| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
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| - | - | - |
The Hennessy Cornerstone Growth Fund utilizes a disciplined, formula-based approach to identify 50 small cap stocks that combine attractive valuations with strong price momentum. The strategy screens for companies with market caps exceeding $175 million, price-to-sales ratios below 1.5, year-over-year earnings growth, and positive three-month, six-month, and one-year price appreciation. As of June 30, 2026, the Fund has a median market cap of $4.0 billion and median price-to-sales ratio of 0.9x, compared to 2.0x for the Russell 2000 benchmark. The portfolio is significantly overweight Industrials at 24%, Energy at 20%, Information Technology at 18%, and Materials at 11%, representing a dramatic shift from the prior year. These allocations reflect momentum in AI infrastructure spending, grid electrification, manufacturing reshoring, elevated defense budgets, surging electricity demand from data centers, and increasing scarcity value for strategic materials. The Fund rebalances annually with equal-weighted 2% positions in each of its 50 holdings, providing diversified exposure across all sectors except Utilities.
The Hennessy Cornerstone Growth Fund employs a formula-based strategy to identify attractively valued small cap stocks exhibiting strong price momentum, combining value and momentum factors to capture companies with improving fundamentals and market recognition.
The Fund expects continued momentum across its key sector allocations in the latter half of 2026. Industrials should benefit from ongoing capital spending in AI infrastructure, grid electrification, manufacturing reshoring, and elevated defense budgets. Energy sector strength is expected to persist due to surging electricity demand from AI data centers and manufacturing reshoring, combined with geopolitical factors. Technology will be driven by AI adoption and replacement cycles. Materials are positioned to benefit from increasing manufacturing importance and rising scarcity value for strategic metals and chemicals globally.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 27 2026 | 2026 Q2 | - | AI, Defense Spending, energy, industrials, momentum, Onshoring, small caps, value | - | Hennessy Cornerstone Growth Fund combines value and momentum factors to build a 50-stock small cap portfolio using strict quantitative screens. The Fund is heavily overweight Industrials, Energy, Technology, and Materials, positioning for AI infrastructure buildout, manufacturing reshoring, grid electrification, defense spending, and materials scarcity. With a median 0.9x price-to-sales ratio versus 2.0x for the Russell 2000, the strategy targets attractively valued companies with strong price momentum. |
| Mar 2 2026 | 2025 Q4 | - | financials, Formula, growth, quantitative, small caps, value | - | Hennessy Cornerstone Growth Fund uses a quantitative formula to select 50 US growth stocks with strong price momentum, earnings growth, and attractive valuations. The fund maintains equal weightings and rebalances annually, currently concentrated in Financials. The systematic approach combines growth and value factors but faces risks from formula constraints and high turnover. |
| Jul 11 2025 | 2025 Q2 | - | Formula-based, growth, momentum, Screening, small caps, value | - | The Hennessy Cornerstone Growth Fund combines value and momentum through systematic screening, selecting the 50 highest one-year price appreciators with attractive valuations. Currently defensively positioned in Financials, Consumer Staples, and Communication Services with a median market cap of $6.3 billion, the Fund targets capital appreciation through earnings growth and valuation expansion. |
| Jan 8 2025 | 2024 Q4 | AAPL, AMZN, GOOGL, META, MSFT, NVDA, TSLA | AI, energy, financials, Japan, Rate Cuts, regulation, small caps, volatility | - | After two years of 20%+ S&P 500 returns, Hennessy expects 2025 volatility with opportunities shifting from Magnificent Seven to small-caps, financials, and energy. Rate cuts, deregulation, and tax cuts should benefit smaller companies. Energy offers decades-long growth from AI demand and transition investments. Japanese equities provide attractive international diversification opportunity. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIAI infrastructure spending is driving robust capital expenditures across multiple sectors in 2026. The Industrials sector benefits from AI infrastructure buildout, while Energy sector momentum is supported by surging electricity demand from AI data centers. Technology sector positioning reflects AI-driven demand cycles. |
Data Centers Infrastructure Spending Technology Energy |
OnshoringReshoring of manufacturing facilities is a key driver for both Industrials and Energy sectors in 2026. The Fund's positioning reflects capital spending opportunities related to domestic manufacturing buildout. Energy demand is being driven in part by manufacturing reshoring alongside AI data center growth. |
Manufacturing Industrials Energy Infrastructure Spending | |
Grid UpgradeGrid electrification is identified as a significant driver of capital spending in the Industrials sector for 2026. The Fund's overweight position in Industrials reflects opportunities in grid infrastructure investment. This theme is linked to broader energy transition and AI infrastructure power requirements. |
Electrical Equipment Industrials Infrastructure Spending Energy Transition | |
Defense SpendingElevated defense budgets are cited as a driver for the Industrials sector in 2026. The Fund's 24% allocation to Industrials includes exposure to defense-related capital spending. Geopolitical issues are mentioned as supporting continued momentum in defense-related areas. |
Defense Industrials Aerospace | |
Energy TransitionThe Energy sector represents the Fund's second largest allocation at 20%, with momentum expected to continue in the latter half of 2026. Surging electricity demand from AI data centers and manufacturing reshoring is driving energy sector opportunities. The positioning reflects structural demand growth for energy infrastructure. |
Energy Electricity Infrastructure Spending | |
MaterialsMaterials are becoming increasingly important in manufacturing, with scarcity value and global demand continuing to increase for some metals and strategic chemicals. The Fund holds an 11% allocation to Materials, reflecting opportunities in this sector. The commentary emphasizes both supply constraints and rising demand dynamics. |
Metals Chemicals Manufacturing Critical Minerals | |
Small CapsThe Fund maintains a median market cap of approximately $4.0 billion as of June 30, 2026, above its long-term average of $2.9 billion but still firmly in small cap territory. The strategy focuses on small and medium capitalized companies using a formula-based approach combining value and momentum factors. The Fund benchmarks against the Russell 2000 Index. |
SmallCap Value Momentum Russell 2000 | |
| 2025 Q2 |
ValueThe Fund utilizes a formula-based approach combining value and momentum investing, screening for stocks with price-to-sales ratios below 1.5. The Fund's median price-to-sales ratio of 1.1x compares favorably to the Russell 2000 Index at 1.8x, reflecting the value-oriented screening criteria. |
Price-to-sales Valuation Screening Value investing |
MomentumThe strategy selects the 50 stocks with the highest one-year price appreciation that also meet screening criteria. The Fund requires positive stock price appreciation over three- and six-month periods, believing this ranking by relative share price strength can be a good predictor of future outperformance. |
Price appreciation Relative strength Momentum Outperformance | |
Small CapsThe Fund has historically been classified as a small-cap fund but currently has a median market cap of $6.3 billion, the largest in over a decade. The managers note the Fund has performed well against peers when market cap is higher than the 10-year average of $3.0 billion. |
Market cap Small-cap Mid-cap Peer performance | |
| 2024 Q4 |
AIGrowth in artificial intelligence and data centers demands more energy, driving investment opportunities across traditional and renewable energy value chains. AI is identified as a key driver of increased energy demand alongside data centers. |
Data Centers Energy Technology Growth |
EnergyEnergy sector viewed as long-term growth industry for several decades driven by global population growth, improved living standards, AI and data center demand, onshoring of manufacturing, and energy transition creating opportunities across traditional and renewable value chains. Corporate management teams more aligned with shareholders than ever before. |
Oil Natural Gas Renewable Growth Shareholder Returns | |
Small CapsSmall and mid-cap stocks may perform better than larger counterparts as they are more evenly diversified across different sectors. Potential for continued rate cuts, less regulation, and lower corporate tax rates could disproportionately benefit small-caps and domestically focused companies. |
Diversification Rates Regulation Tax |
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