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Rating:Hennessy Says, Drive Off the Fiscal Cliff Not Rated 0.0 Email Routing List Email & Route  Print Print
Tuesday, November 27, 2012

Hennessy Says, Drive Off the Fiscal Cliff

Reported by Chris Cumming

Equity-fund distributors have to hope that in addition to his other roles, Neil Hennessy is a competent fortune teller.

Hennessy Funds [profile] held its annual press lunch and year-end outlook today at the midtown Manhattan steakhouse McCormick and Schmick's. The thirty or so members of the press who attended were given a look into how the the firm's founder and CEO manages its equity strategies and his long- and near-term outlooks for the U.S. economy, along with a three-course surf-and-turf meal.

It has been a busy 2012 for Hennessy and his firm. Their purchase of FBR Funds closed last month, adding over $3 billion to the firm's AUM, and Hennessy is ever on the hunt for more acquisitions.

The firm changed its marketing slogan following the FBR acquisition, as Hennessy mentioned at the press lunch, from "Formulas for Smart Investing" to "Investing, Uncompromised." The shop also changed the names of several funds following the acquisition, rechristening the Hennessy Focus 30 fund, for instance, the Hennessy Cornerstone Mid Cap 30.

Neil Hennessy shared with the press his fresh take on the fiscal-cliff drama unfolding in Washington: "We should go over the cliff," he says, rather than settle for a hasty compromise on crucial tax and benefit issues. He pointed to the dividends tax rate as an issue that's crucial for Washington to get right, even at the risk of triggering automatic spending cuts.

"People think I'm crazy," he added.

Hennessy also delivered the familiar lament over retail investors' aversion to equity. He said it's "sad" that so many investors haven't taken part in the last few years of market growth, but added, "Who can blame them?" He said that "corporate America is very, very strong right now," with $7.5 trillion in cash reserves that, once invested in the economy, should spur long-term growth.

Hennessy's co-PM Brian Peery gave reporters a nuts-and-bolts look at the firm's investing strategy. "This year, we think it's all about the consumer," he said, adding that another rule of thumb for 2013 will be, "Don't fight the Fed."

And like his company's founder, Peery is bullish on American equities. He thinks the huge cash reserves held by companies on the S&P 500 will eventually spur hiring, "because there's only so much you can spend on infrastructure."

Neil Hennessy finished up with an optimistic prediction for the stock market: 8 to 12 percent growth per year for the foreseeable future.

"I think we're going back to the 1982-through-2000 stock market," he said. 

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