Hennessy Advisors Would Be A Perfect Addition To One Of Its Own Funds
- The stock trades at a discount to its peer group as historical AUM growth has been driven by acquisitions rather than organic inflows.
- However, the strong FCF provides more than sufficient coverage for the acquisition-related debt, which only has a 4% interest rate.
- The highly accretive acquisition of a fund family from FBR in 2012 provided the critical mass necessary to fully benefit from the scalable business model.
- The recent turnaround in fund flows provides reassurance of the organic growth potential.
- The skin in the game trifecta for the CEO (large equity ownership, highly incentivized compensation structure, name on the door) results in a perfect alignment of interests with shareholders.