| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 14.13% | 38.68% | 38.68% |
Miller/Howard's North American Energy Fund delivered exceptional Q1 2026 performance of 38.91%, driven by geopolitical events that validated their core investment thesis. The surprise US raid on Venezuela in January and the outbreak of war in Iran in February sent oil prices above $100 per barrel and highlighted the superior risk profile of North American energy assets. While higher prices benefit most producers, their portfolio companies avoided operational disruptions that affected international peers. The fund's approach, launched in 2013 at the dawn of the shale era, concentrates on North American energy for robust domestic demand, extensive pipeline infrastructure, skilled labor force, advantaged geology, and low political risk. Portfolio activity included trimming Exxon Mobil and TC Energy while adding Canadian Natural Resources and APA Corp based on commodity outlook and valuation opportunities. The manager expects durable sector tailwinds including shale maturation, persistent valuation discounts, improved balance sheets, and years of underinvestment to support performance regardless of near-term geopolitical outcomes.
North American energy offers superior risk-adjusted returns through geographic concentration in a politically stable region with advantaged geology, existing infrastructure, and reduced geopolitical risk compared to international energy investments.
The manager expects the core tenets of their North American energy approach, particularly lower geopolitical risk profile, to continue supporting relative valuations regardless of the Iran war's outcome. They anticipate durable forces including shale maturation, energy sector discount to broader markets, improved balance sheets, and years of underinvestment to remain supportive for years to come.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 28 2026 | 2026 Q1 | APA, CNQ, JPM, LBRT, OVV, TRP, XOM | AI Disruption, dividends, energy, Geopolitical, Natural Gas, North America, oil | - | Miller/Howard's North American Energy Fund surged 38.91% in Q1 2026 as geopolitical turmoil in Venezuela and Iran validated their thesis of concentrating on politically stable North American energy assets. The fund benefits from reduced geopolitical risk while capturing upside from higher oil prices, with portfolio positioned for continued outperformance through sector tailwinds and improved fundamentals. |
| Jan 24 2026 | 2025 Q4 | CHRD, CNQ, CVE, CVX, EQT, GPOR, HES, LBRT, MPC, OKE, OXY, PBA, PSX, RRC, SM, SU, VLO, XOM | Data centers, dividends, energy, Natural Gas, North America, oil, Refiners | - | Miller/Howard's energy fund returned 6.07% in 2025 while repositioning for long-term opportunities. Despite oil prices at inflation-adjusted century lows, the fund sees improving fundamentals with data center power demand creating new growth avenues. Active portfolio management reduced geopolitical and natural gas exposure while increasing refining positions, maintaining a 3.2% dividend yield. |
| Oct 19 2025 | 2025 Q3 | AR, BKR, DINO, EQT, GPOR, MPC, OKE, RRC, SU, TRP, WTTR | Canada, energy, Natural Gas, oil, Pipelines, Refiners, water | - | Energy equities extended their strong rebound despite lukewarm fundamentals, driven by structural supply fragility from shale's fast-decline profile. With US production expected to decline 2% and rig counts 30% below peaks, the industry's production flexibility remains undervalued. Portfolio activity focused on water treatment opportunities and natural gas exposure while maintaining a 2.9% yield. |
| Jul 22 2025 | 2025 Q2 | AR, BKR, DINO, EQT, GPOR, MPC, OKE, RRC, SU, TRP, WTTR | Canada, energy, Natural Gas, oil, Refiners, Shale, water | - | Energy equities extended their rebound with refiners leading on Ukraine war profits and Canadian producers benefiting from improved realizations. Despite lukewarm fundamentals, structural supply fragility from shale's fast-decline profile supports the thesis. Portfolio positioned for declining US production with water treatment and natural gas exposure while offering 2.9% yield. |
| Mar 31 2025 | 2025 Q1 | AESI, AR, COP, CVE, CVX, EQT, GPOR, HES, KMI, LBRT, SM, SOBO, SU, TRGP, WTTR, XOM | Canada, dividends, energy, Midstream, Natural Gas, oil, Trade Policy | - | Energy sector rotation drove Q1 outperformance despite flat oil prices. Portfolio emphasizes producers with long drilling inventory for stability, making ConocoPhillips the top holding while adding gas-focused Gulfport Energy. Trade tensions pressure Canadian names but manager maintains exposure on strong fundamentals. Current 3.0% yield supported to $40 oil with upside participation at higher prices. |
| Dec 31 2024 | 2024 Q4 | AESI, AR, DINO, EQT, KMI, LBRT, LYB, PBA, PSX, RRC, SM, SOBO, TRP, WTTR, XOM | AI, China, Data centers, energy, Natural Gas, oil, Pipelines, Refiners | - | Miller/Howard's energy fund outperformed despite sector weakness by defensively repositioning toward natural gas pipelines benefiting from AI/data center demand. Chinese oil demand disappointment drove sector weakness, but potential fiscal stimulus could reignite consumption. Portfolio offers 3.3% yield with attractive valuations relative to tech, positioning for opportunities across the North American energy value chain. |
| Sep 30 2024 | 2024 Q3 | AESI, CHRD, CVE, CVX, DINO, HES, KMI, OXY, PBA, TRGP, TRP, WTTR, XOM | energy, Midstream, Natural Gas, oil, Pipelines, Shale |
WTTR AESI |
Miller/Howard's diversified energy strategy proved resilient in Q3 despite 17% oil decline, with natural gas midstream rotation offsetting producer weakness. Added two services companies with unique drivers while maintaining confidence in approach that has delivered 100%+ cumulative returns since 2013 despite oil being down 25%. Strong balance sheets and low valuations support outlook despite 2025 crosscurrents. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
AIAI disruption fears dominated market sentiment in Q1 2026, particularly around agentic AI capabilities that threaten software business models. The market shifted focus from AI infrastructure build-out to potential disruption of traditional industries, causing software companies to decline over 20% while HALO stocks gained. |
Agentic AI Software Disruption Infrastructure Hyperscalers Automation |
OilOil prices surged above $100 per barrel following the Iran conflict, though they remain below 2008 peaks on an inflation-adjusted basis. The geopolitical instability supports North American energy security and may drive long-term contracts with North American exporters. |
Iran Conflict Geopolitical Risk Energy Security Price Volatility | |
Natural GasLNG export tailwinds strengthened due to Qatar's facilities being offline and Middle East instability. Previous concerns about LNG facility overbuilding through the decade have faded, with North American sources becoming more attractive for global energy security. |
LNG Qatar Export Facilities Energy Security | |
DividendsDividend investing provides a natural barrier against chasing growth and offers a margin of safety in an age of disruption. High dividend yields combined with coverage create lower P/E ratios and reduced duration risk compared to growth stocks. |
Dividend Yield Coverage Ratio Duration Risk Valuation | |
GeothermalData center power demand continues to drive sector tailwinds, with companies positioned to benefit from increasing electricity needs. The conflict may have strengthened these tailwinds further as energy infrastructure becomes more critical. |
Data Centers Power Demand Infrastructure | |
| 2025 Q4 |
Small CapsSmall-cap equities ended 2025 on a positive but volatile note with the Russell 2000 returning 2.2% in Q4. The manager expects a constructive outlook for small-cap equities entering 2026, particularly within value-oriented segments, driven by Federal Reserve monetary easing and improving earnings momentum. Consensus expectations point to meaningful acceleration in small-cap earnings in 2026 with growth projected in the low-to-mid teens. |
Russell 2000 Earnings Volatility Value |
ValueThe manager emphasizes value-oriented positioning within small caps, noting that value stocks remain attractively positioned as growth stocks continue to trade at meaningful premiums. The strategy's portfolio trades at 12.2x forward earnings versus 15.0x for the Russell 2000 Value. Historically, periods of accelerating profits have favored value leadership, particularly within smaller-cap universes. |
Valuation Forward Earnings Premium Leadership | |
RatesThe Federal Reserve's shift toward monetary easing represents an important inflection point for smaller companies, which tend to be more sensitive to changes in interest rates and credit conditions. The Fed cut rates twice in Q4 to the current range of 3.50% to 3.75%. Lower borrowing costs should support refinancing activity, capital investment, and margin recovery for small-cap companies. |
Federal Reserve Monetary Policy Credit Refinancing | |
EarningsEarnings are central to the manager's optimism with consensus expectations pointing to meaningful acceleration in small-cap earnings in 2026, with growth projected in the low-to-mid teens and exceeding that of large-cap companies. This anticipated rebound reflects easier year-over-year comparisons, improving operating leverage, and broadening demand across cyclical and value-oriented sectors. |
Growth Operating Leverage Cyclical Rebound | |
| 2025 Q3 |
WaterThe Permian Basin produces three barrels of water for every barrel of oil, making wastewater remediation a key growth industry. Western Midstream's acquisition of ARIS Water Solutions at a 25% premium underscored the value of water treatment companies. The manager added to their Select Water Solutions position following this transaction. |
Wastewater Remediation Treatment Permian Solutions |
Natural GasUS natural gas prices fell more than 11% from mid-July highs due to tempered summer demand from cheap coal substitution, growing renewable capacity, and cooler weather. However, robust gas output growth more than offset rising LNG exports and secular AI-driven power demand. The manager reinvested into natural gas producer Antero Resources. |
LNG Exports Production Prices Demand | |
RefinersRefiners posted Ukraine war-driven windfall profits and were led by strong performance this quarter. Marathon Petroleum's earnings per share was 23% ahead of consensus on strong refining margin capture, with refiner strength continuing on Russia disruption. |
Margins Ukraine Russia Windfall Disruption | |
PipelinesCanadian producers benefited from improved local price realizations versus global benchmarks, a dynamic the manager has long positioned for in this portfolio. Growing anticipation for expanded Canadian oil pipeline egress under the country's new prime minister supported Suncor Energy performance. |
Canadian Egress Realizations Benchmarks Infrastructure | |
| 2025 Q2 |
WaterThe Permian Basin produces three barrels of water for every barrel of oil, making wastewater remediation a key growth industry. Western Midstream's acquisition of ARIS Water Solutions at a 25% premium underscored the value of water treatment companies. The manager added to their Select Water Solutions position following this transaction. |
Water Treatment Wastewater Permian Basin Oilfield Water Water Solutions |
Natural GasUS natural gas prices fell more than 11% from mid-July highs due to tempered summer demand from cheap coal substitution, growing renewable capacity, and cooler weather. Despite robust gas output growth offsetting rising LNG exports and AI-driven power demand, the manager reinvested into natural gas producer Antero Resources. |
Natural Gas LNG Gas Producers Energy Demand Power Generation | |
RefinersRefiners posted Ukraine war-driven windfall profits and were among the quarter's return leaders. Marathon Petroleum's earnings per share was 23% ahead of consensus on strong refining margin capture, with refiner strength continuing on Russia disruption dynamics. |
Refining Margins Geopolitical Ukraine Russia | |
| 2025 Q1 |
OilOil prices remained flat during the quarter despite energy sector outperformance. The portfolio focuses on producers with long drilling inventory to reduce volatility from short-term oil price fluctuations. Permian Basin production analysis shows rapid well decline rates, making longer-term price stability more likely than short-term volatility. |
Permian Basin Production Drilling Volatility Pricing |
Natural GasStrong natural gas prices boosted gas-oriented exploration and production companies during the quarter. The portfolio added upstream gas producer Gulfport Energy, which appears undervalued relative to natural gas prices. |
Gas Producers Pricing Upstream Undervalued | |
MidstreamThe portfolio trimmed midstream positions during the quarter, selling Targa Resources following strong performance and reducing positions in Kinder Morgan and South Bow along the energy value chain. |
Pipelines Value Chain Performance | |
DividendsThe portfolio currently offers an indicated yield of 3.0% which is well supported down to approximately $40/barrel oil, combined with a significantly larger variable return of capital commitment at higher commodity prices. ConocoPhillips offers strong long-term dividend growth potential. |
Yield Income Growth Capital | |
Trade PolicyTrade war drums weighed on Canadian producers despite strong operational results. Energy executives report conflicting messages about achieving both energy dominance and $50/barrel oil, with steel prices rising 30% amid tariff anticipation creating uncertainty. |
Tariffs Canada Steel Uncertainty | |
| 2024 Q4 |
Natural GasNatural gas emerged as a key beneficiary of AI-driven data center demand growth. Weather-driven price surges boosted natural gas producers like Antero Resources and Range Resources. The fund added natural gas pipelines as emerging beneficiaries of power-hungry AI/data center boom. |
Data Centers AI Weather Pipelines Power |
PipelinesThe fund established a full position in oil pipeline South Bow, a spinoff from TC Energy that owns the stable Keystone Pipeline. Natural gas pipelines were added as beneficiaries of AI/data center power demand. Pipeline assets offer stability and potential upside from infrastructure needs. |
Keystone Infrastructure Spinoffs Midstream Stability | |
ChinaChina remains the wild card for oil demand, where conjectured fiscal stimulus could reignite consumption. Disappointing oil demand growth in China drove energy sector weakness, with factors including rising EV adoption, falling population, and business down-cycle affecting the world's largest oil importer. |
Demand Stimulus Electric Vehicles Demographics Imports | |
| 2024 Q3 |
Natural GasPortfolio rotation into natural gas-focused midstream stocks delivered strong returns this quarter, partially offsetting oil producer and refiner weakness. Kinder Morgan is seeing excitement around long-term exposure to AI-related natural gas developments. |
Midstream AI Power Generation Infrastructure |
Oil ServicesAdded two energy services companies with idiosyncratic drivers: Select Water Solutions investing in water and wastewater pipeline networks, and Atlas Energy Solutions building a 42-mile conveyor system to lower sand costs to the Delaware Basin. |
Water Sand Delaware Basin Infrastructure Oilfield Sand | |
Shale ProducersDevoted significant resources to understanding remaining shale drilling inventory and quality. Confident that inventory-constrained companies will curtail drilling faster than prior cycles, helping restore market balance more quickly. |
Drilling Inventory Breakeven Delaware Basin Permian |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| - | Fund Letters | Miller Howard North American Energy Fund | WTTR | Select Water Solutions | Energy | Oil & Gas Equipment & Services | Bull | NYSE | E&P Support, Energy Services, Pipeline infrastructure, Wastewater Treatment, Water Management | Login |
| - | Fund Letters | Miller Howard North American Energy Fund | AESI | Atlas Energy Solutions | Energy | Oil & Gas Equipment & Services | Bull | NYSE | Conveyor Infrastructure, Delaware Basin, Energy Services, Logistics, Proppant Supply, Sand Mining | Login |
| TICKER | COMMENTARY |
|---|---|
| XOM | We trimmed TC Energy (TRP) and Exxon Mobil (XOM) in January. |
| TRP | We trimmed TC Energy (TRP) and Exxon Mobil (XOM) in January. |
| CNQ | Our bullishness on the commodity risk/reward outlook prompted us to upweight oil sands producer Canadian Natural Resources (CNQ). |
| APA | We also bought APA Corp (APA) following a fresh research deep dive into the quality and depth of APA's drilling inventory, which seemed inconsistent with one of the lowest valuations in the space. |
| LBRT | In March, we trimmed Liberty Energy (LBRT) after the stock jumped >70% this quarter on optimism around the company's data center power generation initiatives. |
| OVV | We reallocated proceeds into Ovintiv (OVV) following a recent corporate reshuffling that we believe improved the producer's operations. |
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