At the start of an interview at Schwab Impact 2012 on Thursday, Neil Hennessy rephrased the opening question about his mutual fund complex’s late October acquisition of FBR funds. “Why buy an equity mutual funds” complex now? “The market is in very good shape,” he answered, “and has been in good shape,” citing the year-to-date 14% rise in the S&P 500, and the strong earnings being posted by the S&P 500 companies.
However, with the continued “lack of clarity” on what will happen in Washington regarding taxes, healthcare and regulation, the chairman and CEO of Hennessy Fund Advisors (HNNA) believes that corporations are limited with what they can do with their cash. One option for what companies can do with their cash–to initiate or raise dividends–will be much less appealing should the tax rate on dividends rise if the Bush-era tax cuts are allowed to expire at year’s end. Another one of those options, however, is to make acquisitions. As with other American companies, that’s what Hennessy decided to do with FBR. Additional deals are possible for Hennessy (at left) as well. “I’ll look for more acquisitions on the equity side.”