Why Infrastructure Now?
Friday, April 10, 2020
We have been managing our Infrastructure strategy for nearly 30 years, so we’re excited to be hearing the word “infrastructure” more and more these days.
We view an infrastructure stimulus bill as a great opportunity today, with potential benefits of building and repairing infrastructure for the future.
In our opinion, an infrastructure stimulus bill is timely, and will potentially:
- Kick-start the economy and ease unemployment.
- Take advantage of the low cost of capital / low interest rate environment.
During the period of social distancing and as the world slowly normalizes, we believe outdoor work will remain preferable to indoor work. It’s a great time to build with minimal disruption and lighter traffic patterns. What’s more, warmer weather provides an opportunity for construction to pick up.
The most obvious beneficiaries should be industries within the industrial and materials sectors such as engineering and construction, machinery, road and rail, metals and mining, and construction materials.
We think it is also likely that some spending will be allocated to communications services, mainly 5G technologies. Unlike 4G that was viewed solely as a mobile network, 5G is also described as an Internet of Things (IoT) platform—it’s hard to argue against the importance of communication infrastructure today.
We could also see upgrades and repairs to our aging water and wastewater management infrastructure, as well as grid modernization. There will likely be a push to support renewable energy as well.
Additionally, there could be indirect beneficiaries. For example, spending on roads and highways, airports, and ports could lower shipping costs or improve our ability to compete on a global stage, benefitting transportation and logistics companies.
Learn more about how Miller/Howard’s Infrastructure strategy can provide high and growing income, portfolio diversification, and exposure to macro trends in the infrastructure space:
We look forward to providing updates on the potential infrastructure stimulus in the near future. Stay tuned!
Bryan J. Spratt, CFA, focuses on utilities, telecommunications, and energy stocks. Before joining Miller/Howard in 2004, Bryan worked as an analyst and portfolio manager in investment subsidiaries of Comerica Bank and Munder Capital Management, where he was a member of the energy and power team. Prior to that, Bryan was at Banc One Investment Advisors and the One Group Funds where he was responsible for utilities and telecom for the value team. He graduated summa cum laude from Spring Arbor College with a BA in Economics/Computer Science.
Adam Fackler, CFA, focuses on utilities, telecommunications, and midstream energy including master limited partnerships (MLPs). Prior to joining Miller/Howard in 2016, Adam spent 10 years at Rodman & Redshaw and KLR Group, focusing on MLPs, and at MLV & Co., covering exploration & production companies and MLPs. Adam holds a BS in Business Administration with a minor in Economics from Bucknell University.