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Hennessy Advisors, Inc. President And CEO Neil J. Hennessy Interviews With The Wall Street Transcript

March 22, 2011 - The Wall Street Transcript has just published S&L offering a timely review of the Financial Services sector. This Special Report contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. Please find an excerpt below.

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Neil J. Hennessy has served as Chairman, President and CEO of Hennessy Advisors, Inc., since 1989, and he also serves as President and CIO of Hennessy Funds. He began his financial career more than 30 years ago as a Financial Adviser, and he opened his own broker/dealer firm in 1989. In 1996 Mr. Hennessy founded his own asset management firm and launched his first mutual fund. Today he manages the entire family of quantitatively managed Hennessy Funds. Mr. Hennessy served as the Co-Chairman of the National Association of Securities Dealers Business Conduct Committee District 1 from 1987 to 1989 and as Chairman in 1994. Mr. Hennessy graduated from the University of San Diego and the Wharton School of Upper Management through the SIA.

TWST: Please start with a brief history of Hennessy Advisors and an overview your current operations.

Mr. Hennessy: I've been in this business since September 1979 and opened Hennessy Advisors (HNNA) in February of 1989. When I started we had no assets, no clients and the office space we rented had no heat and no air conditioning. Basically we were about as much at ground zero as you can get. Then in 1996 I launched my first mutual fund, the Hennessy Balanced Fund, HBFBX. The Balanced Fund utilizes the "Dogs of the Dow" investment philosophy. The reason I decided to implement that simple strategy was so that the end user, the shareholder, knew exactly how their money was being invested.

From there I learned a very, very important lesson: To be successful in the mutual fund business, managing the money is the easy part; the more difficult part is managing the mutual fund company for the benefit of the shareholders. And that has become increasingly difficult on a daily basis. I became a student of management companies. Two years after launching the Balanced Fund we launched our second mutual fund, the Total Return Fund, HDOGX. The Total Return Fund was our second mutual fund to use a quantitative formula.In 2000 we expanded our mutual fund family through the acquisition of two mutual funds, the O'Shaughnessy Value Fund - now called the Hennessy Cornerstone Value Fund, HFCVX - and the O'Shaughnessy Cornerstone Growth Fund - now called the Hennessy Cornerstone Growth Fund, HFCGX. These funds fit our investment style perfectly, as they are both purely quantitative. So by the end of 2000 we had four quantitatively managed mutual funds at Hennessy Funds.In 2002 we took Hennessy Advisors, HNNA.OB, public. We wanted to provide liquidity for the shareholders of Hennessy Advisors, Inc. We actually modeled our small initial public offering to work the way community banks raise capital. We reached out to our community and raised just over $6 million dollars. We used those proceeds to pay off approximately $5 million in debt and had a remaining nest egg of $1 million for future growth initiatives or possible future acquisitions. In 2003 we acquired a small mutual fund company in Warsaw, Ind. - the SYM Select Growth Fund, which had $35 million in assets under management at the time - and implemented our back-tested Focus 30, HFTFX, formula. Then in 2004 we acquired five funds from Lindner Asset Management out of Chicago, and we rolled those assets into the five Hennessy funds. We continued to purchase assets, and in 2005 we acquired approximately $300 million from the Henlopen fund. The acquisition of the Henlopen fund prompted us to launch our second Cornerstone Growth Fund, the Hennessy Cornerstone Growth Fund Series II, HENLX. Then by the end of 2005 we were an investment management firm with six quantitatively managed equity mutual funds. In 2009 we changed our acquisition targets to include subadvised opportunities. During that year we acquired two mutual funds from RBC, and one we subadvised back to RBC, and with the other we launched our Hennessy Cornerstone Large Growth Fund, HFLGX, an additional quantitatively managed fund. In September of that year we acquired two Japan funds - SPXJX and SPJSX - which are subadvised by Shuhei Abe and his investment firm, SPARX Asset Management Co., Ltd., located in Tokyo. So today Hennessy Advisors, Inc., is an investment management firm with approximately $950 million in assets under management. We manage 10 mutual funds. Our portfolio team here at Hennessy manages seven of those mutual funds through quantitative formulas, and three of those funds are subadvised and actively managed. Hennessy Advisors, Inc., has persevered through every kind of stock market and economic crisis. Look who is gone: Lehman is not here, Wachovia is not here, Bear Stearns isn't here. IndyMac, Washington Mutual, you can name even more firms that did not survive this last economic downturn, but we're still here. There are several firms that survived, but not without government assistance. Bank of America, JPMorgan, Wells Fargo, Citi and AIG survived, to name a few.

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The Wall Street Transcript is a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This S&L's, Investment Banks and Asset Management Report is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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