HENNESSY ADVISORS INC
For the period ended Mar 31, 2025. Filed May 7, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 7, 2025
HNNA$10.19-3.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-12-31; filed 2025-02-13.
0001437749-25-003757
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-07.
0001437749-25-015126
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 59 previous paragraphs and 69 current paragraphs.
33 unchanged; 24 reworded; 8 added; 2 removed; 0 previous and 4 current paragraphs rearranged.
Tables are not compared: 9 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
On a total return basis, the Dow Jones Industrial Average was up 0.05% for the six months ending March 31, 2025. During the most recent quarter, equity prices decreased modestly as investor thoughts turned toward the potential effects of dramatic cuts in government employment. With the economy contracting slightly in the recent quarter and tariffs causing increased uncertainty, the market is now pricing in between three and four rate cuts by the Federal Reserve by the end of 2025, according to Bloomberg. Investors appear to be anticipating a softening economy. The announced yet fluctuating tariffs appear to have further confounded investors as both the scope and timing of these levies has been in flux.
Current report
Long-term U.S. bond yields decreased during the three months ended March 31, 2025. Inflation remains above the Federal Reserve’s 2% inflation goal. Projections compiled by Bloomberg estimate that the Consumer Price Index will advance by 3.2% in 2025 after increasing by 3.0% in 2024. Even in 2027, the estimate for CPI only moderates to 2.4% growth. With this being the case, we expect investors will be focused on the implications for a slowdown in economic activity as the full weight of government and corporate layoffs and tariffs continue to be digested by the market.
Current report
Comparing the six months ended March 31, 2024, to the six months ended March 31, 2025, total operating expenses increased by 20.2%, from $9.7 million to $11.7 million. As a percentage of total revenue, total operating expenses decreased 12.8 percentage points to 61.6%. The dollar value increase in operating expenses was due to increases in all expense categories.
Current report
Comparing the six months ended March 31, 2024, to the six months ended March 31, 2025, compensation and benefits expense increased by 32.1%, from $4.1 million to $5.4 million. As a percentage of total revenue, compensation and benefits expense decreased 2.7 percentage points to 28.7%.
Current report
Comparing the six months ended March 31, 2024, to the six months ended March 31, 2025, general and administrative expense increased by 8.3%, from $3.2 million to $3.5 million. As a percentage of total revenue, general and administrative expense decreased 6.2 percentage points to 18.2%.
Current report
Comparing the six months ended March 31, 2024, to the six months ended March 31, 2025, fund distribution and other expense increased by 47.4%, from $0.4 million to $0.5 million. As a percentage of total revenue, fund distribution and other expense remained the same at 2.7%.
Current report
Comparing the six months ended March 31, 2024, to the six months ended March 31, 2025, depreciation expense increased by 3.2% from $0.126 million to $0.130 million. As a percentage of total revenue, depreciation expense decreased 0.2 percentage points to 0.7%.
Current report
The dollar value increase in depreciation expense in both periods resulted from more fixed asset purchases in the current period.
Removed paragraphs (2)
Previous report
On a total return basis, the Dow Jones Industrial Average was up 0.93% for the three months ended December 31, 2024. During the most recent quarter, equity prices increased modestly as a strong economic backdrop coupled with a solid earnings season appeared to give investors reason to continue bidding stocks higher. Following the November election, equities rallied sharply on the expectation of lower tax rates and fewer governmental business regulations. In the final weeks of 2024, though, investors seemed to turn their attention to inflation and the prospect of rate cuts. While there was once an expectation of several Federal Reserve interest rate cuts in 2025, the market is now pricing in anywhere from one to perhaps two cuts in 2025, according to Bloomberg, as the economy continues to grow above expectations and inflation remains higher than the Federal Reserve’s target rate. For 2025, aggregate revenue growth for the companies in the S&P 500® Index is forecasted to increase 6% while earnings are expected to increase nearly 15%, also according to Bloomberg. This robust implied margin expansion may provide investors with more reasons to buy equities this year provided that the economy continues to do well.
Previous report
Long-term U.S. bond yields increased meaningfully during the three months ended December 31, 2024. With inflation still above the Federal Reserve’s 2% inflation goal and unemployment remaining low, yields increased. At the end of September 2024, the market was pricing in close to eight interest rate cuts by the end of 2025, according to Bloomberg. With recently released economic data continuing to point to above trend inflation, the market is now pricing in no more than two rate cuts by the end of 2025.
Reworded paragraphs (24)
Previous wording
The Japanese equity market was down 4.04% in U.S. dollar terms over the three months ended December 31, 2024, as measured by the Tokyo Stock Price Index. During the period, Japanese equities traded lower despite optimism that a potential merger between Honda and Nissan could portend a new era of dealmaking in the Japanese equity market.
Current wording
The Japanese equity market was down 2.62% in U.S. dollar terms over the six months ended March 31, 2025, as measured by the Tokyo Stock Price Index. During the period, Japanese equities traded lower as corporate reforms and low inflation have driven returns on equity to four-decade highs.
Previous wording
For the twelve months ended December 31, 2024, all 17 Hennessy Funds generated positive total returns. In addition, for the three‑year and five-year periods ended December 31, 2024, all of the 17 Hennessy Funds posted positive annualized total returns as well. Lastly, over the longer term, all of the Hennessy Funds with over ten years of operating history posted positive returns in the ten-year period ended December 31, 2024.
Current wording
For the twelve months ending March 31, 2025, 13 of 17 Hennessy Funds generated positive total returns, with three of the four that were negative being down less than 1%. In addition, for the three‑year period ending March 31, 2025, all 17 Hennessy Funds posted positive annualized total returns. Lastly, over the longer term, the 16 Hennessy Funds with over five and ten years of operating history all posted positive returns in the five- and ten-year periods ended March 31, 2025.
Previous wording
We provide service to over 210,000 fund accounts nationwide, including accounts held by investors who employ financial advisors to assist them with investing as well as accounts held by retail investors who invest directly with us. We serve approximately 11,000 financial advisors who utilize the Hennessy Funds on behalf of their clients, including roughly 500 who purchased one of our Funds for the first time during the most recent quarter. Approximately 18% of such advisors own two or more Hennessy Funds, and over 700 advisors hold a position of over $500,000. While numbers have declined in recent years, we continue to focus significant efforts on building and maintaining brand loyalty among our top tier of advisors.
Current wording
We provide service to nearly 200,000 fund accounts nationwide, including accounts held by investors who employ financial advisors to assist them with investing as well as accounts held by retail investors who invest directly with us. We serve approximately 11,100 financial advisors who utilize the Hennessy Funds on behalf of their clients, including roughly 500 who purchased one of our Funds for the first time during the most recent quarter. Approximately 18% of such advisors own two or more Hennessy Funds, and over 650 advisors hold a position of over $500,000. While numbers have declined in recent years, we continue to focus significant efforts on building and maintaining brand loyalty among our top tier of advisors.
Previous wording
Total assets under management as of December 31, 2024, was $4.8 billion, an increase of $1.5 billion, or 45.7%, compared to December 31, 2023. The increase in total assets was attributable to net inflows into the Hennessy Funds, market appreciation, and the purchase of the assets related to the management of the CCM Funds.
Current wording
Total assets under management as of March 31, 2025, was $4.3 billion, an increase of $0.4 billion, or 10.5%, compared to March 31, 2024. The increase in total assets was attributable to net inflows into the Hennessy Funds, market appreciation, and the purchase of the assets related to the management of the CCM Funds.
Previous wording
The principal asset on our balance sheet, the management contracts asset, represents the capitalized costs incurred in connection with the purchase of the assets related to the management of investment funds. As of December 31, 2024, this asset had a net balance of $82.3 million, unchanged since September 30, 2024.
Current wording
The principal asset on our balance sheet, the management contract asset, represents the capitalized costs incurred in connection with the purchase of the assets related to the management of investment funds. As of March 31, 2025, this asset had a net balance of $82.3 million, unchanged since September 30, 2024.
Previous wording
Our total assets under management as of December 31, 2024, was $4.8 billion, an increase of $1.5 billion, or 45.7%, compared to December 31, 2023. The primary sources of our revenue, liquidity, and cash flow are our investment advisory fees and shareholder service fees, which are based on and generated by our average assets under management. Our average assets under management for the three months ended December 31, 2024, was $4.8 billion, an increase of $1.8 billion, or 58.8%, compared to the three months ended December 31, 2023. As of December 31, 2024, we had cash and cash equivalents of $65.0 million.
Current wording
Our total assets under management as of March 31, 2025, was $4.3 billion, an increase of $0.4 billion, or 10.5%, compared to March 31, 2024. The primary sources of our revenue, liquidity, and cash flow are our investment advisory fees and shareholder service fees, which are based on and generated by our average assets under management. Our average assets under management for the six months ended March 31, 2025, was $4.8 billion, an increase of $1.5 billion, or 47.3%, compared to the six months ended March 31, 2024. As of March 31, 2025, we had cash and cash equivalents of $67.6 million.
Previous wording
The increase in cash provided by operating activities of $1.8 million was primarily due to increased net income in the current period.
Current wording
The increase in cash provided by operating activities of $3.7 million was primarily due to increased net income in the current period.
Previous wording
The decrease in cash used in investing activities of $0.1 million was primarily due to the costs associated with the purchase of assets related to the management of the CCM Funds in the prior comparable period.
Current wording
The decrease in cash used in investing activities of $0.9 million was primarily due to the costs associated with the purchase of assets related to the management of the CCM Funds in the prior comparable period.
Previous wording
The increase in cash used in financing activities of $0.01 million was due to the increased dollar amount of dividends paid as a result of having more shares outstanding in the current period than in the prior comparable period.
Current wording
The increase in cash used in financing activities of $0.04 million was due to the increased dollar amount of dividends paid as a result of having more shares outstanding in the current period than in the prior comparable period.
Previous wording
Total revenue comprises investment advisory fees and shareholder service fees. Comparing the three months ended December 31, 2023, to the three months ended December 31, 2024, total revenue increased by 58.0%, from $6.1 million to $9.7 million, investment advisory fees increased by 59.9%, from $5.7 million to $9.1 million, and shareholder service fees increased by 35.1%, from $0.5 million to $0.6 million.
Current wording
Total revenue comprises investment advisory fees and shareholder service fees. Comparing the three months ended March 31, 2024, to the three months ended March 31, 2025, total revenue increased by 33.7%, from $6.9 million to $9.3 million, investment advisory fees increased by 34.8%, from $6.4 million to $8.7 million, and shareholder service fees increased by 19.6%, from $0.5 million to $0.6 million. Comparing the six months ended March 31, 2024, to the six months ended March 31, 2025, total revenue increased by 45.1%, from $13.1 million to $19.0 million, investment advisory fees increased by 46.5%, from $12.1 million to $17.7 million, and shareholder service fees increased by 27.2%, from $1.0 million to $1.3 million.
Previous wording
The increase in investment advisory fees was due mainly to increased average daily net assets of the Hennessy Funds, and the increase in shareholder service fees was due to an increase in the average daily net assets held in Investor Class shares of the Hennessy Mutual Funds. Assets held in Investor Class shares of the Hennessy Mutual Funds are subject to a shareholder service fee, whereas assets held in Institutional Class shares of the Hennessy Mutual Funds are not subject to a shareholder service fee.
Current wording
In both periods, the increase in investment advisory fees was due mainly to increased average daily net assets of the Hennessy Funds, and the increase in shareholder service fees was due to an increase in the average daily net assets held in Investor Class shares of the Hennessy Mutual Funds. Assets held in Investor Class shares of the Hennessy Mutual Funds are subject to a shareholder service fee, whereas assets held in Institutional Class shares of the Hennessy Mutual Funds are not subject to a shareholder service fee.
Previous wording
We collect investment advisory fees from each of the Hennessy Funds at differing annual rates. These annual rates range between 0.40% and 1.25% of average daily net assets. Average daily net assets of the Hennessy Funds for the three months ended December 31, 2024, was $4.8 billion, which represents an increase of $1.8 billion, or 58.8%, compared to the three months ended December 31, 2023. The Hennessy Fund with the largest average daily net assets for the three months ended December 31, 2024, was the Hennessy Cornerstone Mid Cap 30 Fund, with $1.7 billion. We collect an investment advisory fee from the Hennessy Cornerstone Mid Cap 30 Fund at an annual rate of 0.74% of average daily net assets. The Hennessy Fund with the second largest average daily assets for the three months ended December 31, 2024, was the Hennessy Focus Fund, with $0.7 billion. We collect an investment advisory fee from the Hennessy Focus Fund at an annual rate of 0.90% of average daily net assets. However, we pay a sub‑advisory fee at an annual rate of 0.29% to the fund’s sub-advisor, which reduces the net operating profit contribution of the fund to our financial operations.
Current wording
We collect investment advisory fees from each of the Hennessy Funds at differing annual rates. These annual rates range between 0.40% and 1.25% of average daily net assets. Average daily net assets of the Hennessy Funds for the three months ended March 31, 2025, was $4.7 billion, which represents an increase of $1.3 billion, or 37.2%, compared to the three months ended March 31, 2024, and average daily net assets of the Hennessy Funds for the six months ended March 31, 2025, was $4.8 billion, which represents an increase of $1.5 billion, or 47.3%, compared to the six months ended March 31, 2024. The Hennessy Fund with the largest average daily net assets for the three and six months ended March 31, 2025, was the Hennessy Cornerstone Mid Cap 30 Fund, with $1.7 billion for both periods. We collect an investment advisory fee from the Hennessy Cornerstone Mid Cap 30 Fund at an annual rate of 0.74% of average daily net assets. The Hennessy Fund with the second largest average daily assets for the three and six months ended March 31, 2025, was the Hennessy Focus Fund, with $0.6 billion for both periods. We collect an investment advisory fee from the Hennessy Focus Fund at an annual rate of 0.90% of average daily net assets. However, we pay a sub‑advisory fee at an annual rate of 0.29% to the fund’s sub-advisor, which reduces the net operating profit contribution of the fund to our financial operations.
Previous wording
Total assets under management as of December 31, 2024, was $4.8 billion, an increase of $1.5 billion, or 45.7%, compared to December 31, 2023. The increase in total assets was attributable to net inflows into the Hennessy Funds, market appreciation, and the purchase of the assets related to the management of the CCM Funds.
Current wording
Total assets under management as of March 31, 2025, was $4.3 billion, an increase of $0.4 billion, or 10.5%, compared to March 31, 2024. The increase in total assets was attributable to net inflows into the Hennessy Funds, market appreciation, and the purchase of the assets related to the management of the CCM Funds.
Previous wording
Redemptions as a percentage of assets under management decreased from an average of 2.8% per month during the three months ended December 31, 2023, to an average of 2.6% per month during the three months ended December 31, 2024.
Current wording
Redemptions as a percentage of assets under management increased from an average of 2.2% per month during the three months ended March 31, 2024, to an average of 5.5% per month during the three months ended March 31, 2025. Redemptions as a percentage of assets under management decreased from an average of 2.5% per month during the six months ended March 31, 2024, to an average of 4.0% per month during the six months ended March 31, 2025.
Previous wording
Comparing the three months ended December 31, 2023, to the three months ended December 31, 2024, total operating expenses increased by 24.6%, from $4.7 million to $5.9 million. As a percentage of total revenue, total operating expenses decreased 16.3 percentage points to 60.5%. The dollar value increase in operating expense was due to increases in all expense categories other than general and administrative expense and depreciation expense, which moderately decreased.
Current wording
Comparing the three months ended March 31, 2024, to the three months ended March 31, 2025, total operating expenses increased by 16.0%, from $5.0 million to $5.8 million. As a percentage of total revenue, total operating expenses decreased 9.5 percentage points to 62.8%. The dollar value increase in operating expenses was due to increases in all expense categories other than sub-advisory fee expense, which moderately decreased.
Previous wording
Compensation and Benefits Expense: Comparing the three months ended December 31, 2023, to the three months ended December 31, 2024, compensation and benefits expense increased by 48.2%, from $1.9 million to $2.8 million. As a percentage of total revenue, compensation and benefits expense decreased 1.9 percentage points to 28.5%. The dollar value increase in compensation and benefit expense was due to an increase in incentive-based compensation in the current period.
Current wording
Compensation and Benefits Expense: Comparing the three months ended March 31, 2024, to the three months ended March 31, 2025, compensation and benefits expense increased by 18.7%, from $2.3 million to $2.7 million. As a percentage of total revenue, compensation and benefits expense decreased 3.7 percentage points to 28.8%.
Previous wording
General and Administrative Expense: Comparing the three months ended December 31, 2023, to the three months ended December 31, 2024, general and administrative expense decreased by 4.1%, from $1.72 million to $1.65 million. As a percentage of total revenue, general and administrative expense decreased 11.1 percentage points to 17.0%. The decrease in general and administrative expense was primarily due to decreased professional services expense, partially offset by increased commission expense on sales of the Hennessy Funds.
Current wording
General and Administrative Expense: Comparing the three months ended March 31, 2024, to the three months ended March 31, 2025, general and administrative expense increased by 22.9%, from $1.5 million to $1.8 million. As a percentage of total revenue, general and administrative expense decreased 1.6 percentage points to 19.5%.
Previous wording
Comparing the three months ended December 31, 2023, to the three months ended December 31, 2024, fund distribution and other expense increased by 77.9%, from $0.1 million to $0.3 million. As a percentage of total revenue, fund distribution and other expense increased 0.3 percentage points to 2.7%. The increase in fund distribution and other expense was primarily due to increased average daily net assets across the Hennessy Funds. Additionally, there was an increase in operating expenses relating to the Hennessy Stance ESG ETF, which had greater average daily net assets in the current period resulting from the purchase of assets related to the management of the CCM Core Impact Fund and subsequent reorganization of such assets into the Hennessy Stance ESG ETF. Such reorganization, which was effective as of February 23, 2024, nearly doubled the average daily net assets of the Hennessy Stance ESG ETF.
Current wording
Comparing the three months ended March 31, 2024, to the three months ended March 31, 2025, fund distribution and other expense increased by 24.9%, from $0.2 million to $0.3 million. As a percentage of total revenue, fund distribution and other expense decreased 0.2 percentage points to 2.7%.
Previous wording
Sub-Advisory Fees Expense: Comparing the three months ended December 31, 2023, to the three months ended December 31, 2024, sub-advisory fees expense increased by 24.4%, from $0.9 million to $1.1 million. As a percentage of total revenue, sub-advisory fees expense decreased 3.1 percentage points to 11.7%. The dollar value increase in sub-advisory fees expense was due to increased average daily net assets of the sub‑advised Hennessy Funds, including the increase in average daily net assets of the Hennessy Stance ESG ETF as a result of the purchase of assets related to the management of the CCM Core Impact Fund and subsequent reorganization of such assets into the Hennessy Stance ESG ETF.
Current wording
Sub-Advisory Fees Expense: Comparing the three months ended March 31, 2024, to the three months ended March 31, 2025, sub-advisory fees expense decreased by 1.3%, from $1.05 million to $1.03 million. As a percentage of total revenue, sub-advisory fees expense decreased 4.0 percentage points to 11.1%. The decrease in sub-advisory fees expense was due to decreased average daily net assets of the sub‑advised Hennessy Funds.
Previous wording
Depreciation Expense: Comparing the three months ended December 31, 2023, to the three months ended December 31, 2024, depreciation expense decreased by 11.6% from $0.07 million to $0.06 million. As a percentage of total revenue, depreciation expense decreased 0.5 percentage points to 0.6%. The decrease in depreciation expense resulted from fewer fixed asset purchases in the current period.
Current wording
Depreciation Expense: Comparing the three months ended March 31, 2024, to the three months ended March 31, 2025, depreciation expense increased by 21.1% from $0.06 million to $0.07 million. As a percentage of total revenue, depreciation expense remained the same at 0.7%.
Previous wording
Interest income consists of interest earned on cash and cash equivalents. Comparing the three months ended December 31, 2023, to the three months ended December 31, 2024, interest income decreased from $0.8 million to $0.7 million. The decrease in interest income resulted from decreased interest rates in the current period.
Current wording
Interest income consists of interest earned on cash and cash equivalents. Comparing the three months ended March 31, 2024, to the three months ended March 31, 2025, interest income decreased from $0.8 million to $0.7 million. Comparing the six months ended March 31, 2024, to the six months ended March 31, 2025, interest income decreased from $1.6 million to $1.4 million. In both periods, the decrease in interest income resulted from decreased interest rates in the current period.
Previous wording
Comparing the three months ended December 31, 2023, to the three months ended December 31, 2024, interest expense increased from $0.567 million to $0.572 million. The increase in interest expense was due to the manner in which interest expense is calculated under U.S. GAAP. The issuance costs related to the 2026 Notes that have been capitalized are amortized over time and therefore increase the carrying amount of the 2026 Notes. As the carrying amount of the 2026 Notes increases, the interest expense on the 2026 Notes for financial statement purposes also increases.
Current wording
Comparing the three months ended March 31, 2024, to the three months ended March 31, 2025, interest expense increased from $0.568 million to $0.572 million. Comparing the six months ended March 31, 2024, to the six months ended March 31, 2025, interest expense increased from $1.135 million to $1.144 million. In both periods, the increase in interest expense was due to the manner in which interest expense is calculated under U.S. GAAP. The issuance costs related to the 2026 Notes that have been capitalized are amortized over time and therefore increase the carrying amount of the 2026 Notes. As the carrying amount of the 2026 Notes increases, the interest expense on the 2026 Notes for financial statement purposes also increases.
Previous wording
Comparing the three months ended December 31, 2023, to the three months ended December 31, 2024, income tax expense increased by 155.2%, from $0.4 million to $1.1 million. The increase in income tax expense was due to increased net operating income, as well as a higher effective income tax rate in the current period due to a greater exposure to state income tax liability based on the location of investors in the Hennessy Funds.
Current wording
Comparing the three months ended March 31, 2024, to the three months ended March 31, 2025, income tax expense increased by 67.2%, from $0.6 million to $1.0 million. Comparing the six months ended March 31, 2024, to the six months ended March 31, 2025, income tax expense increased by 105.3%, from $1.0 million to $2.1 million. In both periods, the increase in income tax expense was due to increased net operating income, as well as a higher effective income tax rate in the current period due to a greater exposure to state income tax liability based on the location of investors in the Hennessy Funds.
Previous wording
Comparing the three months ended December 31, 2023, to the three months ended December 31, 2024, net income increased by 136.2%, from $1.2 million to $2.8 million. The increase in net income was primarily due to increased revenue in the current period.
Current wording
Comparing the three months ended March 31, 2024, to the three months ended March 31, 2025, net income increased by 67.7%, from $1.5 million to $2.6 million. Comparing the six months ended March 31, 2024, to the six months ended March 31, 2025, net income increased by 97.7%, from $2.7 million to $5.4 million. In both periods, the increase in net income was primarily due to increased revenue in the current period.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
In both periods, the dollar value increase in compensation and benefit expense was due to an increase in incentive-based compensation in the current period.
Current report — wording carried from elsewhere
In both periods, the dollar value increase in general and administrative expense was due to increased commission expense on sales of the Hennessy Funds in the current period.
Current report — wording carried from elsewhere
In both periods, the dollar value increase in fund distribution and other expense was primarily due to increased average daily net assets across the Hennessy Funds.
Current report — wording carried from elsewhere
Comparing the six months ended March 31, 2024, to the six months ended March 31, 2025, sub-advisory fees expense increased by 10.6%, from $2.0 million to $2.2 million. As a percentage of total revenue, sub-advisory fees expense decreased 3.6 percentage points to 11.4%. The dollar value increase in sub-advisory fees expense was due to increased average daily net assets of the sub‑advised Hennessy Funds.