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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Miller Howard Investments Utilities Plus 2024 Q3 Investor Letter | Buyside Digest

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Primary Source Intelligence • Q3 2024 Letter Analysis

Miller Howard Investments Utilities Plus Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Miller Howard Investments Utilities Plus. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

Annualized+14.81%

Digest Analysis

Quick Take

"Utilities delivered their best quarter in over 10 years, outperforming the broader market as the Federal Reserve cut rates for the first time since 2020. Independent power producers led on datacenter electricity demand, highlighted by Constellation's Microsoft nuclear deal."

Executive Summary

Miller/Howard's Utilities Plus strategy delivered strong performance in Q3 2024 as utilities recorded their best quarter in over 10 years and outpaced the broader market. The portfolio benefited from increasing visibility into a lower-rate environment, culminating with the Federal Reserve's first rate cut since 2020. Historical analysis shows utilities outperformed the broader market following initial rate cuts in three of four previous easing cycles over three months, and in all four cycles over six months. Independent power producers led sector performance, driven by rising electricity demand from datacenter trends. Constellation Energy's 20-year power purchase agreement with Microsoft to restart Three Mile Island nuclear unit created a catalyst that pushed the group higher. Portfolio activity included initiating American Water Works for its quality profile and growth prospects, while exiting NextEra Energy Partners on dividend cut risk. The manager increased positions in Atmos Energy and Duke Energy, reducing overall portfolio risk while maintaining exposure to premium growth profiles. Seven holdings announced dividend increases averaging 4.1%, supporting the strategy's income focus.

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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%)

Manager demonstrates moderate-high conviction through specific position sizing decisions (exits, increases, initiations) and clear thesis around rate environment and datacenter demand. Portfolio of 32 holdings with named positions and explicit rationales supports this level.

Growth Outlook

75%

BearishBullish

Bullish (75%)

The manager expresses strong optimism about utilities' prospects, describing the best quarter in over 10 years and clearly encouraging backdrop from rate cuts. Historical data supporting outperformance following rate cuts reinforces positive outlook.

Risk Appetite

50%

DefensiveAggressive

Balanced (50%)

Portfolio positioning shows selective risk management with exits from dividend-risky positions while adding quality names. The manager is constructively positioned but making defensive adjustments to reduce risk profile.

Capital Deployment

20%

De-riskingDeploying

De-risking (20%)

Portfolio activity shows rotation rather than net deployment - exiting NEP while initiating AWK and increasing ATO/DUK positions. This represents capital reallocation rather than significant new cash deployment.

Forward Guidance

60%

CautiousExpansionary

Neutral (60%)

Manager expects utilities to deliver high and growing income regardless of rate trajectory, with clear bias toward continued selective deployment in quality names. Constructive but measured approach to future positioning.

Language Signal

70%

BearishBullish

Bullish (70%)

Language is predominantly positive with terms like 'best quarter,' 'encouraging backdrop,' 'attractive,' and 'benefit.' Risk language is present but balanced with opportunity framing.

Perceived Risk

35%

Low RiskElevated

Moderate Risk (35%)

Manager acknowledges specific risks including small-cap underperformance, wildfire exposure, and political/regulatory challenges, but frames these as manageable headwinds rather than systemic concerns.

Opportunity Density

70%

ScarceAbundant

Abundant (70%)

Manager sees attractive opportunities across the utilities sector, particularly in quality names like AWK and growth profiles in ATO/DUK. Rate environment and datacenter demand create multiple investment themes.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

Strategy focuses on high and growing income delivery regardless of rate trajectory, suggesting multi-year investment horizon. Historical rate cycle analysis and dividend growth focus indicate patient capital approach.