Water Utility Up Just 8% in a Year Faces $28 Million Position Cut

On May 8, 2026, Nuance Investments disclosed in an SEC filing that it sold 515,078 shares of H2O America in the first quarter, an estimated $28.04 million trade based on the quarterly average price.

What happened

Nuance Investments reduced its stake in H2O America (NASDAQ:HTO) by 515,078 shares during the first quarter, according to a SEC filing dated May 8, 2026. The estimated value of the shares sold was $28.04 million, based on the mean unadjusted closing price for the quarter. The quarter-end value of the position decreased by $21.44 million, reflecting both the sale and market price changes. Following the transaction, Nuance Investments held 391,646 shares of H2O America, valued at $22.98 million.

What else to know

• After the sale, H2O America represents 3.2% of Nuance Investments' reportable assets under management, which places it outside the fund's top five holdings.
• Top holdings after the filing:
  • NYSE: CWT: $72.71 million (10.1% of AUM)
  • NASDAQ: MRTN: $63.16 million (8.8% of AUM)
  • NYSE: QGEN: $52.86 million (7.4% of AUM)
  • NYSE: CLX: $52.66 million (7.3% of AUM)
  • NASDAQ: WERN: $44.72 million (6.2% of AUM)
• As of May 7, 2026, H2O America shares were priced at $57.16, up 8.4% over the past year and trailing the S&P 500 by 22 percentage points.

Company overview

Company snapshot

• H2O America provides regulated water and wastewater utility services, including water production, purification, distribution, and retail sales, as well as non-tariffed services such as system operations, maintenance agreements, and contracted sewer operations.
• The company operates primarily on a regulated utility business model, generating revenue through tariff-based water and wastewater services, supplemented by ancillary non-tariffed offerings and property leasing.
• It serves water service connections and wastewater connections, reaching over 1.6 million people across California, Connecticut, Maine, and Texas, with a focus on municipal and residential customers.

H2O America is a leading regulated water utility serving diverse communities across multiple U.S. states. The company's strategy centers on stable, tariff-driven revenue streams, complemented by selective expansion into non-tariffed services and property management. Its competitive advantage lies in its scale, regional diversification, and established presence in both regulated and ancillary water markets.

What this transaction means for investors

H2O America continues to look operationally solid, but after trailing the broader market by a wide margin over the past year, Nuance may simply see better capital deployment opportunities elsewhere.

Of course, that does not mean the underlying business is weakening. Late last month, H2O America reaffirmed its long-term adjusted EPS growth target of 6% to 8% and said it expects to land at or above the high end of that range through 2030. The company also reiterated plans to invest $2.7 billion into water and wastewater infrastructure between 2026 and 2030, while advancing its pending Quadvest acquisition in Texas.

Meanwhile, first-quarter revenue climbed 9% to $183.3 million, helped by rate increases and higher customer usage, and net income rose 15% to $19 million. H2O America also extended its strong dividend streak, raising its annualized payout to $1.76 per share after more than 58 consecutive years of increases.

For long-term investors, it’s important to remember that the upside here may not come as quickly as AI or high-growth tech names, but regulated utilities with expanding rate bases and dependable dividend growth can still play an important role in a diversified portfolio.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.