The folks at a $4.4-billion-AUM, 17-fund, publicly traded asset manager in the Golden State are preparing to buy the three-year-old, $222-million-AUM ETF business from an 11-year-old boutique in the Dallas-Fort Forth area.

Teresa Mariani "Terry" Nilsen Hennessy Advisors, Inc. President, Chief Operating Officer, Director

On Friday (March 14), Terry Nilsen, president and chief operating officer of Hennessy Advisors, Inc. (HNNA) [profile], and Jonathan Molchan, co-CEO and managing partner of STF Management LP, confirmed that Novato, California-based Hennessy has agreed to adopt Frisco, Texas-based STFM's two ETFs: the STF Tactical Growth ETF (TUG on the Nasdaq) and the STF Tactical Growth & Income ETF (TUGN). The deal is expected to close in the third quarter, and it would be Hennessy's 13th acquisition, Nilsen confirms. She adds that neither side worked with an investment bank.

STFM will not stay on to subadvise the ETFs after the deal closes, Nilsen confirms, but Molchan is expected to join Hennessy, boosting the firm's headcount to 19 and PMing the two funds alongside Hennessy vice president Josh Wein. Meanwhile, Thomas Campbell, Molchan's fellow co-CEO and managing partner at STFM and the other current PM of TUGN and TUG, is not expected to make the move to Hennessy.

"Thoms Campbell has chosen to pursue other opportunities, making this transition a natural fit for all involved," Nilsen tells MFWire via email.

TUG and TUGN's inception date was May 18, 2022, and both ETFs currently come with an expense ratio of 65 basis points. As of yesterday (March 19, 2025), TUGN had about $42 million in AUM, while TUG had $180 million.

The adoption deal will involve several changes for TUGN and TUG. The two funds are both actively managed, non-diversified series of Listed Funds Trust, yet as part of the deal they will be reorganized as series of Hennessy Funds Trust. Hennesy Advisors will succeed STFM as the funds' investment. And boths ETFs will rebrand: TUG will become the Hennessy Tactical Growth ETF, while TUGN will become the Hennessy Tactical Growth and Income ETF.

Perhaps the Hennessy folks will make other provider changes for the STFM ETFs, too. Cohen & Company, Ltd. serves as TUGN and TUG's independent accounting firm, while Tait, Weller & Baker LLP does so for Hennessy's current ETF, STNC. ACA's Foreside Fund Services, LLC serves as distributor and principal underwriter for TUG and TUGN, while ACA Foreside's Quasar Distributors, LLC does so for STNC. Morgan, Lewis & Bockius LLP serves as TUGN and TUG's counsel, while Foley & Lardner LLP does so for STNC.

Yet at least two providers for TUG and TUGN will probably stay on. U.S. Bancorp Fund Services, LLC (dba U.S. Bank Global Fund Services serves as the two STFM ETFs' administrator and transfer agent, and it already does so STNC at Hennessy, too. The three ETFs also already share the same custodian: U.S. Bank National Association.

"We are always looking for solid products that complement our fund lineup, and these two funds align well with our strategy," Nilsen writes. "The timing is driven by our ongoing efforts to build a strong pipeline of opportunities that fit our long-term investment philosophy and benefit all parties involved. These funds stood out because they are well-managed, have solid performance supported by a consistent quantamental strategy, and expand our ETF offerings."

"Like many smaller managers, STF has a great product and strong business model, but scaling the distribution of ETFs can be costly," Nilsen adds. "Jonathan Molchan is excited to bring his ETF experience and portfolio management expertise to Hennessy, and we're thrilled to have him on board."

Campbell founded STFM in 2014 and created his second algorithmic system, "Tactical Unconstrained Growth" (hence the "TUG" ticker), using it to power SMAs, a mutual fund, and model portfolios as well as the two ETFs. Earlier, he created another system, "Self-Adjusted Trend Following," (STF), which powers SMAs and a mutual fund for another firm. Prior to that, he was an independent financial advisor, then a branch manager. He is an alumnus of McMurry University.

Molchan joined STFM in 2022, a few months before the debut of the firm's two ETFs. Earlier, he served in leadership and portfolio manager roles at Harvest Volatility Management and Mirae Asset Global Investments. He also worked as a trader, and he started his career as a J.P. Morgan analyst. He is an alumnus of Sacred Heart University. 

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