A distinct investment strategy is gaining traction among family offices and certain Wall Street circles, focusing on established, ‘old economy’ businesses as a safeguard against the rapid disruption posed by artificial intelligence. While not as flashy as cutting-edge AI startups, sectors like automotive dealerships and commercial fisheries offer compelling stability and predictable cash flow, attributes highly valued by investors with long-term horizons.

Equity Group Investments (EGI), the private investment firm backed by the family of the late billionaire Sam Zell, exemplifies this approach. EGI’s diverse portfolio includes a John Deere dealership, a bluefin tuna fishery, and even a pedestrian bridge connecting San Diego to Tijuana International Airport. According to EGI President Mark Sotir, the common thread across these seemingly disparate holdings is their resilience to technological obsolescence. Sotir emphasizes a preference for industries with a guaranteed future, allowing for investment horizons extending 10 to 12 years, a key reason for their cautious stance on some technology and startup ventures. This strategy mirrors what Wall Street has dubbed the “HALO” trade: “heavy assets, low obsolescence.”

These asset-heavy businesses often present unique advantages. They tend to deter traditional private equity firms, which typically seek quicker three-to-seven-year exits, creating opportunities for family offices to acquire assets at potentially lower valuations. Furthermore, recent legislative changes, such as the renewal of bonus depreciation, have significantly enhanced the financial appeal of these investments. This provision allows companies to deduct the full cost of qualifying assets like machinery or vehicles in their first year of use, a benefit that can be strategically leveraged for substantial tax advantages, especially for families with other highly appreciated stock holdings.

Beyond tax benefits, these sectors offer inherent stability. Joe Mowery, head of dealership investment banking at Stephens, notes the reliable cash flow from dealerships, particularly the resilient and high-margin parts and service divisions, which represent “must-have” services. Additionally, many old-economy businesses boast geographic moats or significant barriers to entry. Sotir points to franchise agreements for dealerships like John Deere and Kenworth, which limit local competition, and the strict quotas in the bluefin tuna fishing industry. With less pressure to deploy capital quickly than traditional private equity firms, EGI can patiently seek out opportunities, even in distressed sectors like agriculture, turning market uncertainty into an advantage by investing when others are hesitant.