Hennessy Advisors(US:HNNA)2024-12-11 21:35Assets Under Management - Average assets under management for fiscal year 2024 were $3.7 billion, with total assets under management at $4.6 billion as of the end of fiscal year 2024[20]. - Assets under management increased to $4,642,363,000 in fiscal 2024 from $3,032,042,000 in fiscal 2023, reflecting a growth of 53.2%[88]. - Approximately 75% of the company's assets under management are concentrated in five or six funds, with the Hennessy Cornerstone Mid Cap 30 Fund accounting for 27% of average assets under management[176]. Revenue and Fees - The company’s revenue primarily comes from investment advisory services, calculated as a percentage of the average daily net asset values of the Hennessy Funds[18]. - Total revenue, net of sub-advisory fees, for fiscal 2024 was $25,477,000, up from $20,261,000 in fiscal 2023, indicating a growth of 25.5%[89]. - Investment advisory fees for fiscal 2024 were $27,524,000, compared to $22,090,000 in fiscal 2023, marking an increase of 24.5%[89]. - The Hennessy Energy Transition Fund has the highest investment advisory fee at 1.25% of fund assets[93]. - Hennessy Mutual Funds charge a shareholder service fee of 0.10% of the average daily net assets of the Investor Class shares[103]. - The 12b-1 fee for each Hennessy Mutual Fund is set at 0.15% of the average daily net assets of the Investor Class shares[106]. Investment Performance - Hennessy Cornerstone Growth Fund achieved a one-year return of 42.60% for Institutional Class shares and 42.16% for Investor Class shares[76]. - Hennessy Cornerstone Mid Cap 30 Fund reported a one-year return of 44.44% for Institutional Class shares and 43.89% for Investor Class shares[76]. - Hennessy Total Return Fund had a one-year return of 16.77% for Investor Class shares, underperforming the 75/25 Blended DJIA/Treasury Index which returned 22.74%[76]. - Hennessy Cornerstone Value Fund's one-year return was 19.52% for Institutional Class shares and 19.24% for Investor Class shares, compared to the Russell 1000 Value Index at 27.76%[76]. - Hennessy Japan Fund Institutional Class Share (HJPIX) reported a one-year return of 37.43%[78]. - Hennessy Stance ESG ETF (STNC) had a one-year net asset value return of 24.31%[78]. Strategic Growth and Acquisitions - The company completed the purchase of assets related to the management of 10 mutual funds previously managed by FBR Fund Advisers, totaling approximately $2.2 billion[33]. - In November 2023, the company purchased assets related to a mutual fund previously managed by Community Capital Management, totaling approximately $12 million[48]. - In February 2024, the company purchased assets related to a second mutual fund previously managed by Community Capital Management, totaling approximately $59 million[49]. - The company’s business strategy focuses on organic growth through marketing and sales efforts, as well as growth through strategic purchases of management-related assets[20]. - Hennessy Funds have completed 12 asset purchases over nearly 25 years, integrating $4.4 billion in net assets from 33 different investment funds[125]. Regulatory and Compliance - The company maintains compliance with extensive federal and state laws and regulations, including the SEC's Advisers Act and the 1940 Act[129]. - The company has received an exemptive order from the SEC to operate under a manager of managers structure, allowing for more flexibility in appointing sub-advisors[101]. - The company’s investment advisory agreements must be renewed annually, ensuring ongoing oversight and compliance with regulations[95]. - Regulatory compliance is a significant concern, as failure to comply could result in substantial financial penalties and increased operational costs[162]. Market and Competitive Environment - The investment advisory industry is highly competitive, with numerous global and U.S. investment managers posing challenges to Hennessy Funds[127]. - The company may face downward pressure on investment advisory fees, which could reduce profit margins and adversely affect results of operations[156]. - The performance of the Hennessy Funds is crucial, as poor performance compared to competitors can lead to increased redemptions and decreased purchases[140]. Risks and Challenges - The company faces risks related to assets under management, as investors can redeem their investments at any time, which can adversely affect revenues[139]. - Market volatility and economic conditions can significantly impact the company's assets under management and revenues[144]. - Cybersecurity risks pose a significant threat to the company's operations, as any breaches could result in operational disruptions and reputational damage[192]. - The company faces significant competition for qualified personnel, and the loss of key personnel could materially affect its business and financial condition[183]. Employee and Corporate Structure - As of the end of fiscal year 2024, the company had 18 employees, with an average tenure of 14 years, and over 50% of employees are women[134]. - The management contracts are classified as an indefinite-life asset valued at $82.3 million as of the end of fiscal year 2024, subject to impairment analysis[207]. Financial Obligations - The company completed a public offering of the 2026 Notes totaling $40.25 million, maturing on December 31, 2026, with an interest rate of 4.875% per annum[209]. - The company may need to raise additional capital to fund new business initiatives or repay the 2026 Notes, which could adversely impact its operations if financing is not available on acceptable terms[170].