The curated database of hedge funds that publish investor letters. Research by geography, strategy, and schools of thought.
| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
|---|---|---|---|---|---|---|
The Mairs & Power Balanced Fund's core investment thesis is that long-term sustainable returns are best achieved by investing in companies with durable competitive advantages and attractive growth prospects selling at reasonable valuations, combined with rigorous bottom-up credit selection. During the first half of 2026, the Fund achieved a return of 6.14%, slightly underperforming its composite benchmark's return of 6.39%. This relative underperformance was primarily driven by the equities portfolio, where healthcare holdings like Abbott Laboratories and Medtronic, alongside financial services provider Fiserv, acted as key detractors. These headwinds were partially mitigated by strong performance from technology and materials holdings such as Texas Instruments, Entegris, and Littelfuse. The Fund actively managed its portfolio during the quarter, initiating new positions in Palo Alto Networks, Waste Management, Cognex, and AJ Gallagher, while fully liquidating holdings in Salesforce, Qualcomm, Sysco, Walt Disney, and Wells Fargo. In fixed income, the Fund outperformed its benchmark through a structural preference for corporate credits over Treasuries and diligent bottom-up security selection. Looking ahead, the managers remain cautious yet constructive, focus on downside protection, and position the fund to benefit from downstream AI monetization and stable labor markets.
The fund seeks sustainable long-term investment returns by selecting durable, reasonably valued businesses with competitive advantages and attractive growth prospects, paired with bottom-up credit analysis.
We continue to believe that our consistent investment approach to both stocks and bonds will deliver sustainable performance over the long haul. While we do not make predictions on interest rates or credit cycles, we have increasingly positioned the fixed income portion of the Fund to be optimized for a balanced portfolio allowing for effective reallocation in a market dislocation. We focus on durable, reasonably valued businesses positioned as downstream beneficiaries of the AI build-out, rather than the hottest, most cyclical hardware names.
As of Jun 30, 2026
The Hennessy Balanced Fund is managed by a three-person team led by Neil J. Hennessy, alongside Ryan C. Kelley, CFA, and L. Joshua Wein, CAIA. Neil Hennessy serves as the lead portfolio manager and has been with Hennessy Advisors since the firm's founding era. The management company, Hennessy Advisors, Inc., was established in 1989 and registered as an Investment Advisor in 1990, with the Balanced Fund launching as their first mutual fund on March 8, 1996. Teresa M. Nilsen serves as President and Chief Operating Officer of Hennessy Advisors Inc, overseeing firm operations. The company is headquartered in Novato, California, and manages over $4 billion in assets across multiple fund strategies as of 2025. The firm has nearly 35 years of investment management experience, with the Balanced Fund representing their longest-running strategy. The management team maintains a disciplined, systematic approach to investing, focusing on mechanical strategies that can be consistently implemented regardless of market conditions. Hennessy Advisors operates as a boutique investment management firm specializing in quantitative and rules-based investment approaches. The firm's distribution partnership with Quasar Distributors, LLC ensures broad accessibility to U.S. investors. The management team's experience spans multiple market cycles, having navigated various economic environments since the fund's 1996 inception.
The Hennessy Balanced Fund employs a disciplined 'Dogs of the Dow' strategy, investing approximately 50% in the 10 highest dividend-yielding Dow Jones Industrial Average stocks and 50% in U.S. Treasury securities with maturities under one year. The fund's core philosophy centers on capital preservation and risk management, with lead portfolio manager Neil Hennessy stating 'We believe losing less money in difficult markets is more important than making the most in rising ones.' This mechanical, value-oriented approach targets dividend-paying blue-chip stocks while maintaining reduced volatility through Treasury bill allocation. The strategy aims to capture potential mean reversion in high-yield DJIA stocks while providing steady income and capital stability. Since inception in 1996, the fund has maintained a beta of approximately 0.4 relative to the DJIA, demonstrating its commitment to lower-risk balanced investing. The fund rebalances according to the Dogs of the Dow methodology, typically resulting in moderate portfolio turnover of around 57% annually. This systematic approach prioritizes consistency and risk control over maximum returns, appealing to conservative investors seeking balanced exposure to equities and fixed income. The fund pays quarterly income distributions and annual capital gains distributions, providing regular income to shareholders. Risk management remains central to the investment process, with the belief that minimizing losses in difficult markets is more critical than maximizing gains during favorable periods.
Lead Portfolio Manager
Neil J. Hennessy & Ryan Kelley
Managing Partner
Moderate Conviction Bullish
Market Conviction
Conviction is rated at 0.65. As a diversified balanced fund managing both fixed income and equity portfolios across multiple sectors, they do not run an extremely concentrated book. However, they demonstrate high conviction in their discipline by completely liquidating five prominent holdings where they saw competitive erosion.
Growth Outlook
The market outlook is constructive at 0.65. While the manager points to sturdy underlying economic fundamentals, broadening earnings expansion, and healthy valuations relative to earlier in the year, they temper their optimism with acknowledgments of persistent geopolitical conflicts and sticky inflation.
Risk Appetite
The fund's risk appetite is balanced at 0.55. While they maintain a modest overweight to equities, their core equity strategy deliberately avoids high-risk cyclical AI hardware companies in favor of durable, reasonably valued downstream operators with protected balance sheets.
Capital Deployment
The fund shows a moderate level of capital deployment (0.60). They took advantage of the second quarter's volatility to scale up high-conviction holdings and establish four new positions, while actively liquidating five others that had deteriorating competitive outlooks.
Forward Guidance
Forward guidance scores at 0.60. The manager provides clear, actionable descriptions of how they intend to handle the transition to AI monetization by focusing on downstream beneficiaries and avoiding overhyped hardware stocks. They have also explicitly prepared the fixed income book for strategic reallocation during any future market dislocations.
Language Signal
The language signal is moderately positive (0.60). Constructive terms detailing 'broadening earnings,' 'sturdy fundamentals,' and 'productivity tailwinds' are balanced by cautious macro assessments regarding 'sticky inflation,' 'Middle East conflict,' and the Fed wildcard.
Perceived Risk
Perceived risk is scored at 0.65. The manager dedicates significant portions of the outlook to systemic macro risks, including energy feedstock price volatility due to Middle East conflicts, policy communication uncertainties with the new Fed Chair, and the potential 'show me' phase risks of AI monetization.
Opportunity Density
Opportunity density is scored at 0.60. The managers express selectivity, noting that while the broader market faces high valuations and cyclical hype, they were able to find several highly attractive entry points in defensive compounders by capitalizing on recent price volatility.
Time Horizon
The time horizon is scored at 0.85. The fund's primary mandate is focused on long-term investing, ignoring short-term predictions of interest rates and credit cycles. They construct portfolios designed to withstand multi-year macro shifts and harvest returns from durable competitive compounders.
Top Conviction Themes
Key Catalysts
Every insight in this database connects to the original source. Read the actual thesis, see the actual concerns, and make your own call.
Buyside Digest has no business relationship, partnership, agency, sponsorship, endorsement, or affiliation with Hennessy Balanced Fund or any other manager whose content appears on the Service, except where expressly stated. We do not receive Manager Content directly from managers in most cases; content is collected from publicly available sources. Managers have not necessarily reviewed, approved, authorized, or endorsed our display of their content, our editorial commentary, our metadata extraction, or our classifications. Use of a manager’s name is for accurate attribution and identification purposes only, under principles of nominative fair use.
Buyside Digest does not independently verify the regulatory status, registrations, licensing, qualifications, credentials, or professional standing of managers whose content appears on the Service. We do not represent that managers are properly registered with applicable regulatory bodies, that their content complies with applicable securities laws, or that their performance representations are accurate. Inclusion of a manager in our database is based on the publicly available nature of their content, not on our verification of their regulatory status or content compliance. Users are responsible for conducting their own due diligence on any manager.
Performance data, returns, assets under management (“AUM”), and similar figures displayed on this page are sourced from publicly available manager communications (including investor letters), public filings, or other third-party sources. Buyside Digest does not independently verify performance figures, calculate returns, or audit manager-reported data. Such figures: May be selectively reported by the manager; May use non-standard calculation methodologies; May not reflect fees, expenses, taxes, or other costs; May be inconsistent across reporting periods; May be outdated. Past performance is not indicative of future results. Performance figures should not be relied upon for investment decisions without independent verification. Users should request audited performance data directly from the manager and conduct their own due diligence.
