15,000 RIAs and Counting: Hennessy Talks Growth
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Wednesday, May 06, 2015

15,000 RIAs and Counting: Hennessy Talks Growth

Neil Hennessy continues to expand his distribution reach, and he's looking for more acquisitions, too.

Yesterday Novato, California-based Hennessy Funds [profile] reported fully diluted earnings per share of $0.44 for the second quarter (ended March 31) of its fiscal 2015, a 47-percent year-over-year jump. And quarterly revenue of $10.6 million marked the first time that figure has ever risen above $10 million for the firm. Assets under management rose 28 percent year-over-year to $6.1 billion.

Hennessy himself (president, chairman and chief investment officer) recently told MFWire that his eponymous mutual fund shop continues "to grow organically," thanks in part to an increase in the number of RIAs Hennessy Funds works with.

"We now deal with 15,000 RIAs. We've added 7,000 RIAs in the last two years," Hennessy said.

Hennessy says that the fund shop started mainly in the retail space, later expanding into the RIA channel. And now Hennessy says that he and his team are also "starting to break into the defined contribution market."

On the inorganic growth side, Hennessy Funds has made seven different acquisitions over the years, adding a total of 23 mutual funds. (Though through fund mergers, Hennessy now has 16 mutual funds in its lineups.)

"We do asset purchase agreements," Hennessy said. "We don't buy the companies; we just buy the management contracts."

Hennessy is still interested in doing more deals, either by adopting funds and keeping the prior shop on as a subadvisor, by merging outside funds with existing Hennessy Funds, or by buying the assets of the boutique and bringing the employees into Hennessy. He points to Asia-focused funds as a possible area of expansion for the firm. (His 18-person team already offers two Japan funds.)

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