trade after news that Medicare insurer payments will rise by 2.48% next year.

SoFi ($SOFI) is another retail favourite that’s fallen from grace. Sentiment flipped in March after $SOFI landed in literal Muddy Waters – the short-selling firm claimed SoFi was artificially inflating its earnings. But shares moved higher after the company launched a new enterprise banking platform that services both traditional and digital assets.

Pullbacks are hardly surprising after the S&P 500’s worst quarter since Q3 2022. Beyond big tech’s drag on the index, the steepest falls were in companies perceived to be at high-risk of AI disruption. The 236 stocks that still finished in the green? That’s where the HALO trade comes in.

HALO, short for ‘heavy assets, low obsolescence’, is the term analyst Josh Brown uses to describe stocks that are ‘undisruptable by AI’ and ‘immune to Claude Code.’

The core idea is simple: will chatbots and LLMs eliminate the need for said company in the near future? If the answer is no, you might have a HALO.

There’s a wide range of them: ExxonMobil ($XOM), McDonald's ($MCD), FedEx ($FDX), Coca-Cola ($KO), Caterpillar ($CAT), and Deere ($DE) all fit the bill. What unites them is dependence on physical goods, infrastructure or services.

Goldman Sachs analysts suggest the outperformance for capital-intensive HALO companies will continue as earnings momentum turns in their favour. And in a market less driven by geopolitical headwinds, that momentum could grow stronger.

Ironically, investors are now betting on the future with businesses built on physical assets. It's the ‘old economy’ trade rebranded for the AI era.

This is not financial advice nor a recommendation to invest in the securities listed. The information presented is for general information purposes only and intended to be of a factual nature only. Past performance is not a reliable indicator of future performance. The author of this article and other employees of Stakeshop Pty Ltd may hold positions or have financial interests in the company (or companies) discussed above. As always, do your own research and consider seeking financial, legal and taxation advice before investing.