Better Know a Stock Picker

Welcome, Fools, to part 46 of our several-thousand-part series, "Better Know a Stock Picker," which is loosely, but not too loosely, based on Stephen Colbert's "Better Know a District" from The Colbert Report.

Like Stephen and his thorough investigations into America's congressional districts, each week I take a look at a fund you may want to own. What's on tap this week?

Hennessy Focus 30 (HFTFX)

Expense ratio


Fund size

$231 million

1-year return


5-year return


10-year return


Source: Hennessy Advisors as of 3/31/07.

Top 5 holdings


% of Assets

Albemarle (NYSE:ALB)


Big Lots (NYSE:BIG)


WellCare Health Plans (NYSE:WCG)





Source: Hennessy Advisor as of 3/31/07.

Meet Neil Hennessy
The fightin' team at Hennessy Focus 30 is led by the guy with his name on the door: Neil Hennessy. He's run the shop since 1996, when the market-busting Cornerstone Growth Fund (HFCGX) was first introduced.

"Market-busting?" Yeah, I know how that sounds. Prepare to be impressed: Cornerstone Growth is up on the S&P 500 by almost seven percentage points per year since inception. No wonder Barron's listed Hennessy as No. 6 on its 2006 list of the top 100 fund managers.

With such a superstantial record, you'd think Hennessy's first passion would be stocks. Wrong. His first passion is customer service. He recently told Mutual Fund Wire, "All of our employees, including the executives, answer the phone and talk to shareholders."

Hennessy's firm also spends $2 million of its profits to list its funds with Schwab and Fidelity. The goal, he says, is to help clients manage a comprehensive portfolio with less paperwork. Eat that, Wall Street.

How he invests
And prepare for seconds. Unlike members of the white-shoe investapo, Hennessy is a well-known admirer of index funds. Indeed, what matters to him, and his clients, isn't so much the stocks he picks but the process by which they profit. As Hennessy explained about the 50-stock Cornerstone Fund in a 2005 interview with Motley Fool Champion Funds advisor Shannon Zimmerman:

The interesting part about it is just because we don't move stocks on a daily basis, people think that we are not actively managed. But we have the discipline of an index fund. In other words, we go out, we search 9,800 different companies, we do our screens, and we purchase our 50 stocks. With us, what you see is what you get. You know how your money is being invested. (Emphasis mine.)

Hennessy really means what he says. All the details for Focus 30's stock-picking process are public, and they never change. Sales occur only once annually, when the portfolio is rebalanced. That takes guts.

Hennessy is also one of the few managers to focus on price-to-sales. Why? Quoting from the website: "To find relative bargains. We won't spend more than $1.50 for $1 of sales. We use sales as our guide because sales figures are difficult for companies to manipulate and provide the clearest picture of a company's potential and value."

Is this fund for you?
Fair enough. But would you take Hennessy over Peter Lynch in a stock-picking contest? Probably not. Lynch possesses unearthly instincts when it comes to stock picking while Hennessy is a spreadsheet man.

Still, that spreadsheet is working overtime in the case of Focus 30. Since it opened for business on Sept. 17, 2003, the fund has returned 21.2% annually versus just 15.8% for the S&P 500.

No wonder Shannon keeps Focus 30 on his "funds to watch" list. There's simply too much potential here to ignore. (Want more market-beating ideas? Click here to get 30 days of free access to Champion Funds.)

That's all for now. See you back here next week, fund nation. Good night.

For more Foolish coverage of focused funds:

Fool contributor Tim Beyers, who is ranked 3,490 out of more than 29,700 in our Motley Fool CAPS investor intelligence database, is a regular viewer of The Colbert Report. (Stay the course.) Tim didn't own shares in any of the companies mentioned in this article at the time of publication. Tim's portfolio holdings can be found at his Fool profile. His thoughts on mutual funds, Foolishness, and investing in general may be found in his blog. The Motley Fool's disclosure policy is always championship caliber.  

Read/Post Comments (0) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 529236, ~/Articles/ArticleHandler.aspx, 10/28/2016 5:43:05 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,161.19 -8.49 -0.05%
S&P 500 2,126.41 -6.63 -0.31%
NASD 5,190.10 -25.87 -0.50%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/28/2016 4:02 PM
ALB $82.91 Up +0.86 +1.05%
Albemarle CAPS Rating: ***
BDC $65.00 Up +0.18 +0.28%
Belden CAPS Rating: No stars
PCLN $1474.82 Up +11.80 +0.81%
Priceline Group CAPS Rating: ****
WCG $114.03 Down -1.11 -0.96%
WellCare Health Pl… CAPS Rating: *****