Utilities were hampered by Allete (ALE, Financial) and Kansai Electric, the latter of which was exited during the quarter. Allete stock sold off as concerns swirled about industrial customer demand, which consumes 46% of Allete’s power production. Many industrial customers are operating below capacity due to COVID-19, leading to conjecture for smaller contract renewals in August. However, Allete management intimated that large industrial consumers will continue to nominate for stable levels of power in anticipation of a recovery. The residential and commercial businesses appeared to be on track with improving renewable wind economics.
From Bernard Horn (Trades, Portfolio)'s Polaris Global Value Fund second-quarter 2020 shareholder letter.
