’25 years ago we had no clients …, no heat, no air conditioning’
NOVATO — Hennessy Advisors has surpassed $4 billion in assets under management, the latest milestone for the fast-growing mutual fund and asset management firm since it first launched nearly 25 years ago.
Much of that growth has been over the course of 2013, as the company organically grew its net assets under management by 30 percent since the end of last year. But Neil Hennessy, president and CEO, credited a longer-term strategy that has involved a number of careful acquisitions and a business model that has remained consistent since February of 1989.
“Twenty-five years ago, we had no clients, no assets, no heat and no air conditioning. It’s interesting, growing little by little,” Mr. Hennessy said.
Today, “we manage a little over $4 billion in assets, and are a publicly traded company with a staff of 17 people,” he said. “I think my proudest achievement since our first mutual fund came out is that we’ve made our shareholders money 85 percent of the time.”
Hennessy Advisors launched its first mutual fund in 1996, offering a transparent and quantitative approach that Mr. Hennessy said was uncommon at the time. The firm acquired and launched a number of mutual funds in the coming years, and began offering shares to the public while managing around $220 million in assets in 2002.
The firm today manages 16 funds, having recently grown those offerings through the $28 million acquisition of 10 investment funds formerly under management of Arlington, Va.-based FBR Funds in October of last year. It was the 14th acquisition for the firm, growing its assets under management three-fold to over $3 billion.
The firm today has around twice the assets under management as it did during its prior peak at the end of its fiscal year in 2006, serving over 12,000 financial advisors and 215,000 shareholders.
While not escaping the effects of the recent recession, Mr. Hennessy said he remained confident in the company’s approach during those years and noted the completion of four mutual fund acquisitions in 2009.
“It’s not like it wasn’t scary times, but we hunkered down,” he said, noting that the firm had around $500 million in assets under management in March of 2009. “We’ve never changed our business model.”
Among the acquisitions that year were two funds focused on the Japanese stock market, an area that has garnered renewed interest as Japan’s central bank takes steps to beef up consumer and corporate spending.
“If you play the economics of what’s going on in Japan, you can make a lot of money in the long term. You’re not going into an emerging market country — you’re going into a country that’s as regulated, if not more regulated, than the United States,” Mr. Hennessy said. “(Shinzō) Abe ran again on a central message — ‘I’m going to focus on the economy.’ Japan’s government wants business to do well.”
While bullish on the outlook for the domestic stock market and economy, Mr. Hennessy said that many businesses still have a sense of uncertainty when it comes to national economic and regulatory policy. Those companies are raising dividends, buying back shares and investing internally — good for stock prices, but having little impact on unemployment, he said.
Yet in the case of Hennessy Advisors, further expansion is on the horizon.
“We keep looking for acquisitions,” Mr. Hennessy said. Though he cautioned, “one thing I’ve promised I won’t do is make an acquisition for the sake of acquisitions.”
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