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Hennessy Advisors' revenue-generating assets dip 11% in Q1

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Hennessy Advisors Inc. (Nasdaq: HNNA) on Tuesday reported fiscal first-quarter net income of $2.6 million, down 14.3% from a year before.

The Novato-based company said it had profit of 35 cents per share in the quarter ended Dec. 31, down 10% from a year before.

The investment manager posted revenue of $10.2 million in the period, down 12%.

"The U.S. economy and stock market remain healthy, with fundamentals in place to support a continued bull market," said Neil Hennessy, chairman and CEO, in the company's earnings announcement. "To quote Sir John Templeton's famous saying, 'Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.' Over the past 30-plus years, negative annual market performance has largely been driven by euphoria in either real estate or dot coms. I have been saying for a number of years that I see no signs of euphoria in the market. There will likely be moments of volatility, but I remain confident in the strength of the market today and going forward."

He said the company "continues to weather the headwinds faced by actively managed mutual funds, including fee compression and investors moving to passively managed funds."

Hennessy's 16 mutual funds had positive performance last calendar year, he said.

"While earnings are down in line with the decline in average assets under management, the underlying financials of our company remain very strong," said Teresa Nilsen, president and chief operating officer, in the news release.

Total assets under management increased 2% to $5.0 billion by the end of the fiscal first quarter, but average assets under management, upon which revenue is earned, decreased 11% to $4.9 billion.

"We continue to repurchase shares at stock prices we believe are undervalued, reduce our debt, and pay a robust quarterly dividend to shareholders," Nilsen said.

Hennessy Advisors shares have increased nearly 4% since the beginning of the year. In the final minutes of trading on Tuesday, shares hit $10.45, a drop of 7.5% in the last 12 months.

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