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Rating:NorCal Fund Firm Goes Shopping Not Rated 0.0 Email Routing List Email & Route  Print Print
Thursday, February 3, 2005

NorCal Fund Firm Goes Shopping

Reported by Theresa Sim

Neil Hennessy, president and portfolio manager of publicly-held Hennessy Advisors has made no secret of his intentions. The fund family has snapped up $335 million in assets through two acquisitions in the last 16 months, and is on the lookout for more acquisitions.

One approach that the firm has taken in the past includes acquiring an existing fund and using it as a starter for a new Hennessey fund. That was the idea behind Hennessy's September 2003 acquisition of $35 million in assets from the Sym Select Growth Fund, which it used to start the Hennessy Focus 30 Fund. Hennessy also acquired $300 million in assets under management from Linder Asset Management.in February 2004.

Hennessey is interested in funds or fund families that have from $50 million to $200 million in assets under management. Also of interest are sector funds -- currently absent from Hennessy's lineup. The firm's current lineup includes a small-cap blend fund, a mid-cap blend fund and three large-cap value funds.

Past deals have also taught Hennessy that any fund that requires a supermajority of shareholders to approve mergers should not be considered.

Other aspects that Hennessy considers in potential targets are percent of direct-sold fund flows and fund fee structures.

How deep are Hennessy's pockets? Hennessy plans to get funding for any future deals in the same way that he funded his previous deals -- through his relationship with U.S. Bank. The bank loaned $2.6 million for the firm's first acquisition and $8 million the last time around.  

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