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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Miller Howard North American Energy Fund 2024 Q3 Investor Letter | Buyside Digest

Back to Fund Profile (Miller Howard North American Energy Fund)

Primary Source Intelligence • Q3 2024 Letter Analysis

Miller Howard North American Energy Fund Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Miller Howard North American Energy Fund. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

Annualized+8.2%

Digest Analysis

Quick Take

"Miller/Howard's diversified energy strategy proved resilient in Q3 despite 17% oil decline, with natural gas midstream rotation offsetting producer weakness. Strong balance sheets and low valuations support outlook despite 2025 crosscurrents."

Executive Summary

Miller/Howard's North American Energy portfolio emphasizes a diversified energy value chain strategy that has proven resilient across commodity cycles. Despite a 17% decline in oil prices during Q3 2024, roughly one-third of portfolio holdings were positive, demonstrating the benefits of diversification beyond oil price exposure. The portfolio rotated into natural gas-focused midstream stocks, which delivered strong returns and partially offset weakness in oil producers and refiners. Two new energy services positions were added with idiosyncratic drivers: Select Water Solutions building water pipeline infrastructure and Atlas Energy Solutions constructing a conveyor system to reduce sand costs. Looking ahead to 2025, the manager acknowledges major crosscurrents including uncertain US economic scenarios and China demand dynamics, plus opaque supply conditions with potential OPEC+ increases. However, confidence remains high in the diversified approach, supported by rock-bottom valuations, strong balance sheets, and deep research into shale drilling inventory that suggests faster production curtailments could restore market balance more quickly than in prior cycles.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

68%

CautiousHigh

Moderate (68%)

The manager demonstrates moderate-high conviction through specific position additions (WTTR, AESI), detailed research on shale inventory, and strong confidence in their diversified approach backed by long-term track record. However, the broad diversification across the energy value chain and acknowledgment of multiple scenarios prevents a higher score.

Growth Outlook

38%

BearishBullish

Neutral (38%)

The manager acknowledges major crosscurrents for 2025 with uncertain economic scenarios ranging from recession to no landing, weak China demand, and opaque supply dynamics. However, they maintain that valuations are near rock bottom and balance sheets are strong, showing cautious but not bearish positioning.

Risk Appetite

25%

DefensiveAggressive

Defensive (25%)

The portfolio actively rotated into natural gas midstream and added two new energy services positions during the quarter, showing selective risk-taking. The diversified approach and willingness to add positions despite oil price weakness indicates a mildly positive risk appetite.

Capital Deployment

30%

De-riskingDeploying

De-risking (30%)

The portfolio added two new energy services positions during the quarter and rotated into natural gas midstream stocks, indicating moderate deployment activity. However, no cash level changes are mentioned, suggesting this was primarily rotation rather than net new capital deployment.

Forward Guidance

0%

CautiousExpansionary

Cautious (0%)

The manager presents a balanced view for 2025, acknowledging both risks and opportunities without clear directional bias. They maintain high confidence in their diversified approach but don't signal aggressive deployment or defensive positioning.

Language Signal

10%

BearishBullish

Bearish (10%)

Language is balanced with both risk acknowledgment (crosscurrents, uncertainty, opaque) and opportunity framing (rock bottom valuations, strong balance sheets, confidence in approach). Slightly more constructive than negative overall.

Perceived Risk

65%

Low RiskElevated

Elevated Risk (65%)

The manager identifies multiple specific risks including global economic growth concerns, China demand uncertainty, OPEC+ supply dynamics, and various 2025 economic scenarios. These risks are discussed in detail with meaningful analysis rather than brief mentions.

Opportunity Density

60%

ScarceAbundant

Selective (60%)

The manager found specific opportunities to add two energy services companies with idiosyncratic drivers and successfully rotated into natural gas midstream. They emphasize rock bottom valuations across holdings, suggesting selective but meaningful opportunities within their specialized sector.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

The manager emphasizes their long-term track record since 2013 inception and discusses multi-year themes like shale inventory depletion and energy transition. The focus on fundamental research and willingness to hold through commodity cycles indicates a multi-year investment horizon.