HNNA

Hennessy is a small, asset-light investment advisor that earns fees as a percentage of the average daily net assets of its 17 Hennessy Funds, so its top line rises and falls with AUM. FY2025 was a banner year: revenue grew 19.9% to $35.5M, operating income jumped 48.2% to $13.1M (37% operating margin), net income rose 40.3% to $9.96M, and diluted EPS hit $1.27 (+38%). That strength is no accident — management's MD&A ties it directly to a 17.6% S&P 500 total return for the year ended September 30, 2025. The five-year history exposes the catch: revenue fell from $32.8M (FY2021) to a $24.0M trough (FY2023) before recovering, so today's numbers sit near a market-driven cyclical peak rather than on a secular growth curve.

What makes this interesting is the price. At $10.27 the stock trades at 8.1x trailing EPS and 2.3x sales for a business throwing off $13.8M of operating cash flow on just $440K of capex. The balance sheet is fortress-like: $72.4M of cash against an $81M market cap, $97.7M of equity, and liabilities/equity of only 0.64x — meaning the enterprise value is a tiny fraction of market cap and you are effectively buying the operating business for very little. Dividends paid of $4.20M equate to roughly a 5% yield, and the company has a buyback history. The market is pricing HNNA as a melting ice cube; the cash backing and cash generation say otherwise.