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Friday, September 23, 2016

Equity Shop Acquisitions On the Brain

Reported by Neil Anderson, Managing Editor

Today Neil Hennessy "buttoned up" his eighth acquisition. Yet he is still searching for more.

Neil Hennessy
Hennessy Advisors
Portfolio Manager and Chief Investment Officer
The Hennessy Advisors [profile] chief tells MFWire that his eponymous mutual fund shop has completed its Westport Funds [profile] asset purchase. The deal translates into about $475 million in assets (down from about $640 million in May) moving into the four-star, $952.5-million Hennessy Cornerstone Mid Cap 30 Fund.

"That will put us close to scratching on the wall of $7 billion," Hennessy says. "We got the vote two days ago. It closes today."

Per Hennessy's most recent 10-Q filed on August 3, the Novato, California-based, publicly-traded mutual fund shop is paying about $11.3 million. That translates into about 2.4 percent of the Westport funds' $475 million in AUM (or about 1.8 percent of their May AUM).

To date, Hennessy has now done eight deals involving a total of 25 mutual funds. Looking ahead, Hennessy sees a regulatory environment that is making life "more and more difficult" for fundsters with small shops. And that, he says, means lots of opportunity for continued M&A for his firm.

"I'm always hunting around, ... looking for more acquisitions and talking to people," Hennessy says. "We'll see what happens."

"We're only looking in the equity side of the '40 Act business," Hennessy adds, clarifying that he's generally "not interested" in acquiring firms and business in liquid alternatives, ETFs, or fixed income. "You never know. If it was a sizable deal, then maybe I'd look at it."

As for firm size or location, neither is of prime concern for Hennessy as he's deal-hunting. And he's open to different types of deals, including: fund mergers, deals that keep the acquired funds separate and intact, or deals where Hennessy takes over the fund and hires on the target as the subadvisor.

"We have the firepower and the capability and the track record to continue to acquire," Hennessy says. 

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