Hennessy Advisors Eyes ETF Growth Amidst $4.2B AUM

TL;DR

**HNNAZ is a steady asset manager, but its growth hinges on successful ETF acquisitions in a cutthroat market.**

AI Summary

Hennessy Advisors, Inc. (HNNAZ) reported average assets under management of $4.5 billion for fiscal year 2025, with total assets under management at year-end reaching $4.2 billion. The company's revenue is primarily derived from investment advisory services to 16 open-end mutual funds and one ETF, with fees calculated as a percentage of average daily net asset values. Strategic growth is pursued through organic marketing efforts and acquisitions of management-related assets, as evidenced by the definitive agreement in March 2025 to purchase assets related to the STF Tactical Growth & Income ETF and STF Tactical Growth ETF. The company has a history of strategic acquisitions, including the $2.2 billion FBR Funds acquisition in 2012 and the $435 million Westport Advisers acquisition in 2016. Risks include fluctuations in assets under management, which directly impact advisory fees, and the competitive landscape of the investment management industry. The strategic outlook emphasizes continued growth through both internal initiatives and further asset purchases.

Why It Matters

Hennessy Advisors' consistent strategy of organic growth and strategic acquisitions, like the planned STF ETFs purchase, is crucial for investors seeking exposure to a diversified asset manager. For employees, sustained AUM growth ensures job stability and potential for expansion. Customers benefit from a broader range of investment products, including the newly acquired ETFs, enhancing their portfolio options. In a highly competitive asset management market, HNNA's ability to integrate new funds and maintain a disciplined investment approach positions it to potentially capture market share from larger, more established firms.

Risk Assessment

Risk Level: medium — The company's revenue is directly tied to its average assets under management, which was $4.5 billion for fiscal year 2025. Any significant decrease in AUM due to market downturns or investor redemptions would directly reduce investment advisory and shareholder service fees, impacting profitability. The reliance on strategic purchases of management-related assets, such as the planned STF ETFs acquisition, introduces integration risks and dependency on external growth drivers.

Analyst Insight

Investors should monitor HNNAZ's ability to successfully integrate new ETF acquisitions and grow its AUM organically. Evaluate the performance of the Hennessy Funds, particularly the newer ETF offerings, as sustained growth in these areas will be critical for future revenue expansion.

Financial Highlights

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net Income

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Revenue Breakdown

Key Numbers

• $4.5B — Average Assets Under Management (for fiscal year 2025, indicating the revenue base)
• $4.2B — Total Assets Under Management (as of the end of fiscal year 2025, showing year-end AUM)
• 16 — Open-end mutual funds (number of mutual funds managed by Hennessy Advisors)
• 1 — Exchange-traded fund (ETF) (number of ETFs managed by Hennessy Advisors, prior to STF acquisition)
• $49,472,655 — Aggregate market value of common stock held by non-affiliates (as of March 31, 2025, reflecting market capitalization)
• 7,891,917 — Shares of common stock issued and outstanding (as of December 2, 2025)
• $40.25M — Aggregate principal amount of 4.875% Notes due 2026 (issued in October 2021, including overallotment option)

Key Players & Entities

• HENNESSY ADVISORS INC (company) — publicly traded investment management firm
• STF Management, LP (company) — seller of STF Tactical Growth & Income ETF and STF Tactical Growth ETF assets
• STF Tactical Growth & Income ETF (company) — ETF to be acquired by Hennessy Advisors
• STF Tactical Growth ETF (company) — ETF to be acquired by Hennessy Advisors
• U.S. Bank Global Fund Services (company) — Hennessy Funds' administrator
• CBIZ CPAs P.C. (company) — auditor
• Marcum LLP (company) — auditor
• Nasdaq Stock Market LLC (regulator) — exchange where HNNA and HNNAZ are registered

FAQ

Risk Factors

• Fluctuations in Assets Under Management [high — market]: The company's revenue is directly tied to its average assets under management (AUM). A decrease in AUM, driven by market downturns or investor redemptions, will directly reduce advisory fees and negatively impact revenue and profitability. The average AUM for FY2025 was $4.5 billion, with year-end AUM at $4.2 billion.
• Competitive Landscape [medium — market]: The investment management industry is highly competitive, with numerous firms offering similar services. This competition can pressure fee structures and require significant investment in marketing and distribution to attract and retain assets. The company competes with other asset managers for investor capital.
• Subadvisor Reliance and Oversight [medium — operational]: The company delegates day-to-day portfolio management to sub-advisors for some funds. While subject to oversight, the performance and adherence to investment objectives by these sub-advisors are critical. Any underperformance or compliance issues with sub-advisors could negatively impact the funds and the company's reputation.
• Cybersecurity Risks [high — operational]: As an investment management firm, the company handles sensitive client and fund data. A cybersecurity breach could lead to significant financial losses, reputational damage, regulatory penalties, and loss of investor confidence. The company acknowledges cybersecurity as a specific risk area.

Industry Context

The investment management industry is characterized by intense competition and a strong reliance on investor confidence and market performance. Key trends include the ongoing shift towards passive investing, the increasing importance of digital distribution channels, and the consolidation of smaller asset managers. Firms like Hennessy Advisors must differentiate themselves through specialized strategies, strong performance, and efficient operations to thrive.

Regulatory Implications

As a registered investment advisor, Hennessy Advisors is subject to extensive regulation by the Securities and Exchange Commission (SEC) and other regulatory bodies. Compliance with rules regarding fiduciary duty, disclosure, advertising, and fund operations is paramount. Changes in regulations, such as those impacting fee structures or operational requirements, could materially affect the company's business.

What Investors Should Do

1. Monitor AUM trends closely.
2. Evaluate the success of recent and potential acquisitions.
3. Assess competitive positioning and fee structures.

Key Dates

• 2025-03-01: Definitive agreement to purchase assets related to STF Tactical Growth & Income ETF and STF Tactical Growth ETF — Indicates a strategic growth initiative through acquisition, aiming to expand AUM and product offerings.
• 2025-03-31: Aggregate market value of common stock held by non-affiliates — Provides an indication of the company's market capitalization as of this date, valued at $49,472,655.
• 2021-10-01: Issuance of 4.875% Notes due 2026 — Represents a portion of the company's debt financing, with an aggregate principal amount of $40.25M (including overallotment).

Glossary

Assets Under Management (AUM)

The total market value of the investments that a financial institution manages on behalf of its clients. For Hennessy Advisors, this includes assets in their mutual funds and ETFs. (Directly impacts the company's revenue, as advisory fees are calculated as a percentage of AUM.)

Open-end mutual fund

A type of investment fund that can issue and redeem shares continuously. Investors buy shares from and sell shares back to the fund itself. (Hennessy Advisors manages 16 of these funds, which are a primary source of their advisory fee revenue.)

Exchange-traded fund (ETF)

A type of security that tracks an index, sector, commodity, or other asset, but which can be purchased or sold on a stock exchange the same as a regular stock. (Hennessy Advisors manages one ETF and is in the process of acquiring assets related to two more, indicating a strategic focus.)

Sub-advisor

An investment management firm that is hired by a primary investment advisor to manage a portion of a fund's assets. (Hennessy Advisors utilizes sub-advisors for some of its funds and pays them fees out of its own revenue.)

Net Asset Value (NAV)

The per-share market value of a fund, calculated by taking the total value of the fund's assets, subtracting liabilities, and dividing by the number of outstanding shares. (Advisory fees are calculated as a percentage of the average daily NAV of the funds managed by Hennessy Advisors.)

Year-Over-Year Comparison

Information comparing key metrics to the previous year, such as revenue growth, margin changes, and the emergence or mitigation of specific risks, is not available in the provided text excerpt. The filing details FY2025 performance and forward-looking statements, but lacks direct year-over-year comparative data within this section.

Key Financial Figures

• $9.96 — on the Nasdaq National Market System of $9.96 on March 31, 2025 (the last trading day
• $4.5 b — der management for fiscal year 2025 was $4.5 billion, and our total assets under manag
• $4.2 billion — t as of the end of fiscal year 2025 was $4.2 billion. Our business strategy centers on (i) o
• $197 million — the closing date totaled approximately $197 million. 1 Table of Contents 2002 In May,
• $5.7 million — public offering of our stock by raising $5.7 million at an offering price of $1.98 (HNNA.OB)
• $1.98 — ng $5.7 million at an offering price of $1.98 (HNNA.OB) and changed our firm name to
• $358 million — itial public offering was approximately $358 million. 2003 In September, we purchased the
• $35 million — s of the closing date was approximately $35 million. 2004 In March, we purchased the ass
• $301 million — the closing date totaled approximately $301 million. 2005 In July, we purchased the asse
• $299 million — s of the closing date was approximately $299 million. 2007 In November, we launched the H
• $158 million — the closing date totaled approximately $158 million. In September, we purchased the assets
• $74 million — the closing date totaled approximately $74 million. 2011 In October, we reorganized the
• $2.2 billion — s of the closing date was approximately $2.2 billion. In December, we closed the Hennessy M
• $16.67 — 1,500,000 shares of our common stock at $16.67 per share. In June, we launched Instit
• $435 million — the closing date totaled approximately $435 million. 2017 In February, we liquidated the

Filing Documents

• hnna20250930_10k.htm (10-K) — 1495KB
• ex_872086.htm (EX-10.10) — 11KB
• ex_872087.htm (EX-10.18) — 12KB
• ex_872085.htm (EX-10.20) — 12KB
• ex_860656.htm (EX-23.1) — 3KB
• ex_889674.htm (EX-23.2) — 3KB
• ex_860657.htm (EX-31.1) — 12KB
• ex_860658.htm (EX-31.2) — 12KB
• ex_860659.htm (EX-32.1) — 3KB
• ex_860660.htm (EX-32.2) — 3KB
• 0001437749-25-036795.txt ( ) — 6134KB
• hnna-20250930.xsd (EX-101.SCH) — 55KB
• hnna-20250930_cal.xml (EX-101.CAL) — 47KB
• hnna-20250930_def.xml (EX-101.DEF) — 350KB
• hnna-20250930_lab.xml (EX-101.LAB) — 324KB
• hnna-20250930_pre.xml (EX-101.PRE) — 388KB
• hnna20250930_10k_htm.xml (XML) — 748KB

Business

Business 1 Item 1A

Risk Factors

Risk Factors 20 Item 1C Cybersecurity 29 Item 2

Properties

Properties 30 Item 3

Legal Proceedings

Legal Proceedings 30 Item 4 Mine Safety Disclosures 30 Part II Item 5 Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities 30 Item 7

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 31 Item 8

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 39 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 61 Item 9A

Controls and Procedures

Controls and Procedures 62 Item 9B Other Information 63 Item 9C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 63 Part III Item 10 Directors, Executive Officers, and Corporate Governance 63 Item 11

Executive Compensation

Executive Compensation 64 Item 12

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 64 Item 13 Certain Relationships and Related Transactions, and Director Independence 64 Item 14 Principal Accountant Fees and Services 64 Part IV Item 15 Exhibits and Financial Statement Schedules 65 Item 16 Form 10K Summary 67

Signatures

Signatures 68 i Table of Contents PART I ITEM 1.

BUSINESS

BUSINESS GENERAL Hennessy Advisors, Inc. (the "Company," "we," "us," or "our") is a publicly traded investment management firm whose primary business activity is providing investment advisory services to a family of 16 open-end mutual funds (collectively, the "Hennessy Mutual Funds") and one exchangetraded fund ("ETF") branded as the Hennessy Funds. We are committed to providing superior service to investors and employing a consistent and disciplined approach to investing based on a buyandhold philosophy that rejects the idea of market timing. Our goal is to provide products that investors can have confidence in, knowing their money is invested as promised and with their best interests in mind. Our firm was founded on these principles over 35 years ago, and the same principles guide us today. We earn revenues primarily by providing investment advisory services to the Hennessy Funds and secondarily by providing shareholder services to investors in the Hennessy Mutual Funds. Investment advisory services include managing the composition of each fund's portfolio (including the purchase, retention, and disposition of portfolio securities in accordance with each fund's investment objectives, policies, and restrictions), monitoring each fund's compliance with its investment objectives and restrictions and federal securities laws, monitoring the liquidity of each fund, reviewing each fund's investment performance, overseeing the selection and continued employment of sub-advisors and monitoring such sub-advisors' adherence to the fund's investment objectives, policies, and restrictions, overseeing other service providers, maintaining inhouse marketing and distribution departments, preparing and distributing regulatory reports, and overseeing distribution of the funds through thirdparty financial institutions. Shareholder services include maintaining a tollfree number that the current investors in the Hennessy Funds may call to ask questions about their accounts or the f

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View this 10-K filing on SEC EDGAR