ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
, |
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(Address of principal executive office) |
(Zip code) |
Title of each class |
Trading symbol |
Name of each exchange on which registered | ||
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
☒ | Smaller reporting company | |||||
Emerging growth company |
PART I |
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Item 1 |
1 |
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Item 1A |
20 |
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Item 2 |
29 |
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Item 3 |
29 |
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Item 4 |
29 |
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Part II |
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Item 5 |
30 |
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Item 7 |
30 |
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Item 8 |
39 |
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Item 9 |
58 |
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Item 9A |
58 |
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Item 9B |
59 |
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Item 9C |
59 |
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Part III |
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Item 10 |
59 |
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Item 11 |
59 |
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Item 12 |
59 |
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Item 13 |
60 |
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Item 14 |
60 |
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Part IV |
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Item 15 |
61 |
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Item 16 |
64 |
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65 |
ITEM 1. |
BUSINESS |
1989 |
In February, we were founded as a California corporation under our previous name, Edward J. Hennessy, Inc., and registered as a broker-dealer with the Financial Industry Regulatory Authority. | |
1996 |
In March, we launched our first mutual fund, the Hennessy Balanced Fund. | |
1998 |
In October, we launched our second mutual fund, the Hennessy Total Return Fund. |
2000 |
In June, we successfully completed our first asset purchase by purchasing the assets related to the management of two funds previously managed by Netfolio, Inc. (“Netfolio”) and changed the fund names to the Hennessy Cornerstone Growth Fund and the Hennessy Cornerstone Value Fund. The amount of the purchased assets as of the closing date totaled approximately $197 million. | |
2002 |
In May, we successfully completed a self-underwritten initial public offering of our stock by raising $5.7 million at an offering price of $1.98 (HNNA.OB) and changed our firm name to Hennessy Advisors, Inc. Our total assets under management at the time of our initial public offering was approximately $358 million. | |
2003 |
In September, we purchased the assets related to the management of a fund previously managed by SYM Financial Corporation and reorganized the assets of such fund into the newly created Hennessy Cornerstone Mid Cap 30 Fund. The amount of the purchased assets as of the closing date was approximately $35 million. | |
2004 |
In March, we purchased the assets related to the management of five funds previously managed by Lindner Asset Management, Inc. and reorganized the assets of such funds into four of our existing Hennessy Funds. The amount of the purchased assets as of the closing date totaled approximately $301 million. | |
2005 |
In July, we purchased the assets related to the management of a fund previously managed by Landis Associates LLC and changed the fund name to the Hennessy Cornerstone Growth, Series II Fund. The amount of the purchased assets as of the closing date was approximately $299 million. | |
2007 |
In November, we launched the Hennessy Micro Cap Growth Fund, LLC, a non-registered private pooled investment fund. | |
2009 |
In March, we purchased the assets related to the management of two funds previously managed by RBC Global Asset Management (U.S.) Inc. and reorganized the assets of such funds into the newly created Hennessy Cornerstone Large Growth Fund and the Hennessy Large Value Fund. In conjunction with the completion of the transaction, RBC Global Asset Management (U.S.) Inc. became the sub-advisor to the Hennessy Large Value Fund. The amount of the purchased assets as of the closing date totaled approximately $158 million.In September, we purchased the assets related to the management of two funds previously managed by SPARX Investment & Research, USA, Inc. and sub-advised by SPARX Asset Management Co., Ltd. and changed the fund names to the Hennessy Japan Fund and the Hennessy Japan Small Cap Fund. In conjunction with the completion of the transaction, SPARX Asset Management Co., Ltd. became the sub-advisor to both funds. The amount of the purchased assets as of the closing date totaled approximately $74 million. | |
2011 |
In October, we reorganized the assets of the Hennessy Cornerstone Growth, Series II Fund into the Hennessy Cornerstone Growth Fund. | |
2012 |
In October, we purchased the assets related to the management of 10 funds previously managed by FBR Fund Advisers (the “FBR Funds”). We reorganized the assets of three of the FBR Funds into existing Hennessy Funds and reorganized the assets of the seven other FBR Funds into newly created series of the Hennessy Funds. In conjunction with the completion of the transaction, Broad Run Investment Management, LLC became the sub-advisor to the Hennessy Focus Fund, FCI Advisors became the sub-advisor to the Hennessy Equity and Income Fund (fixed income allocation) and the Hennessy Core Bond Fund, and The London Company of Virginia, LLC became the sub-advisor to the Hennessy Equity and Income Fund (equity allocation). The amount of the purchased assets as of the closing date was approximately $2.2 billion.In December, we closed the Hennessy Micro Cap Growth Fund, LLC. | |
2014 |
In April, our common stock began trading on The Nasdaq Capital Market. |
2015 |
In September, we completed a self-tender offer, under which we repurchased 1,500,000 shares of our common stock at $16.67 per share. In June, we launched Institutional Class shares for the Hennessy Japan Small Cap Fund and the Hennessy Large Cap Financial Fund. | |
2016 |
In September, we purchased the assets related to the management of two funds previously managed by Westport Advisers, LLC and reorganized the assets of such funds into the Hennessy Cornerstone Mid Cap 30 Fund. The amount of the purchased assets as of the closing date totaled approximately $435 million. | |
2017 |
In February, we liquidated the Hennessy Core Bond Fund and reorganized the Hennessy Large Value Fund into the Hennessy Cornerstone Value Fund. Additionally, for the Hennessy Technology Fund, we implemented changes to the investment strategy and the portfolio management team. In March, we launched Institutional Class shares for the Hennessy Gas Utility Fund. In December, we purchased the assets related to the management of two funds previously managed by Rainier Investment Management, LLC (“Rainier”) and reorganized the assets of such funds into the Hennessy Cornerstone Large Growth Fund and the Hennessy Cornerstone Mid Cap 30 Fund. The amount of the purchased assets as of the closing date totaled approximately $122 million. | |
2018 |
In January, we purchased the assets related to the management of a third fund previously managed by Rainier and reorganized the assets of such fund into the Hennessy Cornerstone Mid Cap 30 Fund. The amount of the purchased assets as of the closing date totaled approximately $253 million. In October, we purchased the assets related to the management of the two funds previously managed by BP Capital Fund Services, LLC and reorganized the assets of such funds into the newly created Hennessy BP Energy Transition Fund and the Hennessy BP Midstream Fund. In connection with the transaction, BP Capital Fund Services, LLC became the sub-adviser to both funds. The amount of the purchased assets as of the closing date totaled approximately $200 million. | |
2019 |
During the year, we repurchased an aggregate of 560,734 shares of our common stock pursuant to our stock buyback program. | |
2020 |
In the first three months of the year, we repurchased an aggregate of 206,109 shares of our common stock pursuant to our stock buyback program. | |
2021 |
In October, we transferred listing of our common stock from The Nasdaq Capital Market to The Nasdaq Global Market. Also in October, the Company completed a public offering of 4.875% notes due 2026 (the “2026 Notes”) in the aggregate principal amount of $40,250,000, which included the full exercise of the underwriters’ overallotment option. |
The Hennessy Funds Family | ||||
Domestic Equity |
Multi-Asset |
Sector and Specialty | ||
Hennessy Cornerstone Growth Fund |
Hennessy Total Return Fund |
Hennessy BP Energy Transition Fund | ||
Hennessy Focus Fund |
Hennessy Equity and Income Fund |
Hennessy BP Midstream Fund | ||
Hennessy Cornerstone Mid Cap 30 Fund |
Hennessy Balanced Fund |
Hennessy Gas Utility Fund | ||
Hennessy Cornerstone Large Growth Fund |
Hennessy Japan Fund | |||
Hennessy Cornerstone Value Fund |
Hennessy Japan Small Cap Fund | |||
Hennessy Large Cap Financial Fund | ||||
Hennessy Small Cap Financial Fund | ||||
Hennessy Technology Fund |
• | Hennessy Cornerstone Growth Fund one-year price appreciation that also have price-to-sales six-month periods. |
• | Hennessy Focus Fund above-average rates. This fund’s holdings are conviction-weighted. |
• | Hennessy Cornerstone Mid Cap 30 Fund mid-cap growth-oriented common stocks using a quantitative formula. From the investable common stocks of public companies in the S&P Capital IQ Database with market capitalizations between $1 billion and $10 billion, this fund invests in the 30 common stocks with the highest one-year price appreciation that also have price-to-sales three-month and six-month periods. |
• | Hennessy Cornerstone Large Growth Fund price-to-cash-flow one-year return on total capital. |
• | Hennessy Cornerstone Value Fund above-average market capitalizations, above-average number of shares outstanding, 12-month sales that are 50% greater than the average, and above-average cash flows. |
• | Hennessy Total Return Fund |
• | Hennessy Equity and Income Fund high-quality corporate, agency, and government bonds. |
• | Hennessy Balanced Fund |
• | Hennessy BP Energy Transition Fund |
• | Hennessy BP Midstream Fund top-down deductive reasoning approach with a detailed bottom-up analysis of individual companies. |
• | Hennessy Gas Utility Fund capitalization-weighted index that consists of publicly traded member companies of the AGA whose securities are traded on a U.S. stock exchange. The index is adjusted monthly for the percentage of natural gas assets on each company’s balance sheet. |
• | Hennessy Japan Fund in-depth analysis and on-site research, the portfolio managers focus on stocks with a potential “value gap” by screening for companies that they believe have strong businesses and management and are trading at attractive prices. The portfolio managers limit the portfolio to what they consider to be their best ideas and maintain a concentrated number of holdings. |
• | Hennessy Japan Small Cap Fund in-depth analysis and on-site research, the portfolio managers focus on stocks with a potential “value gap” by screening for small-cap companies that the portfolio managers believe have strong businesses and management and are trading at attractive prices. The portfolio managers limit the portfolio to what they consider to be their best ideas and is unconstrained by its benchmarks. |
• | Hennessy Large Cap Financial Fund large-cap companies principally engaged in the business of providing financial services, including information technology companies that are primarily engaged in providing products or services to financial services companies. |
• | Hennessy Small Cap Financial Fund small-cap companies principally engaged in the business of providing financial services. |
• | Hennessy Technology Fund sector-leading cash flows and profits, a history of delivering returns in excess of cost of capital, attractive relative valuations, ability to generate cash, attractive balance sheet risk profiles, and prospects for sustainable profitability. |
Hennessy Cornerstone Growth Fund |
One Year | Three Years | Five Years | Ten Years | ||||||||||||
Institutional Class Share—HICGX |
44.24 | % | 8.74 | % | 10.11 | % | 14.63 | % | ||||||||
Investor Class Share—HFCGX |
43.72 | % | 8.37 | % | 9.74 | % | 14.28 | % | ||||||||
Russell 2000 ® Index (1) |
47.68 | % | 10.54 | % | 13.45 | % | 14.63 | % | ||||||||
S&P 500 ® Index (2) |
30.01 | % | 15.99 | % | 16.90 | % | 16.63 | % |
Hennessy Focus Fund* |
One Year | Three Years | Five Years | Ten Years | ||||||||||||
Institutional Class Share—HFCIX |
36.07 | % | 15.24 | % | 14.23 | % | 15.95 | % | ||||||||
Investor Class Share—HFCSX |
35.56 | % | 14.82 | % | 13.81 | % | 15.55 | % | ||||||||
Russell 3000 ® Index (3) |
31.88 | % | 16.00 | % | 16.85 | % | 16.60 | % | ||||||||
Russell Midcap ® Growth Index (4) |
30.45 | % | 19.14 | % | 19.27 | % | 17.54 | % |
Hennessy Cornerstone Mid Cap 30 Fund |
One Year | Three Years | Five Years | Ten Years | ||||||||||||
Institutional Class Share—HIMDX |
39.83 | % | 11.88 | % | 10.48 | % | 13.10 | % | ||||||||
Investor Class Share—HFMDX |
39.34 | % | 11.50 | % | 10.09 | % | 12.72 | % | ||||||||
Russell Midcap ® Index (5) |
38.11 | % | 14.22 | % | 14.39 | % | 15.52 | % | ||||||||
S&P 500 ® Index (2) |
30.01 | % | 15.99 | % | 16.90 | % | 16.63 | % |
Hennessy Cornerstone Large Growth Fund |
One Year | Three Years | Five Years | Ten Years | ||||||||||||
Institutional Class Share—HILGX |
35.39 | % | 12.96 | % | 13.84 | % | 13.79 | % | ||||||||
Investor Class Share—HFLGX |
35.07 | % | 12.63 | % | 13.51 | % | 13.51 | % | ||||||||
Russell 1000 ® Index (6) |
30.96 | % | 16.43 | % | 17.11 | % | 16.76 | % | ||||||||
S&P 500 ® Index (2) |
30.01 | % | 15.99 | % | 16.90 | % | 16.63 | % |
Hennessy Cornerstone Value Fund |
One Year | Three Years | Five Years | Ten Years | ||||||||||||
Institutional Class Share—HICVX |
38.32 | % | 5.75 | % | 9.14 | % | 10.72 | % | ||||||||
Investor Class Share—HFCVX |
38.02 | % | 5.55 | % | 8.91 | % | 10.49 | % | ||||||||
Russell 1000 ® Value Index (7) |
35.01 | % | 10.07 | % | 10.94 | % | 13.51 | % | ||||||||
S&P 500 ® Index (2) |
30.01 | % | 15.99 | % | 16.90 | % | 16.63 | % |
Hennessy Total Return Fund |
One Year | Three Years | Five Years | Ten Years | ||||||||||||
Investor Class Share—HDOGX |
15.99 | % | 3.40 | % | 5.46 | % | 7.89 | % | ||||||||
75/25 Blended DJIA/Treasury Index (8) |
17.92 | % | 8.83 | % | 12.14 | % | 11.23 | % | ||||||||
Dow Jones Industrial Average (9) |
24.15 | % | 11.00 | % | 15.68 | % | 14.72 | % |
Hennessy Equity and Income Fund* |
One Year | Three Years | Five Years | Ten Years | ||||||||||||
Institutional Class Share—HEIIX |
15.39 | % | 8.38 | % | 9.24 | % | 9.09 | % | ||||||||
Investor Class Share—HEIFX |
14.99 | % | 7.97 | % | 8.83 | % | 8.72 | % | ||||||||
70/30 Blended Balanced Index (10) |
20.29 | % | 12.88 | % | 12.70 | % | 12.44 | % | ||||||||
60/40 Blended Balanced Index (11) |
17.16 | % | 11.79 | % | 11.28 | % | 11.03 | % | ||||||||
S&P 500 ® Index (2) |
30.01 | % | 15.99 | % | 16.90 | % | 16.63 | % |
Hennessy Balanced Fund |
One Year | Three Years | Five Years | Ten Years | ||||||||||||
Investor Class Share—HBFBX |
11.67 | % | 2.96 | % | 4.31 | % | 5.21 | % | ||||||||
50/50 Blended DJIA/Treasury Index (12) |
11.87 | % | 6.84 | % | 8.71 | % | 7.85 | % | ||||||||
Dow Jones Industrial Average (9) |
24.15 | % | 11.00 | % | 15.68 | % | 14.72 | % |
Hennessy BP Energy Transition Fund* |
One Year | Three Years | Five Years | Since Inception (12/31/13) |
||||||||||||
Institutional Class Share— HNRIX |
104.63 | % | -7.22 | % | -2.39 | % | -1.52 | % | ||||||||
Investor Class Share—HNRGX |
103.85 | % | -7.50 | % | -2.66 | % | -1.77 | % | ||||||||
S&P 500 ® Energy Index (13) |
82.99 | % | -6.80 | % | -1.57 | % | -2.87 | % | ||||||||
S&P 500 ® Index (2) |
30.01 | % | 15.99 | % | 16.90 | % | 13.75 | % |
Hennessy BP Midstream Fund* |
One Year | Three Years | Five Years | Since Inception (12/31/13) |
||||||||||||
Institutional Class Share— HMSIX** |
74.04 | % | -4.91 | % | -4.54 | % | -3.21 | % | ||||||||
Investor Class Share—HMSFX |
73.63 | % | -5.12 | % | -4.77 | % | -3.45 | % | ||||||||
Alerian Midstream Index (14) |
86.20 | % | 1.14 | % | 1.30 | % | 0.19 | % | ||||||||
S&P 500 ® Index (2) |
30.01 | % | 15.99 | % | 16.90 | % | 13.75 | % |
Hennessy Gas Utility Fund* |
One Year | Three Years | Five Years | Ten Years | ||||||||||||
Institutional Class Share— HGASX** |
17.34 | % | 4.83 | % | 4.36 | % | 8.94 | % | ||||||||
Investor Class Share—GASFX |
16.99 | % | 4.51 | % | 4.05 | % | 8.77 | % | ||||||||
AGA Stock Index (15) |
18.20 | % | 5.63 | % | 5.26 | % | 9.81 | % | ||||||||
S&P 500 ® Index (2) |
30.01 | % | 15.99 | % | 16.90 | % | 16.63 | % |
Hennessy Japan Fund |
One Year | Three Years | Five Years | Ten Years | ||||||||||||
Institutional Class Share—HJPIX |
15.12 | % | 9.55 | % | 12.66 | % | 13.40 | % | ||||||||
Investor Class Share—HJPNX |
14.67 | % | 9.11 | % | 12.20 | % | 13.03 | % | ||||||||
Russell/Nomura Total Market TM Index (16) |
20.74 | % | 7.00 | % | 9.33 | % | 8.64 | % | ||||||||
Tokyo Stock Price Index (TOPIX) (17) |
20.61 | % | 6.87 | % | 9.28 | % | 8.63 | % |
Hennessy Japan Small Cap Fund |
One Year | Three Years | Five Years | Ten Years | ||||||||||||
Institutional Class Share—HJSIX** |
17.15 | % | 5.97 | % | 12.54 | % | 13.57 | % | ||||||||
Investor Class Share—HJPSX |
16.62 | % | 5.53 | % | 12.11 | % | 13.32 | % | ||||||||
Russell/Nomura Small Cap TM Index (18) |
12.41 | % | 2.73 | % | 7.44 | % | 8.48 | % | ||||||||
Tokyo Stock Price Index (TOPIX) (17) |
20.61 | % | 6.87 | % | 9.28 | % | 8.63 | % |
Hennessy Large Cap Financial Fund* |
One Year | Three Years | Five Years | Ten Years | ||||||||||||
Institutional Class Share—HILFX** |
41.42 | % | 14.90 | % | 18.59 | % | 16.03 | % | ||||||||
Investor Class Share—HLFNX |
40.85 | % | 14.50 | % | 18.17 | % | 15.76 | % | ||||||||
Russell 1000 ® Index Financials (19) |
58.32 | % | 17.30 | % | 18.25 | % | 18.11 | % | ||||||||
Russell 1000 ® Index (6) |
30.96 | % | 16.43 | % | 17.11 | % | 16.76 | % |
Hennessy Small Cap Financial Fund* |
One Year | Three Years | Five Years | Ten Years | ||||||||||||
Institutional Class Share—HISFX |
116.14 | % | 12.67 | % | 12.53 | % | 14.76 | % | ||||||||
Investor Class Share—HSFNX |
115.09 | % | 12.28 | % | 12.11 | % | 14.38 | % | ||||||||
Russell 2000 ® Index Financials (20) |
65.84 | % | 7.98 | % | 10.49 | % | 14.12 | % | ||||||||
Russell 2000 ® Index (1) |
47.68 | % | 10.54 | % | 13.45 | % | 14.63 | % |
Hennessy Technology Fund* |
One Year | Three Years | Five Years | Ten Years | ||||||||||||
Institutional Class Share—HTCIX** |
39.10 | % | 19.49 | % | 18.39 | % | 14.98 | % | ||||||||
Investor Class Share—HTECX |
38.71 | % | 19.18 | % | 18.08 | % | 14.66 | % | ||||||||
NASDAQ Composite Index (21) |
30.26 | % | 22.67 | % | 23.37 | % | 20.96 | % | ||||||||
S&P 500 ® Index (2) |
30.01 | % | 15.99 | % | 16.90 | % | 16.63 | % |
* | Performance information from prior to the date that we acquired the assets related to the management of the fund is included because the previous investment manager managed the fund using a similar investment strategy. |
** | Performance shown for periods prior to the inception of Institutional Class shares represents the performance of Investor Class shares of the fund and includes expenses that are not applicable to, and are higher than, those of Institutional Class shares. |
(1) | The Russell 2000 ® Index comprises the smallest 2,000 companies in the Russell 3000® Index based on market capitalization, representing approximately 8% of the Russell 3000® Index in terms of total market capitalization. |
(2) | The S&P 500 ® Index is a capitalization-weighted index that is designed to represent the broad domestic economy through changes in the aggregate market value of 500 stocks across all major industries. |
(3) | The Russell 3000 ® Index comprises the 3,000 largest U.S. companies based on market capitalization, representing approximately 98% of the investable U.S. equities market. |
(4) | The Russell Midcap ® Growth Index comprises approximately 65% of the total market value of the Russell Midcap® Index and includes companies with higher price-to-book |
(5) | The Russell Midcap ® Index comprises approximately 800 of the smallest securities of the Russell 1000® Index based on a combination of market capitalization and current index membership. |
(6) | The Russell 1000 ® Index comprises the 1,000 largest companies in the Russell 3000® Index based on market capitalization. |
(7) | The Russell 1000 ® Value Index comprises those Russell 1000® companies with lower price-to-book |
(8) | The 75/25 Blended DJIA/Treasury Index consists of 75% common stocks represented by the Dow Jones Industrial Average and 25% short-duration Treasury securities represented by the ICE BofAML U.S. 3-Month Treasury Bill Index, which comprises U.S. Treasury securities maturing in three months. |
(9) | The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the NYSE or The Nasdaq Stock Market LLC. |
(10) | The 70/30 Blended Balanced Index consists of 70% common stocks represented by the S&P 500 ® Index and 30% bonds represented by the Bloomberg Intermediate U.S. Government/Credit Index, which measures the performance of U.S. dollar-denominated Treasury securities and government-related and investment-grade corporate securities that have $250 million or more of outstanding face value, are fixed rate and non-convertible, and have remaining maturities of greater than or equal to one year and less than 10 years. |
(11) | The 60/40 Blended Balanced Index consists of 60% common stocks represented by the S&P 500 ® Index and 40% bonds represented by the Bloomberg Intermediate U.S. Government/Credit Index, which measures the performance of U.S. dollar-denominated Treasury securities and government-related and investment-grade corporate securities that have $250 million or more of outstanding face value, are fixed rate and non-convertible, and have remaining maturities of greater than or equal to one year and less than 10 years. |
(12) | The 50/50 Blended DJIA/Treasury Index consists of 50% common stocks represented by the Dow Jones Industrial Average and 50% short-duration Treasury securities represented by the ICE BofAML 1-Year U.S. Treasury Note Index, which comprises U.S. Treasury securities maturing in approximately one year. |
(13) | The S&P 500 ® Energy Index comprises those companies included in the S&P 500® that are classified in the Energy sector. |
(14) | The Alerian US Midstream Energy Index comprises companies that earn a majority of their cash flow from midstream activities involving energy commodities. |
(15) | The AGA Stock Index is a capitalization-weighted index consisting of members of the American Gas Association whose securities are traded on a U.S. stock exchange. |
(16) | The Russell/Nomura Total Market ™ Index contains the top 98% of all stocks listed on Japan’s stock exchanges and registered on Japan’s over-the-counter |
(17) | The Tokyo Stock Price Index (TOPIX) is a capitalization-weighted index of all of the companies listed on the First Section of the Tokyo Stock Exchange. |
(18) | The Russell/Nomura Small Cap ™ Index contains the bottom 15% of the Russell/Nomura Total Market™ Index based on market capitalization. |
(19) | The Russell 1000 ® Index Financials is a subset of the Russell 1000® Index that measures the performance of the securities classified in the Financials sector of the large-cap U.S. equity market. |
(20) | The Russell 2000 ® Index Financials is a subset of the Russell 2000® Index that measures the performance of the securities classified in the Financials sector of the small-cap U.S. equity market. |
(21) | The NASDAQ Composite Index is a broad-based capitalization-weighted index of all common stocks listed on The Nasdaq Stock Market LLC. |
• | We screen the appropriate universe of stocks with a set of parameters that we believe identifies stocks that will produce higher long-term returns with lower associated risk than their relative indices, and we then introduce the new investment strategy into the marketplace by opening and directly marketing a new mutual fund; |
• | We purchase the assets related to the management of an existing mutual fund that we then manage ourselves; |
• | We purchase the assets related to the management of an existing mutual fund and then engage the existing portfolio managers or strategic firm to act as a sub-advisor to manage the fund; or |
• | We purchase the assets related to the management of an existing mutual fund and then employ the existing portfolio management team to manage the fund. |
Fiscal Years Ended September 30, |
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2021 |
2020 |
2019 |
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(In thousands) |
||||||||||||
Beginning assets under management |
$ | 3,564,597 | $ | 4,873,839 | $ | 6,197,617 | ||||||
Acquisition inflows |
— | — | 194,948 | |||||||||
Organic inflows |
818,358 | 571,195 | 825,541 | |||||||||
Redemptions |
(1,345,371 | ) | (1,771,127 | ) | (2,374,734 | ) | ||||||
Market appreciation (depreciation) |
1,028,338 | (109,310 | ) | 30,467 | ||||||||
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Ending assets under management |
$ | 4,065,922 | $ | 3,564,597 | $ | 4,873,839 | ||||||
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Fiscal Years Ended September 30, |
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2021 |
2020 |
2019 |
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(In thousands) |
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Investment advisory fees |
$ | 30,367 | $ | 30,831 | $ | 39,357 | ||||||
Shareholder service fees |
2,393 | 2,558 | 3,358 | |||||||||
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Subtotal |
32,760 | 33,389 | 42,715 | |||||||||
Sub-advisory fees |
(7,332 | ) | (7,573 | ) | (9,228 | ) | ||||||
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Revenue, net of sub-advisory fees |
$ | 25,428 | $ | 25,816 | $ | 33,487 | ||||||
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• | acting as portfolio manager for the fund or overseeing the sub-advisor acting as portfolio manager for the fund, which includes managing the composition of the fund’s portfolio (including the purchase, retention, and disposition of portfolio securities in accordance with the fund’s investment objectives, policies, and restrictions), seeking best execution for the fund’s portfolio, managing the use of soft dollars for the fund, and managing proxy voting for the fund; |
• | performing a daily reconciliation of portfolio positions and cash for the fund; |
• | monitoring the liquidity of the fund; |
• | monitoring the fund’s compliance with its investment objectives and restrictions and federal securities laws; |
• | maintaining a compliance program (including a code of ethics), conducting ongoing reviews of the compliance programs of the fund’s service providers (including any sub-advisor), including their codes of ethics, as appropriate, conducting onsite visits to the fund’s service providers (including any sub-advisor) as feasible, monitoring incidents of abusive trading practices, reviewing fund expense accruals, payments, and fixed expense ratios, evaluating insurance providers for fidelity bond, directors and officers and errors and omissions insurance, and cybersecurity insurance coverage, managing regulatory examination compliance and responses, conducting employee compliance training, reviewing reports provided by service providers, and maintaining books and records; |
• | if applicable, overseeing the selection and continued employment of the fund’s sub-advisor, reviewing the fund’s investment performance, and monitoring the sub-advisor’s adherence to the fund’s investment objectives, policies, and restrictions; |
• | overseeing service providers that provide accounting, administration, distribution, transfer agency, custodial, sales, marketing, public relations, audit, information technology, and legal services to the fund; |
• | maintaining in-house marketing and distribution departments on behalf of the fund; |
• | preparing or directing the preparation of all regulatory filings for the fund, including writing and annually updating the fund’s prospectus and related documents; |
• | for each annual report of the fund, preparing or reviewing a written summary of the fund’s performance during the most recent 12-month period; |
• | monitoring and overseeing the accessibility of the fund on third-party platforms; |
• | paying the incentive compensation of the fund’s compliance officers and employing other staff such as legal, marketing, national accounts, distribution, sales, administrative, and trading oversight personnel, as well as management executives; |
• | providing a quarterly compliance certification to the Funds’ Board of Trustees; and |
• | preparing or reviewing materials for the Funds’ Board of Trustees, presenting to or leading discussions with the Funds’ Board of Trustees, preparing or reviewing all meeting minutes, and arranging for training and education of the Funds’ Board of Trustees. |
Hennessy Fund (All Class Shares) |
Investment Advisory Fee (as a % of fund assets) |
|||
Hennessy Cornerstone Growth Fund |
0.74 | % | ||
Hennessy Focus Fund |
0.90 | % | ||
Hennessy Cornerstone Mid Cap 30 Fund |
0.74 | % | ||
Hennessy Cornerstone Large Growth Fund |
0.74 | % | ||
Hennessy Cornerstone Value Fund |
0.74 | % | ||
Hennessy Total Return Fund |
0.60 | % | ||
Hennessy Equity and Income Fund |
0.80 | % | ||
Hennessy Balanced Fund |
0.60 | % | ||
Hennessy BP Energy Transition Fund |
1.25 | % | ||
Hennessy BP Midstream Fund |
1.10 | % | ||
Hennessy Gas Utility Fund |
0.40 | % | ||
Hennessy Japan Fund |
0.80 | % | ||
Hennessy Japan Small Cap Fund |
0.80 | % | ||
Hennessy Large Cap Financial Fund |
0.90 | % | ||
Hennessy Small Cap Financial Fund |
0.90 | % | ||
Hennessy Technology Fund |
0.74 | % |
• | acting as portfolio manager for the fund, which includes managing the composition of the fund’s portfolio (including the purchase, retention, and disposition of portfolio securities in accordance with the fund’s investment objectives, policies, and restrictions), seeking best execution for the fund’s portfolio, managing the use of soft dollars for the fund, and managing proxy voting for the fund; |
• | ensuring that its compliance programs include policies and procedures relevant to the fund and the sub-advisor’s duties as a portfolio manager to the fund; |
• | for each annual report of the fund, preparing a written summary of the fund’s performance during the most recent 12-month period; and |
• | providing a quarterly certification to Funds’ Board of Trustees regarding trading and allocation practices, supervisory matters, the sub-advisor’s compliance program (including its code of ethics), compliance with the fund’s policies, and general firm updates. |
Hennessy Fund (All Class Shares) |
Sub-Advisor |
Sub-Advisory Fee(As a % of Fund Assets) | ||
Hennessy Focus Fund | Broad Run Investment Management, LLC | 0.29% | ||
Hennessy Equity and Income Fund |
FCI Advisors (fixed income allocation) |
0.27% | ||
The London Company of Virginia, LLC (equity allocation) |
0.33% | |||
Hennessy BP Energy Transition Fund |
BP Capital Fund Advisors, LLC | 0.40% | ||
Hennessy BP Midstream Fund |
BP Capital Fund Advisors, LLC | 0.40% | ||
Hennessy Japan Fund |
SPARX Asset Management Co., Ltd. | $0-$500 million: 0.35% Above $500 million-$1 billion: 0.40% Above $1 billion: 0.42% | ||
Hennessy Japan Small Cap Fund |
SPARX Asset Management Co., Ltd. | $0-$500 million: 0.35%Above $500 million-$1 billion: 0.40% Above $1 billion: 0.42% |
• |
Seeking to deliver strong investment performance of the Hennessy Funds |
• | result in an increase in the value of existing assets of the Hennessy Funds; |
• | encourage more investors to buy shares of the Hennessy Funds and decrease the number of investors who redeem their shares and leave the Hennessy Funds; and |
• | motivate current investors to invest additional money in the Hennessy Funds. |
• |
Utilizing our branding and marketing campaign to attract assets |
• |
Expanding our distribution network to additional distribution platforms |
• |
Increasing our current base of financial advisors and investment professionals |
• |
Securing participation on the platforms of national full-service firms |
• |
Pursuing strategic purchases of management agreements for additional mutual funds |
• |
Delivering strong, high-quality financial results. |
• | the investment performance of the Hennessy Funds; |
• | the expense ratios of the Hennessy Funds; |
• | the array of our product offerings; |
• | industry rankings of the Hennessy Funds; |
• | the quality of our services; |
• | our ability to further develop and market our brand; |
• | our commitment to placing the interests of investors first; and |
• | our general business reputation. |
ITEM 1A. |
RISK FACTORS |
• | the potential unavailability of attractive acquisition opportunities; |
• | a high level of competition from other companies that may have greater financial resources than we do; |
• | our inability to value potential asset purchases accurately and negotiate acceptable purchase terms; |
• | our inability to obtain quorum and secure enough affirmative votes to gain approval of the proposed fund reorganization from the target fund’s shareholders; |
• | the loss of mutual fund assets paid for in an asset purchase through redemptions by shareholders of the mutual funds involved in the asset purchase; |
• | higher than anticipated asset purchase expenses; |
• | our inability to successfully integrate and maintain adequate infrastructure to support business growth; |
• | increasing our leverage; |
• | the potential diversion of our management’s time and attention; |
• | dilution to our shareholders if we fund an asset purchase in whole or in part with our common stock; and |
• | adverse effects on our earnings if purchased intangible assets become impaired. |
ITEM 2. |
PROPERTIES. |
ITEM 3. |
LEGAL PROCEEDINGS. |
ITEM 4. |
MINE SAFETY DISCLOSURES. |
ITEM 5. |
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES |
Period |
Total Number of Shares Purchased |
Average Price Paid per Share |
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1) |
||||||||||||
July 1-31, 2021 |
— | $ | — | — | 596,368 | |||||||||||
August 1-31, 2021 (2) |
2,490 | 10.00 | — | 596,368 | ||||||||||||
September 1-30, 2021 (2) |
30,002 | 9.91 | — | 596,368 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
32,492 | $ | 9.92 | — | 596,368 | |||||||||||
|
|
|
|
|
|
|
|
(1) | We are authorized to purchase a maximum of 1,500,000 shares under our stock buyback program. We announced the stock buyback program in August 2010, and the program has no expiration date. We temporarily suspended the stock buyback program as of March 24, 2020, so we did not repurchase any shares pursuant to the stock buyback program during the three months ended September 30, 2021. |
(2) | The shares that we repurchased in August and September 2021 are not subject to a maximum per plan or program because we did not repurchase them pursuant to a plan or program. |
ITEM 7. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Fiscal Years Ended September 30, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
(In thousands) |
||||||||||||
Beginning assets under management |
$ | 3,564,597 | $ | 4,873,839 | $ | 6,197,617 | ||||||
Acquisition inflows |
— | — | 194,948 | |||||||||
Organic inflows |
818,358 | 571,195 | 825,541 | |||||||||
Redemptions |
(1,345,371 | ) | (1,771,127 | ) | (2,374,734 | ) | ||||||
Market appreciation (depreciation) |
1,028,338 | (109,310 | ) | 30,467 | ||||||||
|
|
|
|
|
|
|||||||
Ending assets under management |
$ | 4,065,922 | $ | 3,564,597 | $ | 4,873,839 | ||||||
|
|
|
|
|
|
Fiscal Years Ended September 30, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
(In thousands) |
||||||||||||
Average assets under management—Investor Class |
$ | 2,394,194 | $ | 2,556,875 | $ | 3,357,813 | ||||||
Average assets under management—Institutional Class |
1,595,106 | 1,541,529 | 1,826,929 | |||||||||
|
|
|
|
|
|
|||||||
Total |
$ | 3,989,300 | $ | 4,098,404 | $ | 5,184,742 | ||||||
|
|
|
|
|
|
Fiscal Years Ended September 30, |
||||||||||||||||
2021 |
2020 |
|||||||||||||||
Amounts |
Percent of Total Revenue |
Amounts |
Percent of Total Revenue |
|||||||||||||
(In thousands, except percentages) |
||||||||||||||||
Revenue |
||||||||||||||||
Investment advisory fees |
$ | 30,367 | 92.7 | % | $ | 30,831 | 92.3 | % | ||||||||
Shareholder service fees |
2,393 | 7.3 | 2,558 | 7.7 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total revenue |
32,760 | 100.0 | 33,389 | 100.0 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating expenses |
||||||||||||||||
Compensation and benefits |
9,078 | 27.7 | 8,820 | 26.4 | ||||||||||||
General and administrative |
4,754 | 14.5 | 4,961 | 14.9 | ||||||||||||
Mutual fund distribution |
485 | 1.5 | 477 | 1.4 | ||||||||||||
Sub-advisory fees |
7,332 | 22.4 | 7,573 | 22.7 | ||||||||||||
Depreciation |
232 | 0.7 | 239 | 0.7 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
21,881 | 66.8 | 22,070 | 66.1 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating income |
10,879 | 33.2 | 11,319 | 33.9 | ||||||||||||
Interest expense |
— | — | 447 | 1.3 | ||||||||||||
Other income |
(2 | ) | (0.0 | ) | (89 | ) | (0.2 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Income before income tax expense |
10,881 | 33.2 | 10,961 | 32.8 | ||||||||||||
Income tax expense |
2,979 | 9.1 | 3,120 | 9.3 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income |
$ | 7,902 | 24.1 | % | $ | 7,841 | 23.5 | % | ||||||||
|
|
|
|
|
|
|
|
Fiscal Year Ended September 30, 2021 | ||
Fund Name |
Amount | |
Hennessy Japan Fund |
$ 42 million | |
Hennessy Small Cap Financial Fund |
$ 35 million | |
Hennessy Japan Small Cap Fund |
$ 13 million |
Fiscal Year Ended September 30, 2021 |
||||
Fund Name |
Amount |
|||
Hennessy Focus Fund |
$ | (339) million | ||
Hennessy Gas Utility Fund |
$ | (134) million | ||
Hennessy Cornerstone Mid Cap 30 Fund |
$ | (76) million |
Fiscal Years Ended September 30, |
||||||||
2021 |
2020 |
|||||||
(In thousands) |
||||||||
Net cash provided by operating activities |
$ | 10,386 | $ | 10,623 | ||||
Net cash used in investing activities |
(249 | ) | (882 | ) | ||||
Net cash used in financing activities |
(4,256 | ) | (24,473 | ) | ||||
|
|
|
|
|||||
Net increase (decrease) in cash and cash equivalents |
$ | 5,881 | $ | (14,732) | ||||
|
|
|
|
ITEM 8. |
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
40 | ||||
42 | ||||
43 | ||||
44 | ||||
45 | ||||
46 |
/s/ Marcum LLP | ||
Marcum LLP |
Hennessy Advisors, Inc. |
||||||||
Balance Sheets |
||||||||
(In thousands, except share and per share amounts) |
||||||||
September 30, |
||||||||
2021 |
2020 |
|||||||
Assets |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Investments in marketable securities, at fair value |
||||||||
Investment fee income receivable |
||||||||
Prepaid expenses |
||||||||
Other accounts receivable |
||||||||
|
|
|
|
|||||
Total current assets |
||||||||
|
|
|
|
|||||
Property and equipment, net of accumulated depreciation of $ |
||||||||
Operating lease right-of-use |
||||||||
Management contracts |
||||||||
Other assets |
||||||||
|
|
|
|
|||||
Total assets |
$ | $ | ||||||
|
|
|
|
|||||
Liabilities and Stockholders’ Equity |
||||||||
Current liabilities |
||||||||
Accrued liabilities and accounts payable |
$ | $ | ||||||
Operating lease liability |
||||||||
Income taxes payable |
||||||||
|
|
|
|
|||||
Total current liabilities |
||||||||
|
|
|
|
|||||
Long-term operating lease liability |
— | |||||||
Net deferred income tax liability |
||||||||
|
|
|
|
|||||
Total liabilities |
||||||||
|
|
|
|
|||||
Commitments and contingencies (Note 10) |
||||||||
Stockholders’ equity |
||||||||
Common stock, |
||||||||
Retained earnings |
||||||||
|
|
|
|
|||||
Total stockholders’ equity |
||||||||
|
|
|
|
|||||
Total liabilities and stockholders’ equity |
$ |
$ |
||||||
|
|
|
|
|||||
See Accompanying Notes to Financial Statements |
Hennessy Advisors, Inc. |
||||||||
Statements of Income |
||||||||
(In thousands, except share and per share amounts) |
Fiscal Years Ended September 30, |
||||||||
2021 |
2020 |
|||||||
Revenue |
||||||||
Investment advisory fees |
$ | $ | ||||||
Shareholder service fees |
||||||||
|
|
|
|
|||||
Total revenue |
||||||||
|
|
|
|
|||||
Operating expenses |
||||||||
Compensation and benefits |
||||||||
General and administrative |
||||||||
Mutual fund distribution |
||||||||
Sub-advisory fees |
||||||||
Depreciation |
||||||||
|
|
|
|
|||||
Total operating expenses |
||||||||
|
|
|
|
|||||
Net operating income |
||||||||
Interest expense |
— | |||||||
Other income |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Income before income tax expense |
||||||||
Income tax expense |
||||||||
|
|
|
|
|||||
Net income |
$ | $ | ||||||
|
|
|
|
|||||
Earnings per share |
||||||||
Basic |
$ | $ | ||||||
|
|
|
|
|||||
Diluted |
$ | $ | ||||||
|
|
|
|
|||||
Weighted average shares outstanding |
||||||||
Basic |
||||||||
|
|
|
|
|||||
Diluted |
||||||||
|
|
|
|
|||||
Cash dividends declared per share |
$ | $ | ||||||
|
|
|
|
Common Stock |
Retained |
Total Stockholders’ |
||||||||||||||
Shares |
Amount |
Earnings |
Equity |
|||||||||||||
Balance at September 30, 2019 |
$ | $ | $ | |||||||||||||
Net income |
— | — | ||||||||||||||
Dividends paid |
— | — | ( |
) | ( |
) | ||||||||||
Employee and director restricted stock vested |
— | — | — | |||||||||||||
Repurchase of vested employee restricted stock for tax withholding |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Shares issued for auto-investments pursuant to the 2018 Dividend Reinvestment and Stock Purchase Plan |
— | |||||||||||||||
Shares issued for dividend reinvestment pursuant to the 2018 Dividend Reinvestment and Stock Purchase Plan |
— | |||||||||||||||
Shares repurchased pursuant to a stock buyback program |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Stock-based compensation |
— | — | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at September 30, 2020 |
$ | $ | $ | |||||||||||||
Net income |
— | — | ||||||||||||||
Dividends paid |
— | — | ( |
) | ( |
) | ||||||||||
Employee and director restricted stock vested |
— | — | — | |||||||||||||
Repurchase of vested employee restricted stock for tax withholding |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Shares issued for auto-investments pursuant to the 2018 Dividend Reinvestment and Stock Purchase Plan |
— | |||||||||||||||
Shares issued for dividend reinvestment pursuant to the 2018 Dividend Reinvestment and Stock Purchase Plan |
— | |||||||||||||||
Shares issued for auto-investments pursuant to the 2021 Dividend Reinvestment and Stock Purchase Plan |
— | |||||||||||||||
Shares issued for dividend reinvestment pursuant to the 2021 Dividend Reinvestment and Stock Purchase Plan |
— | |||||||||||||||
Stock-based compensation |
— | — | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at September 30, 2021 |
$ | $ | $ | |||||||||||||
|
|
|
|
|
|
|
|
Fiscal Years Ended September 30, |
||||||||
2021 |
2020 |
|||||||
Cash flows from operating activities |
||||||||
Net income |
$ | $ | ||||||
Adjustments to reconcile net income to net cash provided by operating activities |
||||||||
Depreciation |
||||||||
Change in right-of-use |
( |
) | ( |
) | ||||
Deferred income taxes |
||||||||
Deferred offering costs |
( |
) | — | |||||
Stock-based compensation |
||||||||
Unrealized gains on marketable securities |
( |
) | — | |||||
Interest expense associated with debt issuance cost |
— | |||||||
Change in operating assets and liabilities: |
||||||||
Investment fee income receivable |
( |
) | ||||||
Prepaid expenses |
( |
) | ( |
) | ||||
Other accounts receivable |
||||||||
Other assets |
( |
) | ||||||
Accrued liabilities and accounts payable |
( |
) | ||||||
Income taxes payable |
||||||||
|
|
|
|
|||||
Net cash provided by operating activities |
||||||||
|
|
|
|
|||||
Cash flows from investing activities |
||||||||
Purchases of property and equipment |
( |
) | ( |
) | ||||
Payments related to management contracts |
— | ( |
) | |||||
|
|
|
|
|||||
Net cash used in investing activities |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Cash flows from financing activities |
||||||||
Principal payments on bank loan |
— | ( |
) | |||||
Shares repurchased pursuant to stock buyback program |
— | ( |
) | |||||
Repurchase of vested employee restricted stock for tax withholding |
( |
) | ( |
) | ||||
Proceeds from shares issued pursuant to the 2018 Dividend Reinvestment and Stock Repurchase Plan |
||||||||
Proceeds from shares issued pursuant to the 2021 Dividend Reinvestment and Stock Repurchase Plan |
— | |||||||
Dividend payments |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Net cash used in financing activities |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Net increase (decrease) in cash and cash equivalents |
( |
) | ||||||
Cash and cash equivalents at the beginning of the period |
||||||||
|
|
|
|
|||||
Cash and cash equivalents at the end of the period |
$ | $ | ||||||
|
|
|
|
|||||
Supplemental disclosures of cash flow information |
||||||||
Cash paid for income taxes |
$ | $ | ||||||
Cash paid for interest |
$ | — | $ |
(1) |
Organization and Description of Business and Significant Accounting Policies |
(a) |
Organization and Description of Business |
• |
acting as portfolio manager for the fund or overseeing the sub-advisor acting as portfolio manager for the fund, which includes managing the composition of the fund’s portfolio (including the purchase, retention, and disposition of portfolio securities in accordance with the fund’s investment objectives, policies, and restrictions), seeking best execution for the fund’s portfolio, managing the use of soft dollars for the fund, and managing proxy voting for the fund; |
• |
performing a daily reconciliation of portfolio positions and cash for the fund; |
• |
monitoring the liquidity of the fund; |
• |
monitoring the fund’s compliance with its investment objectives and restrictions and federal securities laws; |
• |
maintaining a compliance program (including a code of ethics), conducting ongoing reviews of the compliance programs of the fund’s service providers (including any sub-advisor), including their codes of ethics, as appropriate, conducting onsite visits to the fund’s service providers (including any sub-advisor) as feasible, monitoring incidents of abusive trading practices, reviewing fund expense accruals, payments, and fixed expense ratios, evaluating insurance providers for fidelity bond, directors and officers and errors and omissions insurance, and cybersecurity insurance coverage, managing regulatory examination compliance and responses, conducting employee compliance training, reviewing reports provided by service providers, and maintaining books and records; |
• |
if applicable, overseeing the selection and continued employment of the fund’s sub-advisor, reviewing the fund’s investment performance, and monitoring the sub-advisor’s adherence to the fund’s investment objectives, policies, and restrictions; |
• |
overseeing service providers that provide accounting, administration, distribution, transfer agency, custodial, sales, marketing, public relations, audit, information technology, and legal services to the fund; |
• |
maintaining in-house marketing and distribution departments on behalf of the fund; |
• |
preparing or directing the preparation of all regulatory filings for the fund, including writing and annually updating the fund’s prospectus and related documents; |
• |
for each annual report of the fund, preparing or reviewing a written summary of the fund’s performance during the most recent 12-month period; |
• |
monitoring and overseeing the accessibility of the fund on third-party platforms; |
• |
paying the incentive compensation of the fund’s compliance officers and employing other staff such as legal, marketing, national accounts, distribution, sales, administrative, and trading oversight personnel, as well as management executives; |
• |
providing a quarterly compliance certification to the Board of Trustees of Hennessy Funds Trust (the “Funds’ Board of Trustees”); and |
• |
preparing or reviewing materials for the Funds’ Board of Trustees, presenting to or leading discussions with the Funds’ Board of Trustees, preparing or reviewing all meeting minutes, and arranging for training and education of the Funds’ Board of Trustees. |
(b) |
Cash and Cash Equivalents |
(c) |
Fair Value of Financial Instruments |
(d) | Investments |
(e) |
Property and Equipment |
(f) |
Management Contracts Purchase d |
(g) |
Income Taxes |
Year |
Number of State Tax Jurisdictions |
|||
2021 |
||||
2020 |
||||
2019 |
||||
2018 |
||||
2017 |
(h) |
Earnings per Share |
(i) |
Equity |
Fiscal Years Ended September 30, |
||||||||||||||||
2021 |
2020 |
|||||||||||||||
Shares |
Weighted Average Grant Date Fair Value per Share |
Shares |
Weighted Average Grant Date Fair Value per Share |
|||||||||||||
Non-vested balance at beginning of year |
$ | $ | ||||||||||||||
Granted |
||||||||||||||||
Vested (1) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Forfeited |
— |
— |
||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Non-vested balance at end of year |
$ | $ | ||||||||||||||
|
|
|
|
|
|
|
|
(1) |
Represents partially vested RSUs for which the Company already has recognized the associated compensation expense but has not yet issued to employees the related shares of common stock. |
September 30, 2021 |
||||
(In thousands, except years) |
||||
Total expected compensation expense related to RSUs |
$ | |||
Recognized compensation expense related to RSUs |
( |
) | ||
|
|
|||
Unrecognized compensation expense related to RSUS |
$ | |||
|
|
|||
Weighted average remaining period to expense for RSUs |
(j) |
Use of Estimates |
(2) |
Fair Value Measurements |
• |
Level 1 – Unadjusted, quoted prices in active markets for identical assets or liabilities that an entity has the ability to access at the measurement date; |
• |
Level 2 – Other significant observable inputs (including, but not limited to, quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets); and |
• |
Level 3 – Significant unobservable inputs (including the entity’s own assumptions about what market participants would use to price the asset or liability based on the best available information) when observable inputs are not available. |
September 30, 2021 |
||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
(In thousands) |
||||||||||||||||
Money market fund deposits |
$ | $ | — | $ | — | $ | |
|||||||||
Mutual fund investments |
— | — | ||||||||||||||
Total |
$ | $ | — | $ | — | $ | ||||||||||
Amounts included in |
||||||||||||||||
Cash and cash equivalents |
$ | |
$ | — | $ | — | $ | |||||||||
Investments in marketable securities |
— | — | ||||||||||||||
Total |
$ | $ | — | $ | — | $ | ||||||||||
September 30, 2020 |
||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
(In thousands) |
||||||||||||||||
Money market fund deposits |
$ | |
$ | — | $ | — | $ | |
||||||||
Mutual fund investments |
— | — | ||||||||||||||
Total |
$ | $ | — | $ | — | $ | ||||||||||
Amounts included in |
||||||||||||||||
Cash and cash equivalents |
$ | $ | — | $ | — | $ | ||||||||||
Investments in marketable securities |
— | — | ||||||||||||||
Total |
$ | $ | — | $ | — | $ | ||||||||||
(3) |
Investments |
Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Total |
|||||||||||||
(In thousands) |
||||||||||||||||
2021 |
||||||||||||||||
Mutual fund investments |
$ | |
$ | |
$ | ( |
) | $ | |
|||||||
Total |
( |
) | ||||||||||||||
2020 |
||||||||||||||||
Mutual fund investments |
$ | $ | $ | ( |
) | $ | ||||||||||
Total |
( |
) | ||||||||||||||
(4) | Property and Equipment, Net |
September 30, |
||||||||
2021 |
2020 |
|||||||
(In thousands) |
||||||||
Equipment |
$ | $ | ||||||
Leasehold improvements |
||||||||
Furniture and fixtures |
||||||||
IT infrastructure |
||||||||
Software |
||||||||
Property and equipment, gross |
||||||||
Accumulated depreciation |
( |
) | ( |
) | ||||
Property and equipment, net |
$ | $ | ||||||
(5) |
Management Contracts |
(6) |
Investment Advisory Agreements |
(7) |
Leases |
September 30, 2021 |
||||
(In thousands, except years and percentages) |
||||
Operating lease right-of-use |
$ | |
||
Current operating lease liability |
$ | |||
Long-term operating lease liability |
$ | |||
Weighted average remaining lease term |
||||
Weighted average discount rate |
% |
September 30, 2021 |
||||
(In thousands) |
||||
Fiscal year 2022 undiscounted cash flows |
||||
Fiscal year 2023 |
||||
Fiscal year 2024 |
||||
|
|
|||
Total undiscounted cash flows |
||||
|
|
|||
Present value discount |
( |
) | ||
|
|
|||
Total operating lease liabilities |
$ | |
||
|
|
(8) |
Accrued Liabilities and Accounts Payable |
September 30 |
||||||||
2021 |
2020 |
|||||||
(In thousands) |
||||||||
Accrued bonus liabilities |
$ | |
$ | |
||||
Accrued sub-advisor fees |
||||||||
Other accrued expenses |
||||||||
|
|
|
|
|||||
Total accrued expenses |
$ | $ | ||||||
|
|
|
|
(9) | Bank Loan |
(10) | Commitments and Contingencies |
(11) | Retirement Plan |
(12) | Income Taxes |
Fiscal Years Ended September 30, |
||||||||
2021 |
2020 |
|||||||
(In thousands) |
||||||||
Beginning year balance |
$ | |
$ | |
||||
Decrease related to prior year tax positions |
||||||||
Increase related to current year tax positions |
||||||||
Settlements |
||||||||
Lapse of statutes of limitations |
||||||||
Ending year balance |
$ | $ | ||||||
Fiscal Years Ended September 30, |
||||||||
2021 |
2020 |
|||||||
(In thousands) |
||||||||
Current |
||||||||
Federal |
$ | |
$ | |
||||
State |
||||||||
Total Current |
||||||||
Deferred |
||||||||
Federal |
||||||||
State |
||||||||
Total Deferred |
||||||||
Total |
$ | $ | ||||||
Fiscal Years Ended September 30, |
||||||||
2021 |
2020 |
|||||||
Federal statutory income tax rate |
% | % | ||||||
State income taxes, net of federal benefit |
||||||||
Permanent and other differences |
||||||||
Difference due to executive compensation |
||||||||
Tax return to provision adjustments |
( |
) | ||||||
Uncertain tax position allowance |
||||||||
Stock-based compensation |
||||||||
Effective income tax rate |
% | % | ||||||
Fiscal Years Ended September 30, |
||||||||
2021 |
2020 |
|||||||
(In thousands) |
||||||||
Deferred tax assets |
||||||||
Accrued compensation |
$ | $ | ||||||
Stock compensation |
||||||||
State taxes |
||||||||
Capital loss carryforward |
||||||||
ROU asset/lease liability |
( |
) | ||||||
Gross deferred tax assets |
||||||||
Disallowed capital loss |
( |
) | ( |
) | ||||
Net deferred tax assets |
||||||||
Deferred tax liabilities |
||||||||
Property and equipment |
( |
) | ( |
) | ||||
Management contracts |
( |
) | ( |
) | ||||
Total deferred tax liabilities |
( |
) | ( |
) | ||||
Net deferred tax liabilities |
$ | ( |
) | $ | ( |
) | ||
(13) |
Earnings per Share |
September 30, |
||||||||
2021 |
2020 |
|||||||
Weighted average common stock outstanding, basic |
||||||||
Dilutive impact of RSUs |
||||||||
Weighted average common stock outstanding, diluted |
||||||||
(14) |
Concentration of Credit Risk |
(15) |
Recently Issued and Adopted Accounting Standards |
(16) |
Subsequent Events |
ITEM 9. |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
ITEM 9A. |
CONTROLS AND PROCEDURES |
ITEM 9B. |
OTHER INFORMATION |
ITEM 9C. |
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS |
ITEM 10. |
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE |
ITEM 11. |
EXECUTIVE COMPENSATION |
ITEM 12. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
September 30, 2021 |
||||||||||||
Plan Category |
Number of Securities to Be Issued upon Exercise of Outstanding Options, Warrants, and Rights |
Weighted-Average Exercise Price of Outstanding Options, Warrants, and Rights |
Number of Securities Remaining for Issuance Under Compensation Plans (2) |
|||||||||
Equity compensation plans approved by security holders (1) |
328,150 | — | 1,352,012 | |||||||||
Equity compensation plans not approved by security holders |
— | — | — | |||||||||
|
|
|
|
|
|
|||||||
Total |
328,150 | — | 1,352,012 | |||||||||
|
|
|
|
|
|
(1) | Securities to be issued pursuant to outstanding RSUs that vest over four years at a rate of 25% per year, for which the weighted average exercise price is zero. |
(2) | Excludes securities to be issued upon the vesting of outstanding RSUs. The maximum number of shares of common stock that may be issued under the Omnibus Plan is 50% of our outstanding common stock, or 3,734,792 shares, as of the end of fiscal year 2021. |
ITEM 13. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE |
ITEM 14. |
PRINCIPAL ACCOUNTANT FEES AND SERVICES |
ITEM 15. |
EXHIBIT AND FINANCIAL STATEMENT SCHEDULES |
31.2 | Rule 13a-14a Certification of the Principal Financial Officer | |
32.1 | Written Statement of the Principal Executive Officer, Pursuant to 18 U.S.C. § 1350 | |
32.2 | Written Statement of the Principal Financial Officer, Pursuant to 18 U.S.C. § 1350 | |
101 | Financial statements from the Annual Report on Form 10-K of the registrant for the year ended September 30, 2021, filed on November 24, 2021, formatted in XBRL: (i) the Balance Sheets; (ii) the Statements of Income and Comprehensive Income; (iii) the Statements of Changes in Stockholders’ Equity; (iv) the Statements of Cash Flows; and (v) the Notes to Financial Statements. | |
104 | The Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document). |
* | The related schedules to the agreement are not being filed herewith. The registrant agrees to furnish supplementally a copy of any such schedules to the Securities and Exchange Commission upon request. |
(1) | Management contract or compensatory plan or arrangement. |
(2) | Incorporated by reference from the Company’s Form SB-2 registration statement (SEC File No. 333-66970) filed August 6, 2001. |
(3) | Incorporated by reference from the Company’s Form 10-K for the fiscal year ended September 30, 2009 (SEC File No. 000-49872), filed December 4, 2009. |
(4) | Incorporated by reference from the Company’s Form 10-Q for the quarter ended December 31, 2012 (SEC File No. 000-49872), filed January 17, 2013. |
(5) | Incorporated by reference from the Company’s Current Report on Form 8-K (SEC File No. 000-49872) filed September 18, 2013. |
(6) | Incorporated by reference to Annex A of the Company’s definitive proxy statement on Schedule 14A for the Company’s Special Meeting of Shareholders held on March 26, 2015 (SEC File No. 000-49872), filed February 21, 2014. |
(7) | Incorporated by reference from the Company’s Form 10-Q for the quarter ended June 30, 2014 (SEC File No. 001-36423), filed August 6, 2014. |
(8) | Incorporated by reference from the Company’s Form 10-K for the fiscal year ended September 30, 2015 (SEC File No. 001-36423), filed November 30, 2015. |
(9) | Incorporated by reference from the Company’s Current Report on Form 8-K (SEC File No. 001-36423) filed October 13, 2016. |
(10) | Incorporated by reference from the Company’s Form 10-K for the fiscal year ended September 30, 2016 (SEC File No. 001-36423), filed December 1, 2016. |
(11) | Incorporated by reference from the Company’s Current Report on Form 8-K (SEC File No. 001-36423) filed March 7, 2017. |
(12) | Incorporated by reference from the Company’s Current Report on Form 8-K (SEC File No. 001-36423) filed May 11, 2017. |
(13) | Incorporated by reference from the Company’s Current Report on Form 8-K (SEC File No. 001-36423) filed January 25, 2018. |
(14) | Incorporated by reference from the Company’s Form 10-Q for the quarter ended March 31, 2018 (SEC File No. 001-36423), filed May 2, 2018. |
(15) | Incorporated by reference from the Company’s Form 10-K for the fiscal year ended September 30, 2018 (SEC File No. 001-36423), filed November 28, 2018. |
(16) | Incorporated by reference from the Company’s Current Report on Form 8-K (SEC File No. 001-36423) filed February 25, 2019. |
(17) | Incorporated by reference from the Company’s Current Report on Form 8-K (SEC File No. 001-36423), filed October 20, 2021. |
ITEM 16. |
FORM 10-K SUMMARY |
Date: | November 24, 2021 | |||||
By: | /s/ Teresa M. Nilsen |
|||||
Teresa M. Nilsen | ||||||
President, Chief Operating Officer, and Director | ||||||
(As a duly authorized officer on behalf of the registrant and as | ||||||
Principal Executive Officer) |
By: |
/s/ Kathryn R. Fahy |
Date: | November 24, 2021 | |||
Kathryn R. Fahy | ||||||
Chief Financial Officer and Senior Vice President | ||||||
(Principal Financial and Accounting Officer) | ||||||
By: | /s/ Neil J. Hennessy |
Date: | November 24, 2021 | |||
Neil J. Hennessy | ||||||
Chief Executive Officer and Chairman of the Board of Directors | ||||||
By: | /s/ Daniel B. Steadman |
Date: | November 24, 2021 | |||
Daniel B. Steadman | ||||||
Executive Vice President and Director | ||||||
By: | /s/ Henry Hansel |
Date: | November 24, 2021 | |||
Henry Hansel | ||||||
Director | ||||||
By: | /s/ Brian A. Hennessy |
Date: | November 24, 2021 | |||
Brian A. Hennessy | ||||||
Director | ||||||
By: | /s/ Daniel G. Libarle |
Date: | November 24, 2021 | |||
Daniel G. Libarle | ||||||
Director | ||||||
By: | /s/ Rodger Offenbach |
Date: | November 24, 2021 | |||
Rodger Offenbach | ||||||
Director | ||||||
By: | /s/ Susan W. Pomilia |
Date: | November 24, 2021 | |||
Susan W. Pomilia | ||||||
Director | ||||||
By: | /s/ Thomas L. Seavey |
Date: | November 24, 2021 | |||
Thomas L. Seavey | ||||||
Director |
Exhibit 4.1
DESCRIPTION OF THE REGISTRANTS SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934
Hennessy Advisors, Inc. (the Company, we, our, or us) has one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the Exchange Act), common stock, no par value per share (Common Stock).
DESCRIPTION OF COMMON STOCK
The following is a description of the rights of the Common Stock and related provisions of the Companys Amended and Restated Articles of Incorporation (the Articles) and Fifth Amended and Restated Bylaws (the Bylaws) and applicable California law. This description is qualified in its entirety by, and should be read in conjunction with, the Articles, Bylaws, and applicable California law.
Common Stock
The Company is authorized to issue up to 22,500,000 shares of Common Stock.
Fully Paid and Nonassessable
All of the outstanding shares of Common Stock are fully paid and nonassessable.
Voting Rights
The holders of shares of Common Stock are entitled to one vote per share on all matters to be voted on by such holders. Holders of shares of Common Stock are not entitled to cumulative voting rights.
Dividends
Subject to preferences to which holders of any preferred stock the Company may issue may be entitled, the holders of shares of Common Stock are entitled to receive such dividends, if any, as may be declared from time to time by the Companys Board of Directors, in its discretion, from funds legally available therefor.
Right to Receive Liquidation Distributions
In the event of a liquidation, dissolution, or winding up of the Company, holders of shares of Common Stock would be entitled to share in the Companys assets remaining after the payment of liabilities and the satisfaction of any liquidation preference granted to the holders of any outstanding shares of preferred stock. The rights, preferences, and privileges of the holders of shares of Common Stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that the Company may issue in the future.
No Preemptive or Similar Rights
Common Stock has no preemptive or other subscription rights, and there are no conversion rights or redemption or sinking fund provisions with respect to shares of Common Stock.
Anti-Takeover Provisions of the Bylaws and California Law
Provisions of the Bylaws may delay or discourage transactions involving an actual or potential change in control of the Company or change in its management, including transactions in which shareholders might otherwise receive a premium for their shares or transactions that its shareholders might otherwise deem to be in their best interests. Among other things, the Bylaws:
| provide that, except for a vacancy caused by the removal of a director as provided in the Bylaws, a vacancy on the Companys Board of Directors may be filled by a person selected by a majority of the remaining directors then in office, whether or not less than a quorum, or by a sole remaining director; and |
| provide that shareholders seeking to present proposals before a meeting of shareholders or to nominate candidates for election as directors at a meeting of shareholders must provide advance notice in writing in a timely manner. |
In addition, as a California corporation, the Company is subject to the provisions of Section 1203 of the California General Corporation Law, which requires the Company to provide a fairness opinion to its shareholders in connection with their consideration of certain proposed interested party reorganization transactions.
Listing
The Companys Common Stock is listed on The Nasdaq Stock Market LLC under the trading symbol HNNA.
DESCRIPTION OF THE NOTES
The following description of our 4.875% notes due 2026 (the Notes) summarizes certain material terms of the Notes. This description is qualified in its entirety by reference to the base indenture (as defined below) and supplemental indenture (as defined below), which are filed as exhibits to the Annual Report on Form 10-K of which this Exhibit 4.1 is a part.
The Notes were issued under, and are governed by, an indenture, dated as of October 20, 2021 (the base indenture), as supplemented by the first supplemental indenture, dated as of October 20, 2021 (the supplemental indenture), entered into between us and U.S. Bank National Association, as trustee (the trustee) (the base indenture, together with the supplemental indenture, the indenture).
General, Principal and Interest
On October 20, 2021, we completed a public offering of $40,250,000 aggregate principal amount of the 2026 Notes. The Notes mature on December 31, 2026. The principal payable at maturity will be 100% of the aggregate principal amount. The interest rate of the Notes is 4.875% per year and will be paid every March 31, June 30, September 30, and December 31, beginning December 31, 2021, and the regular record dates for interest payments will be every March 15, June 15, September 15, and December 15 beginning December 15, 2021. If an interest payment date falls on a non-business day, the applicable interest payment will be made on the next business day and no additional interest will accrue as a result of such delayed payment. The initial interest period will be the period from and including October 20, 2021, to, but excluding, the initial interest payment date, and the subsequent interest periods will be the periods from and including an interest payment date to, but excluding, the next interest payment date or the stated maturity date, as the case may be.
The indenture does not limit the amount of debt (including secured debt) that may be issued by us or our subsidiaries under the indenture or otherwise, but does contain a covenant regarding our maintenance of a certain net consolidated debt to equity ratio. See Covenants below. Other than restrictions described under Merger or Consolidation below, the indenture does not contain any covenants or other provisions designed to afford holders of the Notes protection in the event of a highly leveraged transaction involving us or if our credit rating declines as the result of a takeover, recapitalization, highly leveraged transaction, or similar restructuring involving us.
Covenants
In addition to standard covenants relating to payment of principal and interest, maintaining an office where payments may be made or securities can be surrendered for payment, and related matters, the following covenants apply to the Notes:
| If, at any time, we are not subject to the reporting requirements of Sections 13 or 15(d) of the Exchange Act to file any periodic reports with the SEC, we agree to furnish to holders of the Notes and the trustee, for the period of time during which the Notes are outstanding, our audited annual consolidated financial statements, within 90 days of our fiscal year end, and unaudited interim consolidated financial statements, within 45 days of our fiscal quarter end (other than our fourth fiscal quarter). All such financial statements will be prepared, in all material respects, in accordance with GAAP. GAAP means generally accepted accounting principles in effect from time to time in the United States; provided, notwithstanding the foregoing, if any change in such generally accepted accounting principles or in the application thereof after the issue date would affect the computation of any financial ratio or requirement set forth in the Notes or the indenture, then we may deliver notice to the trustee that such change will not apply for any determinations thereafter under the Notes or the indenture. |
| We agree to not permit the Net Consolidated Debt to Equity Ratio, measured as of the last day of each fiscal quarter, to be greater than 2 to 1. Net Consolidated Debt to Equity Ratio means the ratio of Net Consolidated Debt to our total shareholders equity as shown on our most recent consolidated balance sheet. Net Consolidated Debt means, as of any determination date, without duplication, an amount equal to (a) the aggregate principal amount of outstanding indebtedness for borrowed money of us and our subsidiaries, plus (b) Capital Lease Obligations we and/or our subsidiaries may have outstanding as of such date, minus (c) the aggregate amount of cash and cash equivalents included on our most recent consolidated balance sheet; provided that the cash proceeds of any proposed incurrence of indebtedness shall not be included in this clause (c) for purposes of calculating Net Consolidated Debt; provided further that Net Consolidated Debt shall not include (1) any indebtedness that has been defeased, discharged, and/or redeemed, provided that funds in an amount equal to all such indebtedness (including interest and any other amounts required to be paid to the holders thereof in order to give effect to such defeasance, discharge or redemption) have been irrevocably deposited with a trustee or agent for the benefit of the relevant holders of such indebtedness, (2) interest, fees, make-whole amounts, premium, charges, or expenses, if any, relating to the principal amount of Net Consolidated Debt, and (3) any indebtedness owing to us by any subsidiary or any indebtedness owing to any subsidiary by us or another subsidiary. Capital Lease Obligation means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) in accordance with GAAP; provided that obligations of us or any subsidiaries we may acquire or establish in the future, or of a special purpose or other entity not consolidated with us and any subsidiaries we may acquire or establish in the future that (x) initially were not included on our consolidated balance sheet as capital lease obligations and were subsequently characterized as capital lease obligations or, in the case of such a special purpose or other entity becoming consolidated with us and our subsidiaries were required to be characterized as capital lease obligations upon such consolidation, in either case, due to a change in accounting treatment or otherwise, or (y) did not exist on the issue date and were required to be characterized as capital lease obligations but would not have been required to be treated as capital lease obligations on the issue date had they existed at that time, shall for all purposes not be treated as Capital Lease Obligations; provided further, notwithstanding the foregoing, Capital Lease Obligations shall not include obligations relating to a lease that was (or would be) classified and accounted for by us and our subsidiaries as an operating lease under GAAP as in effect prior to the effectiveness of Accounting Standards Codification 842. |
Optional Redemption
The Notes may be redeemed in whole or in part at any time or from time to time at our option on or after December 31, 2023, upon not less than 30 days nor more than 60 days written notice by mail prior to the date fixed for redemption thereof, at a redemption price of 100% of the outstanding principal amount of the Notes to be redeemed plus accrued and unpaid interest payments otherwise payable thereon for the then-current quarterly interest period accrued to, but excluding, the date fixed for redemption.
If we redeem only some of the Notes, the trustee or, with respect to global securities, DTC, will determine the method for selection of the particular Notes to be redeemed, in accordance with the indenture and in accordance with the rules of any national securities exchange or quotation system on which the Notes are listed. Unless we default in payment of the redemption price, on and after the date of redemption, interest will cease to accrue on the Notes called for redemption.
Conversion and Exchange
The Notes are not convertible into or exchangeable for other securities.
Events of Default
An event of default with respect to the Notes occurs if:
| we do not pay the principal of any Note when due and payable at maturity; |
| we do not pay interest on any Note when due and payable, and such default is not cured within 30 days of its due date; |
| we remain in breach of any other covenant in respect of the Notes for 60 days after we receive a written notice of default stating we are in breach (the notice must be sent by either the trustee or holders of at least 25% of the principal amount of the outstanding Notes (with a copy to the Trustee)); or |
| we file for bankruptcy or certain other events of bankruptcy, insolvency, or reorganization occur and remain undischarged or unstayed for a period of 90 days. |
If an Event of Default has occurred and is continuing, the trustee or the holders of not less than 25% in principal amount of the Notes (with a copy to the trustee) may declare the entire principal amount of all the Notes to be due and immediately payable, but this does not entitle any holder of Notes to any redemption payout or redemption premium. This is called a declaration of acceleration of maturity. In certain circumstances, a declaration of acceleration of maturity may be canceled by the holders of a majority in principal amount of the Notes if (1) we have deposited with the trustee all amounts due and owing with respect to the Notes (other than principal or any payment that has become due solely by reason of such acceleration) and certain other amounts, and (2) any other Events of Default have been cured or waived.
Merger or Consolidation
Under the terms of the indenture, we are generally permitted to consolidate or merge with another entity. We are also permitted to sell all or substantially all of our assets to another entity. However, we may not take any of these actions unless all the following conditions are met:
| where we merge out of existence or convey or transfer our assets substantially as an entirety, the resulting entity must agree to be legally responsible for our obligations under the Notes; |
| immediately after giving effect to the transaction, no default or Event of Default shall have occurred and be continuing; and |
| we must deliver certain certificates and documents to the trustee. |
Modification or Waiver
There are three types of changes we can make to the indenture and the Notes issued thereunder.
Changes Requiring the Approval of the Noteholders
First, there are changes that we cannot make to the Notes without approval from each holder directly and adversely affected thereby. The following is a list of those types of changes:
| changing the stated maturity of the principal of (or premium, if any, on) or any installment of principal of or interest on the Notes; |
| reducing any amounts due on the Notes or reduce the rate of interest on the Notes; |
| reducing the amount of principal payable upon acceleration of the maturity of a Note during the continuance of an Event of Default; |
| changing the place or currency of payment on a Note; |
| impairing noteholders right to sue for payment in respect of a Note; |
| reducing the percentage of holders of Notes whose consent is needed to modify or amend the indenture; and |
| reducing the percentage of holders of Notes whose consent is needed to waive compliance with certain provisions of the indenture or to waive certain defaults or reduce the percentage of holders of Notes required to satisfy quorum or voting requirements at a meeting of holders of the Notes. |
Changes Not Requiring Approval of the Noteholders
The second type of change does not require any vote by the holders of the Notes. This type is limited to clarifications and certain other changes that would not adversely affect holders of the Notes in any material respect.
Changes Requiring Majority Approval
Any other change to the indenture and the Notes would require the following approval:
| if the change affects only the Notes, it must be approved by the holders of a majority in principal amount of the Notes; and |
| if the change affects more than one series of debt securities issued under the same indenture, it must be approved by the holders of a majority in principal amount of all of the series affected by the change, with all affected series voting together as one class for this purpose. |
In each case, the required approval must be given by written consent. The holders of a majority in principal amount of all of the series of debt securities issued under the indenture, voting together as one class for this purpose, may waive our compliance with some of our covenants in that indenture. However, we cannot obtain a waiver of a payment default or of any of the matters covered by the bullet points included above under Changes Requiring Approval of the Noteholders.
Satisfaction and Discharge
The indenture will be discharged and will cease to be of further effect with respect to the Notes when:
| either: |
| all the Notes that have been authenticated have been delivered to the trustee for cancellation; or |
| all the Notes that have not been delivered to the trustee for cancellation: |
| have become due and payable, or |
| will become due and payable at their stated maturity within one year, or |
| are to be called for redemption within one year, |
| and we, in the case of the first, second and third sub-bullets above, have irrevocably deposited or caused to be deposited with the trustee as trust funds in trust solely for the benefit of the holders of the Notes, in amounts as will be sufficient, to pay and discharge the entire indebtedness (including all principal, premium, if any, and interest) on such Notes not previously delivered to the trustee for cancellation (in the case of Notes that have become due and payable on or prior to the date of such deposit) or to the stated maturity or redemption date, as the case may be; |
| we have paid or caused to be paid all other sums payable by us under the indenture with respect to the Notes; and |
| we have delivered to the trustee an officers certificate and legal opinion, each stating that all conditions precedent provided for in the indenture relating to the satisfaction and discharge of the indenture and the Notes have been complied with. |
Defeasance
The following provisions will be applicable to the Notes. Defeasance means that, by depositing with a trustee an amount of cash and/or government securities sufficient to pay all principal and interest, if any, on the Notes when due and satisfying any additional conditions noted below, we will be deemed to have been discharged from our obligations under the Notes. In the event of a covenant defeasance, upon depositing such funds and satisfying similar conditions discussed below, we would be released from certain covenants under the indenture relating to the Notes.
Covenant Defeasance
Under the indenture, we can make the deposit described below and be released from some of the restrictive covenants in the indenture under which the Notes were issued. This is called covenant defeasance. In that event, noteholders would lose the protection of those restrictive covenants but would gain the protection of having money and government securities set aside in trust to repay the Notes. In order to achieve covenant defeasance, the following must occur:
| since the Notes are denominated in U.S. dollars, we must deposit in trust for the benefit of all holders of the Notes a combination of cash and U.S. government or U.S. government agency notes or bonds that will generate enough cash to make interest, principal and any other payments on the Notes on their various due dates; |
| we must deliver to the trustee a legal opinion of our counsel confirming that, under current U.S. federal income tax law, we may make the above deposit without causing noteholders to be taxed on the Notes any differently than if we did not make the deposit; |
| we must deliver to the trustee a legal opinion and officers certificate stating that all conditions precedent to covenant defeasance have been complied with; |
| defeasance must not result in a breach or violation of, or result in a default under, the indenture or any of our other material agreements or instruments; and |
| no default or Event of Default with respect to the Notes shall have occurred and be continuing and no defaults or Events of Default related to bankruptcy, insolvency or reorganization shall occur during the next 90 days. |
If we accomplish covenant defeasance, noteholders can still look to us for repayment of the Notes if there were a shortfall in the trust deposit or the trustee is prevented from making payment. In fact, if one of the remaining Events of Default occurred (such as our bankruptcy) and the Notes became immediately due and payable, there might be a shortfall. Depending on the event causing the default, noteholders may not be able to obtain payment of the shortfall.
Full Defeasance
The Notes are subject to full defeasance. Full defeasance means that we can legally release ourselves from all payment and other obligations on the Notes, subject to the satisfaction of certain conditions, including, but not limited to that (a) we have received from, or there has been published by, the Internal Revenue Service, or the IRS, a ruling, or (b) there is a change in U.S. federal income tax law, in either case to the effect that the holders of the Notes and any coupons appertaining thereto will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred (called full defeasance), and that we put in place the following other arrangements for noteholders to be repaid:
| since the Notes are denominated in U.S. dollars, we must deposit in trust for the benefit of all holders of the Notes a combination of money and U.S. government or U.S. government agency notes or bonds that will generate enough cash to make interest, principal, and any other payments on the Notes on their various due dates; |
| we must deliver to the trustee a legal opinion confirming that there has been a change in current U.S. federal tax law or an IRS ruling that allows us to make the above deposit without causing noteholders to be taxed on the Notes any differently than if we did not make the deposit; |
| we must deliver to the trustee a legal opinion and officers certificate stating that all conditions precedent to defeasance have been complied with; |
| defeasance must not result in a breach or violation of, or constitute a default under, the indenture or any of our other material agreements or instruments; and |
| no default or Event of Default with respect to the Notes shall have occurred and be continuing and no defaults or Events of Default related to bankruptcy, insolvency, or reorganization shall occur during the next 90 days. |
If we ever did accomplish full defeasance, as described above, noteholders would have to rely solely on the trust deposit for repayment of the Notes. Noteholders could not look to us for repayment in the unlikely event of any shortfall. Conversely, the trust deposit would most likely be protected from claims of our lenders and other creditors if we ever became bankrupt or insolvent.
Governing Law
The indenture and the Notes will be governed by and construed in accordance with the laws of the State of New York.
Indenture Provisions - Ranking
The Notes are our direct unsecured obligations and rank:
| pari passu with any of our existing and future unsecured, unsubordinated indebtedness; |
| senior to any of our future indebtedness that expressly provides it is subordinated to the Notes; |
| effectively subordinated to all of our existing and future secured indebtedness (including indebtedness that is initially unsecured to which we subsequently grant security), to the extent of the value of the assets securing such indebtedness; and |
| structurally subordinated to all existing and future indebtedness and other obligations of any future subsidiaries of ours. |
The Trustee under the Indenture
U.S. Bank National Association serves as the trustee, paying agent, and security registrar under the indenture.
Book-Entry Procedures
The Notes were issued in book-entry form and are represented by global notes deposited and registered in the name of DTC or its nominee. Except as set forth in this description, certificated notes will not be issued in exchange for beneficial interests in the global notes. The Notes will be issued as fully registered securities registered in the name of Cede & Co. (DTCs partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered certificate will be issued for each issuance of the Notes, in the aggregate principal amount thereof, and will be deposited with DTC.
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the Registration Statement of Hennessy Advisors, Inc. on Form S-3 (No. 333-251201) and Form S-8 (No. 333-188439) of our report dated November 24, 2021, with respect to our audits of the financial statements of Hennessy Advisors, Inc. as of September 30, 2021 and 2020, and for the years ended September 30, 2021 and 2020, which report is included in this Annual Report on Form 10-K of Hennessy Advisors, Inc. for the year ended September 30, 2021.
/s/ Marcum LLP |
Marcum LLP |
Costa Mesa, California |
November 24, 2021 |
Exhibit 31.1
Rule 13a 14a Certification of the Principal Executive Officer
I, Teresa M. Nilsen, certify that:
1. | I have reviewed this annual report on Form 10-K of Hennessy Advisors, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Teresa M. Nilsen |
Teresa M. Nilsen, President |
Hennessy Advisors, Inc. |
Date: November 24, 2021 |
Exhibit 31.2
Rule 13a 14a Certification of the Principal Financial Officer
I, Kathryn R. Fahy, certify that:
1. | I have reviewed this annual report on Form 10-K of Hennessy Advisors, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Kathryn R. Fahy |
Kathryn R. Fahy, Chief Financial Officer |
Hennessy Advisors, Inc. |
Date: November 24, 2021
Exhibit 32.1
Written Statement of the Principal Executive Officer
Pursuant to 18 U.S.C. § 1350
Solely for the purposes of complying with 18 U.S.C. § 1350, I, the undersigned President of Hennessy Advisors, Inc. (the Company), hereby certify, based on my knowledge, that the Annual Report on Form 10-K of the Company for the year ended September 30, 2021 (the Report), fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Teresa M. Nilsen |
Teresa M. Nilsen, President |
Hennessy Advisors Inc. |
Date: November 24, 2021
Exhibit 32.2
Written Statement of the Principal Financial Officer
Pursuant to 18 U.S.C. § 1350
Solely for the purposes of complying with 18 U.S.C. § 1350, I, the undersigned Chief Financial Officer of Hennessy Advisors, Inc. (the Company), hereby certify, based on my knowledge, that the Annual Report on Form 10-K of the Company for the year ended September 30, 2021 (the Report), fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Kathryn R. Fahy |
Kathryn R. Fahy, Chief Financial Officer |
Hennessy Advisors, Inc. |
Date: November 24, 2021
Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Sep. 30, 2020 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Property and equipment, accumulated depreciation | $ 1,850 | $ 1,618 |
Common stock, no par value | $ 0 | $ 0 |
Common stock, shares authorized | 22,500,000 | 22,500,000 |
Common stock, shares issued | 7,469,584 | 7,356,822 |
Common stock, shares outstanding | 7,469,584 | 7,356,822 |
Statements of Income - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Revenue | ||
Total revenue | $ 32,760 | $ 33,389 |
Operating expenses | ||
Compensation and benefits | 9,078 | 8,820 |
General and administrative | 4,754 | 4,961 |
Mutual fund distribution | 485 | 477 |
Sub-advisory fees | 7,332 | 7,573 |
Depreciation | 232 | 239 |
Total operating expenses | 21,881 | 22,070 |
Net operating income | 10,879 | 11,319 |
Interest expense | 447 | |
Other income | (2) | (89) |
Income before income tax expense | 10,881 | 10,961 |
Income tax expense | 2,979 | 3,120 |
Net income | $ 7,902 | $ 7,841 |
Earnings per share | ||
Basic | $ 1.07 | $ 1.07 |
Diluted | $ 1.07 | $ 1.06 |
Weighted average shares outstanding | ||
Basic | 7,367,948 | 7,352,495 |
Diluted | 7,409,112 | 7,378,729 |
Cash dividends declared per share | $ 0.55 | $ 0.55 |
Investment advisory fees [Member] | ||
Revenue | ||
Total revenue | $ 30,367 | $ 30,831 |
Shareholder service fees [Member] | ||
Revenue | ||
Total revenue | $ 2,393 | $ 2,558 |
Organization and Description of Business and Significant Accounting Policies |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Description of Business and Significant Accounting Policies |
Hennessy Advisors, Inc. (the “Company”) was founded on February 1, 1989, as a California corporation under the name Edward J. Hennessy, Incorporated. In 1990, the Company became a registered investment advisor, and on April 15, 2001, the Company changed its name to Hennessy Advisors, Inc. The Company’s operating e rvices to 16 open-end mutual funds branded as the Hennessy Funds. The Company serves as the investment advisor to all classes of the Hennessy Cornerstone Growth Fund, the Hennessy Focus Fund, the Hennessy Cornerstone Mid Cap 30 Fund, the Hennessy Cornerstone Large Growth Fund, the Hennessy Cornerstone Value Fund, the Hennessy Total Return Fund, the Hennessy Equity and Income Fund, the Hennessy Balanced Fund, the Hennessy BP Energy Transition Fund, the Hennessy BP Midstream Fund, the Hennessy Gas Utility Fund, the Hennessy Japan Fund, the Hennessy Japan Small Cap Fund, the Hennessy Large Cap Financial Fund, the Hennessy Small Cap Financial Fund, and the Hennessy Technology Fund. The Company also provides shareholder services to shareholders of the Hennessy Funds. The Company’s operating revenues consist of contractual investment advisory and shareholder service fees paid to it by the Hennessy Funds. The Company earns investment advisory fees from each Hennessy Fund by, among other things:
The Company earns shareholder service fees from Investor Class shares of the Hennessy Funds by, among other things, maintaining a toll-free number that the current investors in the Hennessy Funds may call to ask questions about their accounts or the funds or to get help with processing exchange and redemption requests or changing account options. These fee revenues are earned and calculated daily by the Hennessy Funds’ accountants at U.S. Bank Global Fund Services and are subsequently reviewed by management. The fees are computed and billed monthly, at which time they are recognized in accordance with Accounting Standards Codification 606 — Revenue from Contracts with Customers. The Company waived a portion of its fees with respect to the Hennessy Cornerstone Large Growth Fund and the Hennessy BP Energy Transition Fund through the expiration of each fund’s expense limitation agreement on November 30, 2019, and October 25, 2020, respectively. The Company continues to waive a portion of its fees with respect to the Hennessy BP Midstream Fund and the Hennessy Technology Fund to comply with contractual expense ratio limitations. The fee waivers are calculated daily by the Hennessy Funds’ accountants at U.S. Bank Global Fund Services, reviewed by management, and then charged to expense monthly as offsets to the Company’s revenues. Each waived fee is then deducted from investment advisory fee income and reduces the aggregate amount of advisory fees the Company receives from such fund in the subsequent month. To date, the Company has only waived fees based on contractual obligations, but the Company has the ability to waive fees at its discretion. Any decision to waive fees would apply only on a going-forward basis. The Company’s contractual agreements for investment advisory and shareholder services prove that a contract exists with fixed and determinable fees, and the services are rendered daily. The collectability is deemed probable because the fees are received from the Hennessy Funds in the month subsequent to the month in which the services are provided.
Cash and cash equivalents include all cash balances and highly liquid investments with original maturities of three months or less that are readily convertible into cash.
The Financial Accounting Standards Board (“FASB”) guidance on “Disclosures about Fair Value of Financial Instruments” requires disclosures regarding the fair value of all financial instruments for financial statement purposes. The estimates presented in these financial statements are based on information available to manage m ent as of the end of fiscal years 2021 and 2020. Accordingly, the fair values presented in the Company’s financial statements as of the end of fiscal years 2021 and 2020 may not be indicative of amounts that could be realized on disposition of the financial instruments. The fair value of receivables, accounts payable, and notes payable has been estimated at carrying value due to the short maturity of these instruments. The fair va lue of marketable securities and money market accounts is based on closing net asset values as reported by securities exchanges registered with the SEC.
Investments in highly-liquid financial instruments with remaining maturities of less than one year are classified as short-term investments. Financial instruments with remaining maturities of greater than one year are classified as long-term investments. A table of investments is included in Note 3 in this Item 8, “Financial Statements and Supplementary Data.” The Company holds investments in publicly traded mutual funds, which are accounted for as trading securities. Accordingly, unrealized gains of less than $1,000 per year were recognized in operations for fiscal years 2021 and 2020. Dividend income is recorded on the
ex-dividend date. Purchases and sales of marketable securities are recorded on a trade-date basis, and realized gains and losses recognized on sale are determined on a specific identification/average cost bas is.
Property and equipment are stated at cost less accumulated
Throughout its history, the Company has completed 10 purchases of the assets related to the management of 30 different mutual funds, some of which were reorganized into already existing Hennessy Funds. In accordance with FASB guidance, the Company periodically reviews the carrying value of its management contract asset t o determine if any impairment has occurred. The fair value of the management contracts asset was estimated by applying the income approach and is based on management estimates and assumptions, including third-party valuations that utilize appropriate valuation techniques. It was determined that there was no impairment as of the end of fiscal years 2021 and 2020 . Under Accounting Standards Codification 350 — Intangibles—Goodwill and Other, intangible assets that have indefinite useful lives are not amortized but are tested at least annually for impairment. The Company reviews the useful life of the management contracts each reporting period to determine if they continue to have an indefinite useful life. The Company considers the management contracts asset to be an intangible asset with an indefinite useful life and no impairment as of the end of fiscal year 2021. The Company completed its most recent asset purchase on October 26, 2018, when it purchased the assets related to the management of the BP Capital TwinLine Energy Fund and the BP Capital TwinLine MLP Fund (the “BP Funds”), which were reorganized into the Hennessy BP Energy Transition Fund and the Hennessy BP Midstream Fund, respectively, two new series of Hennessy Funds Trust .
The Company, under the FASB guidance on “Accounting for Uncertainty in Income Tax,” uses a recognition threshold and measurement attribute for the financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in a company’s income tax return and also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company utilizes a two-step approach for evaluating uncertain tax positions. The first step, recognition, requires the Company to determine if the weight of available evidence indicates that a tax position is more likely than not to be sustained upon audit, including resolution of related appeals or litigation processes, if any. The second step, measurement, is based on the largest amount of benefit that is more likely than not to be realized on ultimate settlement. The Company believes the positions taken on its tax returns are fully supported, but tax authorities may challenge these positions and they may not be fully sustained on examination by the relevant tax authorities. Accordingly, the income tax provision includes amounts intended to satisfy assessments that may result from these challenges. Determining the income tax provision for these potential assessments and recording the related effects requires management judgement and estimates. The amounts ultimately paid on resolution of an audit could be materially different from the amounts previously included in the income tax provision and, therefore, could have a material impact on the Company’s income tax provision, net income, and cash flows. The accrual for uncertain tax positions is attributable primarily to uncertainties concerning the tax treatment of the Company’s domestic operations, including the allocation of income among different jurisdictions. For a further discussion on taxes, refer to Note 11 in this Item 8, “Financial Statements and Supplementary Data.” The Company is subject to income tax in the U.S. federal jurisdiction and multiple state jurisdictions. The Company’s U.S. federal income taxes for 2017 through 2021 remain open and subject to examination. The Company has identified 22 major state tax jurisdictions in which it is subject to income tax, which include California, Colorado, Connecticut, Illinois, Indiana, Iowa, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Texas, and Wisconsin. For tax years that remain open, the below chart shows the number of such state tax jurisdictions that remain subject to examination by the appropriate governmental agencies:
For state tax jurisdictions with unfiled tax returns, the statutes of limitations remains open indefinitely.
Basic earnings per share is determined by dividing net earnings by the weighted average number of shares of common stock outstanding, while diluted earnings per share is determined by dividing net earnings by the weighted average number of shares of common stock outstanding adjusted for the dilutive e f fect of common stock equivalents, which consist of restricted stock units (“RSUs”).
Amended and Restated 2013 Omnibus Incentive Plan The Company has adopted, and the Company’s shareholders have approved, the Amended and Restated 2013 Omnibus Incentive Plan (the “Omnibus Plan”), which provides for the issuance of options, stock appreciation rights, restricted stock, RSUs, performance awards, and other equity awards for the purpose of attracting and retaining executive officers, key employees, and outside directors and advisors and increasing shareholder value. The maximum number of shares that may be issued under the Omnibus Plan is 50% of the number of outstanding shares of common stock of the Company, subject to adjustment by the compensation committee of the Company’s Board of Directors upon the occurrence of certain events. The 50% limitation does not invalidate any awards made prior to a decrease in the number of outstanding shares, even if such awards have result or may result in shares constituting more than 50% of the outstanding shares being available for issuance under the Omnibus Plan. Shares available under the Omnibus Plan that are not awarded in one particular year may be awarded in subsequent years. The compensation committee of the Company’s Board of Directors has the authority to determine the awards granted under the Omnibus Plan, including among other things, the individuals who receive the awards, the times when they receive them, vesting schedules, performance goals, whether an option is an incentive or nonqualified option, and the number of shares to be subject to each award. However, no participant may receive options or stock appreciation rights under the Omnibus Plan for an aggregate of more than shares in any calendar year. The exercise price and term of each option or stock appreciation right is fixed by the compensation committee except that the exercise price for each stock option that is intended to qualify as an incentive stock option must be at least equal to the fair market value of the stock on the date of grant and the term of the option cannot exceed 10 years. In the case of an incentive stock option granted to a 10% or more shareholder, the exercise price must be at least 110% of the fair market value on the date of grant and cannot exceed five years. Incentive stock options may be granted only within 10 years from the date of adoption of the Omnibus Plan. The aggregate fair market value (determined at the time the option is granted) of shares with respect to which incentive stock options may be granted to any one individual, which stock options are exercisable for the first time during any calendar year, may not exceed $ 100,000. An optionee may, with the consent of the compensation committee, elect to pay for the shares to be received upon exercise of his or her options in cash, shares of common stock, or any combination thereof. Under the Omnibus Plan, participants may be granted RSUs, each of which represents an unfunded, unsecured right to receive a share of the Company’s common stock on the date specified in the recipient’s award. The Company issues new shares of its common stock when it is required to deliver shares t o an RSU recipient. The RSUs granted under the Omnibus Plan vest over four years at a rate of 25% per year. The Company recognizes stock-based compensation expense on a straight-line basis over the four-year vesting term of each award. All compensation costs related to RSUs vested during fiscal years 2021 and 2020 have been recognized in the financial statements. The Company has available up to 3,734,792 shares of the Company’s common stock in respect of granted stock awards, in accordance with terms of the Omnibus Plan. A summary of RSU activity is as follows:
Additional information related to RSUs is as follows:
Dividend Reinvestment and Stock Purchase Plan In January 2021, the Company adopted an updated Div i dend Reinvestment and Stock Purchase Plan (the “DRSPP”), replacing the previous Dividend Rein vestment and Stock Purchase Plan that had been in place since 2018. The DRSPP provides shareholders and new investors with a convenient and economical means of purchasing shares of the Company’s common stock and reinvesting cash dividends paid on the Company’s common stock. Under the DRSPP and its predecessor plan, the Company issued 12,666 and 9,815 shares of common stock in fiscal years 2021 and 2020, respectively. The maximum number of shares that may be issued under the DRSPP is 1,470,000, of which 1,460,457 shares remained available for issuance as of September 30, 2021.Stock Buyback Program In August 2010, the Company adopted a stock buyback program. The program provides that the Company may repurchase up to 1,500,000 shares of its common stock and has no expiration date. Share repurchases may be made in the open market, in privately negotiated transactions, or otherwise. A total of 596,368 shares remains available for repurchase under the stock buyback program. The Company temporarily suspended repurchases under the stock buyback program as of March 24, 2020, so the Company did not repurchase any shares of its common stock pursuant to the stock buyback program during fiscal year 2021.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements |
The Company applies Accounting Standards Codification 820 — Fair Value Measurement for all financial assets and liabilities, which establishes a framework for measuring fair value and expands disclosures about fair value measurements. The standard defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” It also establishes a fair value hierarchy consisting of the following three levels that prioritize the inputs to the valuation techniques used to measure fair value:
Based on the definitions, th e following table represents the Company’s assets categorized in the Level 1 to Level 3 hierarchies:
There were no transfers between levels during fiscal years 2021 or 2020. |
Investments |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments |
The cost, gross unrealized gains, gross unrealized losses, and fair market value of the Company’s trading investments were as follows:
The mutual fund investments are included as a separate line item in current assets on the Company’s balance sheets. |
Property and Equipment, Net |
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Property and Equipment, Net |
The following table summarizes the Company’s property and equipment balances:
During each of fiscal year 2021 and fiscal year 2020, depreciation expense was $0.2 million. |
Management Contracts |
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Text Block [Abstract] | |||
Management Contracts |
The costs related to the Company’s purchase of the assets related to management contracts are capitalized as incurred and comprise the management contracts asset. This asset was $80.6 million as of the end of fiscal year 2021, unchanged from the end of fiscal year 2020. The Company considers the management contracts asset to be an intangible asset per Accounting Standards Codification 350 — Intangibles—Goodwill and Other. The purchase costs that comprise the management contracts asset include legal fees, shareholder vote fees, and percent of asset costs to purchase the assets related to the management contracts. |
Investment Advisory Agreements |
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Investment Advisory Agreements |
The Company has investment advisory agreements with Hennessy Funds Trust under which it provides investment advisory services to all classes of the 16 Hennessy Funds. The inv e stment advisory agreements must be renewed annually (except in limited circumstances) by (a) the Funds’ Board of Trustees or the vote of a majority of the outstanding shares of the applicable Hennessy Fund and (b) the vote of a majority of the trustees of Hennessy Funds Trust who are not interested persons of the Hennessy Funds. If an investment advisory agreement is not renewed, it terminates automatically. There are two additional circumstances in which an investment advisory agreement would terminate. First, an investment advisory agreement automatically terminates if the Company assigns it to another advisor (assignment includes “indirect assignment,” which is the transfer of the Company’s common stock in sufficient quantities deemed to constitute a controlling block). Second, an investment advisory agreement may be terminated prior to its expiration upon 60 days’ written notice by either the applicable Hennessy Fund or the Company. As provided in each investment advisory agreement, the Company receives investment advisory fees monthly based on a percentage of the applicable fund’s average daily net asset value. The Company has entered into sub-advisory agreements for the Hennessy Focus Fund, the Hennessy Equity and Income Fund, the Hennessy BP Energy Transition Fund, the Hennessy BP Midstream Fund, the Hennessy Japan Fund, and the Hennessy Japan Small Cap Fund. Under each of these sub-advisory agreements, the sub-advisor is responsible for the investment of the assets of the applicable Hennessy Fund in accordance with the terms of such agreement and the applicable Hennessy Fund’s Prospectus and Statement of Additional Information. The sub-advisors are subject to the direction, supervision, and control of the Company and the Funds’ Board of Trustees. The sub-advisory agreements must be renewed annually (except in limited circumstances) in the same manner as, and are subject to the same termination provisions as, the investment advisory agreements. In exchange for the
sub-advisory services, the Company (not the Hennessy Funds) pays sub-advisory fees to the sub-advisors out of its own assets. Sub-advisory fees are calculated as a percentage of the applicable sub-advised fund’s average daily net asset value. |
Leases |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases |
The Company determines right-of-use long-term operating lease liabilities on the Company’s balance sheet. During the quarter ended March 31, 2021, the Company renewed the lease for its office in Novato, California for an additional three years. The renewed lease expires on July 31, 2024. The lease renewal created a long-term operating lease as of March 31, 2021, and the Company recorded a right-of-use Right-of-use right-of-use e information available at the lease commencement date.y include options to extend the lease when it is reasonably certain that it will exercise any such options. For its leases, the Company concluded that it is not reasonably certain that any renewal options would be exercised, so the amounts are not recognized as part of operating lease right-of-use The Company’s most significant leases are real estate leases of office facilities. The Company leases office space under non-cancelable operating leases. Its principal executive office is located in Novato, California, and it has additional offices in Austin, Texas, Boston, Massachusetts, and Chapel Hill, North Carolina. Only the office lease in Novato, California has been capitalized because the other operating leases have terms of 12 months or less, including leases that are month-to-month right-of-use
For fiscal years 2021 and 2020, the Company’s lease payments related to its operating lease right-of-use million and $0.44million, respectively, and total million and $0.57 million, respectively. The undiscounted cash flows for future maturities of the Company’s operating lease liabilities and the reconciliation to the balance of operating lease liabilities reflected o n the Company’s balance sheet are as follows:
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Accrued Liabilities and Accounts Payable |
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Accrued Liabilities, Current [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities and Accounts Payable |
The details relating to the accrued liabilities and accounts payable reflected on the Company’s balance sheet are as follows:
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Bank Loan |
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Debt Disclosure [Abstract] | |||
Bank Loan |
On March 26, 2020, the Company prepaid in full all principal, accrued interest, and costs and expenses outstanding under its term loan agreement with U.S. Bank National Association. The aggregate prepayment amount of $15.4 million was funded by cash on hand, and the Company did not incur any prepayment penalties. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||
Commitments and Contingencies |
The Company has no commitments and no significant contingencies with original terms in excess of one year other than operating leases, which are discussed in Note 7. |
Retirement Plan |
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Retirement Benefits [Abstract] | |||
Retirement Plan |
The Company has a 401(k) retirement plan covering eligible employees. Employees are eligible to participate if they are over 21 years of age and have completed a minimum of one month of service with at least 80 hours worked in that month. The Company also made discretionary profit-sharing contributions of $0.2 million in each of the fiscal years 2021 and 2020. To be eligible for the discretionary profit-sharing contribution, an employee must be eligible to participate in the 401(k) retirement plan and must complete at least 501 hours of service during the calendar year or be employed as of the last day of the calendar year. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes |
As of the end of each of fiscal years 2021 and 2020, the Company’s gross liability for unrecognized tax benefits related to uncertain tax positions was $0.6 million. If the tax benefits of such amounts were recognized, $0.50 million of such amounts would decrease the Company’s effective income tax rate. The Company’s net liability for accrued interest and penalties was $0.30 million and $0.27 million as of September 30, 2021, and September 30, 2020, respectively. The Company has elected to recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. During the years ended September 30, 2021, and September 30, 2020, the Company recognized approximately $0.03 million and $0.04 million in interest and penalties, respectively. The Company’s activity was as follows:
The total amount of unrecognized ta x benefits can change due to final regulations, audit settlements, tax examinations activities, lapse of applicable statutes of limitations, and the recognition and measurement criteria under the guidance related to accounting for uncertainly in income taxes. The Company is unable to estimate what this change could be within the next 12 months, but does not believe it would be material to its financial statements. The Company’s income tax expense
The principal reasons for the differences from the federal statutory income tax rate and the Company’s effective tax rate were as follows:
The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities were as follows:
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Earnings per Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Share |
The weighted average common shares outstanding used in the calculation of basic earnings per share and weighted average common shares outstanding, adjusted for common stock equivalents, used in the computation of diluted earnings per share were as follows:
For fiscal years 2021 and 2020, the Company excluded 65,098 and 186,520 common stock equivalents, respectively, from the diluted earnings per share calculations because they were not dilutive. In each case, the excluded common stock equivalents consisted of vested RSUs. |
Concentration of Credit Risk |
12 Months Ended | ||
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Sep. 30, 2021 | |||
Risks and Uncertainties [Abstract] | |||
Concentration of Credit Risk |
The Company m a intains its cash accounts with three com m ercial banks that, at times, may exceed federally insured limits. The amount on deposit at September 30, 2021, exceeded the insurance limits of the Federal Deposit Insurance Corporation by approximately $4.0 million. In addition, total cash and cash equivalents include $11.5 |
Recently Issued and Adopted Accounting Standards |
12 Months Ended | ||
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Sep. 30, 2021 | |||
Accounting Changes and Error Corrections [Abstract] | |||
Recently Issued and Adopted Accounting Standards |
The Company has reviewed accounting pronouncements issued between December 1, 2020, the filing date of its most recent previously filed Annual Report on Form 10-K, and November 24, 2021, the filing date of this Annual Report on Form 10-K, and has determined that no accounting pronouncement issued would have a material impact on the Company’s financial position, results of operations, or disclosures. There have been no other significant changes to the Company’s critical accounting policies and estimates during fiscal year 2021. |
Subsequent Events |
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Sep. 30, 2021 | |||
Subsequent Events [Abstract] | |||
Subsequent Events |
As of November 24, 2021, the filing date of this Annual Report on Form 10-K, management evaluated the existence of events occurring subsequent to the end of fiscal year 2021, and determined the following to be subsequent events: On October 20, 2021, the Company completed a public offering of 4.875% notes h calendar quarter and at maturity, beginning December 31, 2021. The 2026 Notes mature on December 31, 2026. On October 29, 2021, the Company announced a quarterly cash dividend of $0.1375 per share paid on November 23, 2021, to shareholders of record as of November 11, 2021. The declaration and payment of dividends to holders of the Company’s common stock, if any, are subject to the discretion of the Company’s Board of Directors. The Company’s Board of Directors will take into account such matters as general economic and business conditions, the Company’s strategic plans, the Company’s financial results and condition, contractual, legal, and regulatory restrictions on the payment of dividends by the Company, and such other factors as the Company’s Board of Directors may consider relevant. |
Organization and Description of Business and Significant Accounting Policies (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Description of Business |
Hennessy Advisors, Inc. (the “Company”) was founded on February 1, 1989, as a California corporation under the name Edward J. Hennessy, Incorporated. In 1990, the Company became a registered investment advisor, and on April 15, 2001, the Company changed its name to Hennessy Advisors, Inc. The Company’s operating e rvices to 16 open-end mutual funds branded as the Hennessy Funds. The Company serves as the investment advisor to all classes of the Hennessy Cornerstone Growth Fund, the Hennessy Focus Fund, the Hennessy Cornerstone Mid Cap 30 Fund, the Hennessy Cornerstone Large Growth Fund, the Hennessy Cornerstone Value Fund, the Hennessy Total Return Fund, the Hennessy Equity and Income Fund, the Hennessy Balanced Fund, the Hennessy BP Energy Transition Fund, the Hennessy BP Midstream Fund, the Hennessy Gas Utility Fund, the Hennessy Japan Fund, the Hennessy Japan Small Cap Fund, the Hennessy Large Cap Financial Fund, the Hennessy Small Cap Financial Fund, and the Hennessy Technology Fund. The Company also provides shareholder services to shareholders of the Hennessy Funds. The Company’s operating revenues consist of contractual investment advisory and shareholder service fees paid to it by the Hennessy Funds. The Company earns investment advisory fees from each Hennessy Fund by, among other things:
The Company earns shareholder service fees from Investor Class shares of the Hennessy Funds by, among other things, maintaining a toll-free number that the current investors in the Hennessy Funds may call to ask questions about their accounts or the funds or to get help with processing exchange and redemption requests or changing account options. These fee revenues are earned and calculated daily by the Hennessy Funds’ accountants at U.S. Bank Global Fund Services and are subsequently reviewed by management. The fees are computed and billed monthly, at which time they are recognized in accordance with Accounting Standards Codification 606 — Revenue from Contracts with Customers. The Company waived a portion of its fees with respect to the Hennessy Cornerstone Large Growth Fund and the Hennessy BP Energy Transition Fund through the expiration of each fund’s expense limitation agreement on November 30, 2019, and October 25, 2020, respectively. The Company continues to waive a portion of its fees with respect to the Hennessy BP Midstream Fund and the Hennessy Technology Fund to comply with contractual expense ratio limitations. The fee waivers are calculated daily by the Hennessy Funds’ accountants at U.S. Bank Global Fund Services, reviewed by management, and then charged to expense monthly as offsets to the Company’s revenues. Each waived fee is then deducted from investment advisory fee income and reduces the aggregate amount of advisory fees the Company receives from such fund in the subsequent month. To date, the Company has only waived fees based on contractual obligations, but the Company has the ability to waive fees at its discretion. Any decision to waive fees would apply only on a going-forward basis. The Company’s contractual agreements for investment advisory and shareholder services prove that a contract exists with fixed and determinable fees, and the services are rendered daily. The collectability is deemed probable because the fees are received from the Hennessy Funds in the month subsequent to the month in which the services are provided. |
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Cash and Cash Equivalents |
Cash and cash equivalents include all cash balances and highly liquid investments with original maturities of three months or less that are readily convertible into cash. |
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Fair Value of Financial Instruments |
The Financial Accounting Standards Board (“FASB”) guidance on “Disclosures about Fair Value of Financial Instruments” requires disclosures regarding the fair value of all financial instruments for financial statement purposes. The estimates presented in these financial statements are based on information available to manage m ent as of the end of fiscal years 2021 and 2020. Accordingly, the fair values presented in the Company’s financial statements as of the end of fiscal years 2021 and 2020 may not be indicative of amounts that could be realized on disposition of the financial instruments. The fair value of receivables, accounts payable, and notes payable has been estimated at carrying value due to the short maturity of these instruments. The fair va lue of marketable securities and money market accounts is based on closing net asset values as reported by securities exchanges registered with the SEC. |
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Investments |
Investments in highly-liquid financial instruments with remaining maturities of less than one year are classified as short-term investments. Financial instruments with remaining maturities of greater than one year are classified as long-term investments. A table of investments is included in Note 3 in this Item 8, “Financial Statements and Supplementary Data.” The Company holds investments in publicly traded mutual funds, which are accounted for as trading securities. Accordingly, unrealized gains of less than $1,000 per year were recognized in operations for fiscal years 2021 and 2020. Dividend income is recorded on the
ex-dividend date. Purchases and sales of marketable securities are recorded on a trade-date basis, and realized gains and losses recognized on sale are determined on a specific identification/average cost bas is. |
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Property and Equipment |
Property and equipment are stated at cost less accumulated |
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Management Contracts Purchased |
Throughout its history, the Company has completed 10 purchases of the assets related to the management of 30 different mutual funds, some of which were reorganized into already existing Hennessy Funds. In accordance with FASB guidance, the Company periodically reviews the carrying value of its management contract asset t o determine if any impairment has occurred. The fair value of the management contracts asset was estimated by applying the income approach and is based on management estimates and assumptions, including third-party valuations that utilize appropriate valuation techniques. It was determined that there was no impairment as of the end of fiscal years 2021 and 2020 . Under Accounting Standards Codification 350 — Intangibles—Goodwill and Other, intangible assets that have indefinite useful lives are not amortized but are tested at least annually for impairment. The Company reviews the useful life of the management contracts each reporting period to determine if they continue to have an indefinite useful life. The Company considers the management contracts asset to be an intangible asset with an indefinite useful life and no impairment as of the end of fiscal year 2021. The Company completed its most recent asset purchase on October 26, 2018, when it purchased the assets related to the management of the BP Capital TwinLine Energy Fund and the BP Capital TwinLine MLP Fund (the “BP Funds”), which were reorganized into the Hennessy BP Energy Transition Fund and the Hennessy BP Midstream Fund, respectively, two new series of Hennessy Funds Trust . |
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Income Taxes |
The Company, under the FASB guidance on “Accounting for Uncertainty in Income Tax,” uses a recognition threshold and measurement attribute for the financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in a company’s income tax return and also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company utilizes a two-step approach for evaluating uncertain tax positions. The first step, recognition, requires the Company to determine if the weight of available evidence indicates that a tax position is more likely than not to be sustained upon audit, including resolution of related appeals or litigation processes, if any. The second step, measurement, is based on the largest amount of benefit that is more likely than not to be realized on ultimate settlement. The Company believes the positions taken on its tax returns are fully supported, but tax authorities may challenge these positions and they may not be fully sustained on examination by the relevant tax authorities. Accordingly, the income tax provision includes amounts intended to satisfy assessments that may result from these challenges. Determining the income tax provision for these potential assessments and recording the related effects requires management judgement and estimates. The amounts ultimately paid on resolution of an audit could be materially different from the amounts previously included in the income tax provision and, therefore, could have a material impact on the Company’s income tax provision, net income, and cash flows. The accrual for uncertain tax positions is attributable primarily to uncertainties concerning the tax treatment of the Company’s domestic operations, including the allocation of income among different jurisdictions. For a further discussion on taxes, refer to Note 11 in this Item 8, “Financial Statements and Supplementary Data.” The Company is subject to income tax in the U.S. federal jurisdiction and multiple state jurisdictions. The Company’s U.S. federal income taxes for 2017 through 2021 remain open and subject to examination. The Company has identified 22 major state tax jurisdictions in which it is subject to income tax, which include California, Colorado, Connecticut, Illinois, Indiana, Iowa, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Texas, and Wisconsin. For tax years that remain open, the below chart shows the number of such state tax jurisdictions that remain subject to examination by the appropriate governmental agencies:
For state tax jurisdictions with unfiled tax returns, the statutes of limitations remains open indefinitely. |
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Earnings Per Share |
Basic earnings per share is determined by dividing net earnings by the weighted average number of shares of common stock outstanding, while diluted earnings per share is determined by dividing net earnings by the weighted average number of shares of common stock outstanding adjusted for the dilutive e f fect of common stock equivalents, which consist of restricted stock units (“RSUs”). |
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Equity |
Amended and Restated 2013 Omnibus Incentive Plan The Company has adopted, and the Company’s shareholders have approved, the Amended and Restated 2013 Omnibus Incentive Plan (the “Omnibus Plan”), which provides for the issuance of options, stock appreciation rights, restricted stock, RSUs, performance awards, and other equity awards for the purpose of attracting and retaining executive officers, key employees, and outside directors and advisors and increasing shareholder value. The maximum number of shares that may be issued under the Omnibus Plan is 50% of the number of outstanding shares of common stock of the Company, subject to adjustment by the compensation committee of the Company’s Board of Directors upon the occurrence of certain events. The 50% limitation does not invalidate any awards made prior to a decrease in the number of outstanding shares, even if such awards have result or may result in shares constituting more than 50% of the outstanding shares being available for issuance under the Omnibus Plan. Shares available under the Omnibus Plan that are not awarded in one particular year may be awarded in subsequent years. The compensation committee of the Company’s Board of Directors has the authority to determine the awards granted under the Omnibus Plan, including among other things, the individuals who receive the awards, the times when they receive them, vesting schedules, performance goals, whether an option is an incentive or nonqualified option, and the number of shares to be subject to each award. However, no participant may receive options or stock appreciation rights under the Omnibus Plan for an aggregate of more than shares in any calendar year. The exercise price and term of each option or stock appreciation right is fixed by the compensation committee except that the exercise price for each stock option that is intended to qualify as an incentive stock option must be at least equal to the fair market value of the stock on the date of grant and the term of the option cannot exceed 10 years. In the case of an incentive stock option granted to a 10% or more shareholder, the exercise price must be at least 110% of the fair market value on the date of grant and cannot exceed five years. Incentive stock options may be granted only within 10 years from the date of adoption of the Omnibus Plan. The aggregate fair market value (determined at the time the option is granted) of shares with respect to which incentive stock options may be granted to any one individual, which stock options are exercisable for the first time during any calendar year, may not exceed $ 100,000. An optionee may, with the consent of the compensation committee, elect to pay for the shares to be received upon exercise of his or her options in cash, shares of common stock, or any combination thereof. Under the Omnibus Plan, participants may be granted RSUs, each of which represents an unfunded, unsecured right to receive a share of the Company’s common stock on the date specified in the recipient’s award. The Company issues new shares of its common stock when it is required to deliver shares t o an RSU recipient. The RSUs granted under the Omnibus Plan vest over four years at a rate of 25% per year. The Company recognizes stock-based compensation expense on a straight-line basis over the four-year vesting term of each award. All compensation costs related to RSUs vested during fiscal years 2021 and 2020 have been recognized in the financial statements. The Company has available up to 3,734,792 shares of the Company’s common stock in respect of granted stock awards, in accordance with terms of the Omnibus Plan. A summary of RSU activity is as follows:
Additional information related to RSUs is as follows:
Dividend Reinvestment and Stock Purchase Plan In January 2021, the Company adopted an updated Div i dend Reinvestment and Stock Purchase Plan (the “DRSPP”), replacing the previous Dividend Rein vestment and Stock Purchase Plan that had been in place since 2018. The DRSPP provides shareholders and new investors with a convenient and economical means of purchasing shares of the Company’s common stock and reinvesting cash dividends paid on the Company’s common stock. Under the DRSPP and its predecessor plan, the Company issued 12,666 and 9,815 shares of common stock in fiscal years 2021 and 2020, respectively. The maximum number of shares that may be issued under the DRSPP is 1,470,000, of which 1,460,457 shares remained available for issuance as of September 30, 2021.Stock Buyback Program In August 2010, the Company adopted a stock buyback program. The program provides that the Company may repurchase up to 1,500,000 shares of its common stock and has no expiration date. Share repurchases may be made in the open market, in privately negotiated transactions, or otherwise. A total of 596,368 shares remains available for repurchase under the stock buyback program. The Company temporarily suspended repurchases under the stock buyback program as of March 24, 2020, so the Company did not repurchase any shares of its common stock pursuant to the stock buyback program during fiscal year 2021. |
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Use of Estimates |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. |
Organization and Description of Business and Significant Accounting Policies (Tables) |
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Disclosure Of Number Of State Tax Jurisdictions That Remain Open To Examination [Table Text Block] |
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Schedule of Non-Vested Restricted Stock Units Activity | A summary of RSU activity is as follows:
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Schedule of Non-Vested Restricted Stock Units Compensation | Additional information related to RSUs is as follows:
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Categorized on Basis of Various Levels | Based on the definitions, th e following table represents the Company’s assets categorized in the Level 1 to Level 3 hierarchies:
|
Investments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trading Investments Details | The cost, gross unrealized gains, gross unrealized losses, and fair market value of the Company’s trading investments were as follows:
|
Property and Equipment, Net (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | The following table summarizes the Company’s property and equipment balances:
|
Leases (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Detailed Information About In Operating Lease Right Of Use Assets Lease Liabilities and Others | The classification of the Company’s operating lease right-of-use
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Operating Lease Maturities | The undiscounted cash flows for future maturities of the Company’s operating lease liabilities and the reconciliation to the balance of operating lease liabilities reflected o n the Company’s balance sheet are as follows:
|
Accrued Liabilities and Accounts Payable (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities, Current [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accrued liabilities | The details relating to the accrued liabilities and accounts payable reflected on the Company’s balance sheet are as follows:
|
Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Company's Activity | The Company’s activity was as follows:
|
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Provision for Income Taxes | The Company’s income tax expense
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principal Reasons for Differences from Federal Statutory Rate | The principal reasons for the differences from the federal statutory income tax rate and the Company’s effective tax rate were as follows:
|
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Tax Effects of Temporary Differences of Deferred Tax Assets and Liabilities | The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities were as follows:
|
Earnings per Share (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Diluted Earnings Per Share | The weighted average common shares outstanding used in the calculation of basic earnings per share and weighted average common shares outstanding, adjusted for common stock equivalents, used in the computation of diluted earnings per share were as follows:
|
Organization and Description of Business and Significant Accounting Policies - Schedule of Non-Vested Restricted Stock Units Compensation (Detail) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total expected compensation expense related to RSUs | $ 1,438 | $ 1,782 |
Restricted Stock Units (RSUs) [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total expected compensation expense related to RSUs | 16,905 | |
Recognized compensation expense related to RSUs | (14,034) | |
Unrecognized compensation expense related to RSUS | $ 2,871 | |
Weighted average remaining period to expense for RSUs | 3 years |
Fair Value Measurements - Assets Categorized on Basis of Various Levels (Detail) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Sep. 30, 2020 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market fund deposits | $ 11,554 | $ 6,053 |
Mutual fund investments | 10 | 9 |
Cash and cash equivalents | 11,554 | 6,053 |
Investments in marketable securities | 10 | 9 |
Total | 11,564 | 6,062 |
Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market fund deposits | 11,554 | 6,053 |
Mutual fund investments | 10 | 9 |
Cash and cash equivalents | 11,554 | 6,053 |
Investments in marketable securities | 10 | 9 |
Total | $ 11,564 | $ 6,062 |
Fair Value Measurements - Additional Information (Detail) - USD ($) |
12 Months Ended | |
---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Fair Value Disclosures [Abstract] | ||
Transfer from fair value level 1 to level 2 | $ 0 | $ 0 |
Transfer from fair value level 2 to level 1 | 0 | 0 |
Transfer into (out of) level 3 | $ 0 | $ 0 |
Investments - Trading Investments Details (Detail) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Investments [Line Items] | ||
Cost | $ 4 | $ 4 |
Gross Unrealized Gains | 24 | 23 |
Gross Unrealized Losses | (18) | (18) |
Total | 10 | 9 |
Mutual Fund Investments [Member] | ||
Investments [Line Items] | ||
Cost | 4 | 4 |
Gross Unrealized Gains | 24 | 23 |
Gross Unrealized Losses | (18) | (18) |
Total | $ 10 | $ 9 |
Property and Equipment, Net - Property and Equipment (Detail) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Sep. 30, 2020 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 2,161 | $ 1,912 |
Accumulated depreciation | (1,850) | (1,618) |
Property and equipment, net | 311 | 294 |
Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 599 | 538 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 154 | 154 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 391 | 391 |
IT Infrastructure [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 84 | 71 |
Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 933 | $ 758 |
Property and Equipment, Net - Additional Information (Detail) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 232 | $ 239 |
Management Contracts - Additional Information (Detail) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Sep. 30, 2020 |
---|---|---|
Contractors [Abstract] | ||
Management contracts | $ 80,643 | $ 80,643 |
Investment Advisory Agreements - Additional Information (Detail) |
12 Months Ended |
---|---|
Sep. 30, 2021
Funds
| |
Investment Schedule [Abstract] | |
Number of Hennessy funds to which company provides investment advisory services | 16 |
Notice period for termination of agreement | 60 days |
Leases - Schedule Of Operating Lease Maturities (Detail) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Sep. 30, 2020 |
---|---|---|
Operating lease right-of-use assets | $ 1,010 | $ 276 |
Current operating lease liability | 359 | $ 330 |
Long-term operating lease liability | $ 646 | |
Weighted average remaining lease term | 2 years 9 months 18 days | |
Weighted average discount rate | 0.90% |
Leases - Detailed Information About In Operating Lease Right Of Use Assets Lease Liabilities and Others (Detail) $ in Thousands |
Sep. 30, 2021
USD ($)
|
---|---|
Fiscal year 2022 undiscounted cash flows | $ 363 |
Fiscal year 2023 | 374 |
Fiscal year 2024 | 286 |
Total undiscounted cash flows | 1,023 |
Present value discount | (18) |
Total operating lease liabilities | $ 1,005 |
Leases - Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2021 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Right of use assets payments | $ 430 | $ 440 | |
Operating lease right-of-use assets | 1,010 | 276 | |
Novato California [Member] | |||
Operating lease right-of-use assets | 1,100 | ||
Additional operating lease term | 3 years | ||
Operating lease expiry date | Jul. 31, 2024 | ||
General and Administrative Expense [Member] | |||
Operating lease rent payments | $ 510 | $ 570 |
Accrued Liabilities and Accounts Payable - Summary of accrued expenses reflected on the company's balance sheet (Detail) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Sep. 30, 2020 |
---|---|---|
Accrued Liabilities, Current [Abstract] | ||
Accrued bonus liabilities | $ 2,738 | $ 2,571 |
Accrued sub-advisor fees | 628 | 552 |
Other accrued expenses | 785 | 690 |
Total accrued expenses | $ 4,151 | $ 3,813 |
Bank Loan - Additional Information (Detail) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Mar. 26, 2020 |
Sep. 30, 2020 |
|
Debt Instrument [Line Items] | ||
Prepayments of long term debt | $ 17,500 | |
US Bank National Association Loan [Member] | ||
Debt Instrument [Line Items] | ||
Prepayments of long term debt | $ 15,400 |
Commitments and Contingencies - Additional Information (Detail) |
12 Months Ended |
---|---|
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments And Contingencies Description | The Company has no commitments and no significant contingencies with original terms in excess of one year other than operating leases, which are discussed in Note 7. |
Retirement Plan - Additional Information (Detail) - USD ($) |
12 Months Ended | |
---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Defined Contribution Plan Disclosure [Line Items] | ||
Defined contribution plan employer discretionary contribution | $ 200 | $ 200 |
Defined contribution plan description | Employees are eligible to participate if they are over 21 years of age and have completed a minimum of one month of service with at least 80 hours worked in that month | |
Defined contribution plan employee eligibility age | 21 years | |
Defined contribution plan minimum eligible service months | 1 month | |
Defined contribution plan minimum eligible service hours | 80 hours | |
Defined contribution plan name | 401(k) retirement plan | |
Discretionary Contributions [Member] | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Defined contribution plan description | To be eligible for the discretionary profit-sharing contribution, an employee must be eligible to participate in the 401(k) retirement plan and must complete at least 501 hours of service during the calendar year or be employed as of the last day of the calendar year. | |
Defined contribution plan minimum eligible service hours in each month | 501 hours |
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Income Tax Disclosure [Abstract] | |||
Gross liability for unrecognized tax benefits | $ 608 | $ 608 | $ 608 |
Unrecognized tax benefits that would impact effective tax rate | 500 | 500 | |
Net liability for accrued interest and penalties | 300 | 270 | |
Interest and penalty expenses on unrecognised tax benefit | $ 30 | $ 40 |
Income Taxes - Summary of Company's Activity (Detail) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Income Tax Disclosure [Abstract] | ||
Beginning year balance | $ 608 | $ 608 |
Decrease related to prior year tax positions | 0 | |
Increase related to current year tax positions | 0 | 0 |
Settlements | 0 | |
Lapse of statutes of limitations | 0 | |
Ending year balance | $ 608 | $ 608 |
Income Taxes - Provision for Income Taxes (Detail) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Current | ||
Federal | $ 1,545 | $ 1,321 |
State | 513 | 552 |
Total | 2,058 | 1,873 |
Deferred | ||
Federal | 752 | 904 |
State | 169 | 343 |
Deferred income tax expense (benefit), total | 921 | 1,247 |
Total | $ 2,979 | $ 3,120 |
Income Taxes - Principal Reasons for Differences from Federal Statutory Rate (Detail) |
12 Months Ended | |
---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Effective Income Tax Rate Reconciliation, Percent [Abstract] | ||
Federal statutory income tax rate | 21.00% | 21.00% |
State income taxes, net of federal benefit | 4.10% | 4.30% |
Permanent and other differences | 0.30% | 0.20% |
Difference due to executive compensation | 1.30% | 1.10% |
Tax return to provision adjustments | 0.10% | (0.10%) |
Uncertain tax position allowance | 0.30% | 0.40% |
Stock-based compensation | 0.30% | 1.60% |
Effective income tax rate | 27.40% | 28.50% |
Income Taxes - Tax Effects of Temporary Differences of Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Sep. 30, 2020 |
---|---|---|
Deferred tax assets | ||
Accrued compensation | $ 60 | $ 47 |
Stock Compensation | 2 | 13 |
State taxes | 266 | 245 |
Capital loss carryforward | 7 | 7 |
ROU asset/lease liability | (1) | 0 |
Gross deferred tax assets | 334 | 312 |
Disallowed capital loss | (7) | (7) |
Net deferred tax assets | 327 | 305 |
Deferred tax liabilities | ||
Property and equipment | (33) | (28) |
Management contracts | (12,731) | (11,793) |
Total deferred tax liabilities | (12,764) | (11,821) |
Net deferred tax liabilities | $ (12,437) | $ (11,516) |
Earnings per Share - Additional Information (Detail) - shares |
12 Months Ended | |
---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Restricted Stock Units (RSUs) [Member] | ||
Weighted Average Amounts Used In Calculating Earnings Per Share [Line Items] | ||
Stock options excluded from diluted earnings per share | 65,098 | 186,520 |
Earnings Per Share - Computation of Diluted Earnings Per Share (Detail) - shares |
12 Months Ended | |
---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Earnings Per Share [Abstract] | ||
Weighted average common stock outstanding, basic | 7,367,948 | 7,352,495 |
Dilutive impact of RSUs | 41,164 | 26,234 |
Weighted average common stock outstanding, diluted | 7,409,112 | 7,378,729 |
Concentration of Credit Risk - Additional Information (Detail) $ in Millions |
Sep. 30, 2021
USD ($)
|
---|---|
Concentration Risk [Line Items] | |
Deposit amount exceeding the FDIC insurance limit | $ 4.0 |
First American Retail Prime Obligation Money Market Fund [Member] | |
Concentration Risk [Line Items] | |
Uninsured amount of cash and cash equivalents | $ 11.5 |
Subsequent Events - Additional Information (Detail) - Subsequent Event [Member] - USD ($) $ / shares in Units, $ in Thousands |
1 Months Ended | |
---|---|---|
Oct. 20, 2021 |
Oct. 29, 2021 |
|
4.875% notes due in 2026 | Over-Allotment Option [Member] | ||
Subsequent Event [Line Items] | ||
Long term debt bearing fixed rate of interest percentage | 4.875% | |
Debt instrument face value | $ 40,250,000 | |
Proceeds from issuance of medium term notes | $ 40,250,000 | |
Long term debt maturity start date | Dec. 31, 2021 | |
Long term debt maturity end date | Dec. 31, 2026 | |
Dividend Declared [Member] | ||
Subsequent Event [Line Items] | ||
Dividend to be paid | $ 0.1375 | |
Dividend declared date | Oct. 29, 2021 | |
Dividend record date | Nov. 11, 2021 | |
Dividend payable date | Nov. 23, 2021 |
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