Hennessy Advisors closed out 2012 with a huge ramp up in assets thanks to its acquisition of funds from FBR Funds.

The initial agreement, signed in June 2012, had Hennessy paying $28.7 million for the FBR assets. Once completed, the transaction will give Hennessy total assets under management of more $2.7 billion. In addition, several FBR portfolio managers, including Dave Ellison, FBR president and chief investment officer, will join Hennessy Funds to continue managing the portfolios.

Yesterday, Hennessy reported that for its first quarter ending December 31, 2012, total assets under management for the firm jumped 287% to over $3 billion. “Financial performance for the first quarter was clearly impacted by the purchase of the assets related to the management contracts of the FBR Funds, which took place on October 26, 2012,” stated Neil Hennessy, chief executive officer of Hennessy Advisors.

“We are excited to now manage over $3 billion in assets and offer shareholders a broader and more diversified lineup of mutual fund products.”

In a follow-up interview with Money Management Executive, Hennessy said that the firm will look for more acquisitions in the international and domestic equities space as well as grow its product line organically. However, Hennessy is shying away from fixed income managers because “margins are thin and interest rates are on the rise.”

He’ll also stay away from alternative products because “if you can’t explain it to a six-year-old, then you can’t understand it yourself.” And exchange-traded funds managers need not apply. “ETF margins are getting squeezed on a daily basis and I haven’t seen anything that makes sense,” said Hennessy.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.