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Utilities worst performer among S&P 500 indexes in August

As the broader S&P 500 index extended its gaining streak five months in a row with a total return of 7.2%, the S&P 500 Utilities and the S&P 500 Energy indexes concluded the month of August on the negative side of the ledger.

The S&P 500 Utilities index saw a negative return of 2.6%, while the S&P 500 Energy recorded a negative return of 1.0%.

In the second quarter of 2020, many of the largest independent oil and gas producers saw institutional investors cut their holdings, some by significant amounts.

Particularly, Occidental Petroleum Corp. saw institutional investors decrease their stock holdings by more than 33 million shares, down 5.2% from the first quarter.

Like in July, Occidental ended August as the worst-performing stock in the S&P 500 Energy index, recording a negative return of 19.1%.

The company reported an adjusted loss for the second quarter of $1.6 billion, with impairment charges of $6.6 billion contributing to the loss.

Occidental on Aug. 19 said it would sell holdings in Wyoming, Utah and Colorado to Orion Mine Finance for $1.33 billion, in order to reduce its heavy debt burden.

HollyFrontier Corp., which saw a negative return of 12.0% in August, reported a second-quarter adjusted net loss attributable to the corporation's stockholders of $40.8 million, compared with an adjusted net income of $372.3 million, a year earlier.

HollyFrontier executives said they may issue debt in the next six to 12 months to fund the oil refining and lubricants company's expansion into renewable diesel production.

Other index components that reported negative returns were Baker Hughes Co., Hess Corp. and Marathon Petroleum Corp.

Oilfield services provider Halliburton Co. led gains among components of the S&P 500 Energy index, posting a 12.9% total return in August. The gains come as Halliburton is planning to auction surplus real estate assets in five U.S. states and Canada in early October.

Williams Cos. Inc. saw a total return of 8.5%. The company's second-quarter adjusted EBITDA of $1.24 billion surpassed the S&P Capital IQ consensus estimate of $1.19 billion.

Pioneer Natural Resources Co. logged a total return of 7.2%. The company is planning a new method of rewarding shareholders in the form of a variable dividend starting in 2022, in replacement of share buybacks.

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Racking up the biggest losses among utilities for the month of August, Evergy Inc. saw a negative return of 17.1%.

The company on Aug. 5 announced a stand-alone five-year strategic plan designed to increase earnings and capital investments, following the conclusion of an independent review of its business. Shares of Evergy were trading roughly 11% lower on Aug. 4 following a report that the Midwestern utility would announce a decision to remain independent.

American Electric Power Co. Inc. logged a negative return of 8.5%.

AEP's CEO has promised increased transparency around the company's contributions to 501(c)(4) organizations while maintaining the company had no known involvement in a corruption scheme behind the passage of House Bill 6 in Ohio.

Meanwhile, the company's effort to designate an energy storage project as transmission has run into opposition at the Federal Energy Regulatory Commission.

Other bottom-performing utility stocks during the month included Pinnacle West Capital Corp., NiSource Inc. and Public Service Enterprise Group Inc.

On the flip side, AES Corp. led gains among components of the S&P 500 Utility index with a total return of 16.5% for the month of August.

AES expects Fluence Energy LLC, its energy storage partnership with Siemens AG, to generate $500 million in revenue this year and $3 billion per year by 2025.

It was also reported in August that BHP Group's Escondida and Spence copper projects in Chile will collectively pay about $840 million to terminate a 2008 contract with AES' coal-fired energy and power distribution unit AES Gener SA by August 2021.

Following AES, CenterPoint Energy Inc. posted a total return of 6.4%.

Pandemic-induced cuts to power and natural gas demand reduced CenterPoint's earnings in the second quarter, but executives reiterated guidance of $1.10 to $1.20 per share and 5% to 7% compound annual growth rate over the next five years.

CenterPoint is also seeking up to 1,300 MW of new wind and solar generation in Indiana.

PPL Corp. recorded a total return 3.8%. PPL has launched a formal process to sell its U.K. utility business Western Power Distribution PLC, following a comprehensive strategic review.

Financial analysts consider the sale as well timed, given political developments in Great Britain and demand by U.S. investors for simplified, regulated utility business models.

DTE Energy Co. and NRG Energy Inc. also logged positive returns in August.