Portfolio Perspectives: HALO Companies and Mid Cap Growth
Alger Mid Cap Growth Portfolio Manager Brandon Geisler shares why he's excited about HALO (heavy assets, low obsolescence) businesses and highlights stocks that he believes exemplify the theme.
Brandon Geisler: Hi, my name is Brandon Geisler. And I’m the portfolio manager for the Alger Mid Cap Growth Strategy.
There’s no doubt AI is very disruptive, and it is obviously present in our portfolios here at Alger. There are going to be businesses that can really harness the power of AI and drive disproportional results, in our view. And more recently, people have been talking about this as the HALO concept, heavy assets, low obsolescence.
These are businesses that tend to have regulatory barriers to entry, have a lot of physical assets, have unique characteristics. And from our perspective, they present very interesting opportunities to populate a portfolio today.
We think RBC is a great example of a business that could be qualified under a HALO company. They make effectively highly engineered bearings, gearing, and motion control systems for the aerospace industry, for the defense industry, and for industrial applications. What makes it so unique, in our view, is that there’s a lot of IP and coatings and producing products that can really work in these harsh environments. And so, the qualification process to be a participant in one of these products is very long. Because of that, there’s natural barriers to entry for an upstart to get involved. And so, in our view, it’s a business that can actually take advantage of AI to enhance its innovation, its production line, and actually we believe continue to drive the business forward.
Another example is GFL. GFL couldn’t be more different than RBC. One is in the aerospace industries and GFL is in the waste business. What I think makes it somewhat similar though is some of those underlying characteristics we were talking about earlier. In the case of GFL, it’s actually things like landfills. And those are assets that are very difficult to get permitted.
There is a unique structure of that industry that allows them, in our view, to take advantage of AI to actually improve things like route density, to think about things like in the recycling facilities and running their landfills more efficiently.
Another business that we’re looking at right now is Viking Cruises.
I think what’s really interesting is there’s a major demographic wave that’s evolving right now in the United States. If you look at the 55-year-old plus population group, they’re growing mid to high single digits every year, versus the overall population barely growing here.
And what’s interesting is they control 75 percent of the net worth of the U.S. economy, so roughly 110 trillion dollars. So if you take those tenets and you look at how they’re spending their money, we believe they’re looking for experiential travel. What makes Viking unique, in our view, is it really focuses on the 55-year-old demographic. And if you look at their core business, it’s actually river cruises across Europe. And they control I think 89 unique docking locations on those rivers, which really gives them a disproportionate advantage to new competition, in our view.
I think the demographic trends are immutable. We believe it’s going to be happening for the next several decades. And so when we have moments like this where we have events in the Middle East that are impacting oil prices, and jet fuel prices, and travel, I tend to think of these things as opportunities, because when you have a secular trend like that demographic wave with this affluent customer, we believe it’s a matter of when, not if.
I think it’s a great time to be looking at the mid cap space. On the one hand, we get to directly invest in some of the technology providers of AI. But on the other, we get to find businesses like GFL and RBC and Viking that we believe can really harness the power of AI and take advantage of their inherent business characteristics, their physical presence, their regulatory framework, the qualifications frameworks that in our view really allow them to take advantage, drive their businesses forward, and I think the opportunity in the mid cap space is exciting.
The views expressed are the views of Fred Alger Management, LLC (“FAM”) and its affiliates as of May 2026. These views are subject to change at any time and may not represent the views of all portfolio management teams. These views should not be interpreted as a guarantee of the future performance of the markets, any security or any funds managed by FAM. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities.
Risk Disclosures: Investing in the stock market involves risks, including the potential loss of principal. Growth stocks may be more volatile than other stocks as their prices tend to be higher in relation to their companies’ earnings and may be more sensitive to market, political, and economic developments. A significant portion of assets may be invested in securities of companies in related sectors, and may be similarly affected by economic, political, or market events and conditions and may be more vulnerable to unfavorable sector developments. Investing in companies of medium capitalizations involves the risk that such issuers may have limited product lines or financial resources, lack management depth, or have limited liquidity. Foreign securities involve special risks including currency fluctuations, inefficient trading, political and economic instability, and increased volatility. At times, cash may be a larger position in the portfolio and may underperform relative to equity securities. Past performance is not indicative of future performance. Investors whose reference currency differs from that in which the underlying assets are invested may be subject to exchange rate movements that alter the value of their investments. Companies involved in, or exposed to, AI-related businesses may have limited product lines, markets, financial resources or personnel as they face intense competition and potentially rapid product obsolescence, and many depend significantly on retaining and growing their consumer base. These companies may be substantially exposed to the market and business risks of other industries or sectors, and may be adversely affected by negative developments impacting those companies, industries or sectors, as well as by loss or impairment of intellectual property rights or misappropriation of their technology. Companies that utilize AI could face reputational harm, competitive harm, and legal liability, and/or an adverse effect on business operations as content, analyses, or recommendations that AI applications produce may be deficient, inaccurate, biased, misleading or incomplete, may lead to errors, and may be used in negligent or criminal ways. AI technology could face increasing regulatory scrutiny in the future, which may limit the development of this technology and impede the future growth. AI companies, especially smaller companies, tend to be more volatile than companies that do not rely heavily on technology.
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The following positions represented the noted percentages of Alger's firm-wide assets as of February 28, 2026: RBC Bearings Incorporated, 0.41%; GFL Environmental Inc, 0.90%; Viking Holdings Ltd, 0.05%.
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