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Rating:Hennessy's FBR Deal Bolsters Earnings Not Rated 0.0 Email Routing List Email & Route  Print Print
Friday, August 09, 2013

Hennessy's FBR Deal Bolsters Earnings

Reported by Casey Quinlan

Hennessy [profile] Advisors reported third quarter earnings of $0.24 a share from $0.05 per share for the third quarter of 2012. The firm's mutual fund assets average AUM came in at $3 billion this quarter compared to $798.4 million in last year's third quarter. Revenue increased 279 percent from $1.7 million to $6 million.

The company's level of growth is mainly attributable to the acquisition of 10 FBR & Co. funds in October of 2012. Hennessy manages 16 funds. President, Chairman and CEO of Hennessy Advisors, Neil Hennessy said the company is in a good place and plans to stick with equity funds for the foreseeable future.

"We're not about to get in the bond market. The margins are very thin, " Hennessy said in an interview with MFWire. "This is a cyclical bull market which will go on for three to five years at least and the equity market has provided a lot of inflows, so we're in a really good position."

Hennessy said the firm can acquire "a lot more" mutual funds, but didn't give a specific number.

"We're actively pursuing more acquisitions," Hennessy said. Hennessy said he believes his bids are fair, as opposed to other firms who may try to lowball bids.

"We're not acquiring to get headlines. We can acquire and sub-advise back to them and some money managers, they don't want to deal the regulations and Dodd Frank. But we will acquire management agreements," Hennessy said.

When Hennessy Advisors looks to acquire funds it pays attention to more consistent money makers.

"One of the things we look at isn't benchmarks. We just want to make shareholders money. We don't want them to lose money because if we beat the benchmark and lose 20 percent of your money, you're not going to be happy about it," Hennessy said.

The firm, once staffed with 11 people, now employs 18 people. One of the benefits of the acquisition has been talented PMs such as David Ellison, Hennessy added.

Hennessy Advisors, Inc. Announces Third Quarter Earnings Increase 380%

Firm Also Announces Quarterly Dividend

Novato, CA - Hennessy Advisors, Inc. (OTCBB:HNNA) today reported financial results for the third quarter of fiscal 2013, which show the company’s continued momentum in growth of earnings and assets under management. Fully diluted earnings per share were $0.24 for the quarter ended June 30, 2013, an increase of 380% versus earnings of $0.05 per share for the quarter ended June 30, 2012. Fully diluted earnings per share for the nine months ended June 30, 2013 were $0.56 per share, an increase of 367% from $0.12 for the nine months ended June 30, 2012. The increase in earnings is attributable to increased mutual fund assets under management, primarily due to the purchase of mutual fund assets from FBR & Co. in October, 2012. Net purchases in the firm’s domestic equity, specialty, balanced and fixed income mutual funds and strong market appreciation also contributed to the increase in assets under management. The increase in average assets under management, the asset levels upon which the firm’s fees are earned, increased 341% over the three-month and 286% over the nine-month prior comparable periods, respectively, creating a corresponding rise in revenue, net income and earnings per share.

“We are very pleased with our third quarter results, which were aided by increased investor interest in our products,” said Neil Hennessy, President, Chairman and CEO of Hennessy Advisors, Inc. “With the successful integration of the mutual funds from our last acquisition, I believe we are well positioned to continue to serve and retain our shareholders by offering a broad line-up of solidly performing products and to attract new investors by maintaining an aggressive marketing and sales program,” he added.

The Board of Directors of Hennessy Advisors, Inc. today also declared a quarterly dividend of $0.03125 per share to be paid on September 15, 2013 to shareholders of record as of August 22, 2013. Based on the Hennessy Advisors, Inc. stock price at the close of business on August 7, 2013 of $8.20 per share, this dividend, when annualized, represents a 1.5% yield.

“The third quarter of our fiscal year was marked by good returns in the overall financial markets, which I feel validates my long-standing belief that we are in a long term, sustainable bull market and economic recovery,” noted Mr. Hennessy. “Hennessy Advisors will maintain its strong commitment to the business model of organic growth and strategic asset purchases. We apply a diligent work ethic to that business model in order to generate positive financial results, and that firm-wide focus keeps the shareholders’ interest our top priority,” he added.  

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