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Rating:Hennessy Swings to a Full-Year Loss Not Rated 0.0 Email Routing List Email & Route  Print Print
Monday, December 07, 2009

Hennessy Swings to a Full-Year Loss

Reported by Patricia Kelly

Hennessy Advisors recorded a loss of $195,000 for its fiscal year ended September 30 compared with net income of $1.6 million in the year-ago period.

Although the firm's assets under management increased from $876 million to $923 million between September 30, 2008 and September 30, 2009, mutual fund assets hit a low of $475 million in March, resulting in diminished earnings. The good news is that the tide has shifted for Hennessy in recent months and the firm's mutual fund assets have been rebounding.

“This has been a year marked by extreme movements in the financial markets, one that I think many investors will be glad to have behind them. In the first half of our fiscal year, the major indices plummeted approximately 30-35 percent, and Hennessy Advisors experienced a loss of $248 million in assets under management due solely to market depreciation. Then, in the second half of the fiscal year, the indices rallied back, gaining roughly 30 to 35 percent, and we saw our assets increase by $214 million due to market appreciation,” stated Neil Hennessy, the firm's president and CEO.

Another factor impacting the company's earnings results was its acquisition of four mutual funds totaling $232 million in assets this year. Still, the buying spree was not enough to pacify skittish investors and stem the tide of outflows.

“While we had new purchases into the Hennessy Funds totaling $80 million for the year, we experienced net outflows as nervous investors moved their investments into cash as the markets tumbled. Many investors, in my opinion, remain paralyzed with fear and may be missing the current recovery by keeping their money on the sidelines,” concluded Hennessy.

In addition to acquisitions, Hennessy expanded into the global arena with the launch of several actively managed funds, including the Hennessy Select SPARX Japan Fund and the Hennessy Select SPARX Japan Smaller Companies Fund in September. These funds mark the company's first international funds.

Meanwhile, Hennessy sought to shore up its balance sheet by reducing its total debt by 70 percent, upping its cash to debt ratio to 3:1.

“We have navigated the company through an extremely tumultuous market, and although we are reporting a small loss per share, I am proud to report that Hennessy Advisors remains strong, stable, and resolute in our business strategy. We have aggressively build our distribution platforms and pursued accretive acquisitions throughout the past year, and we will continue working hard to try to build on these successes in the future,” Hennessy said in a press release. 

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