8-K: Hennessy Advisors to Acquire STF Management ETFs, Expanding ETF Offerings

Hennessy Advisors, Inc. announces a definitive agreement to acquire the STF Tactical Growth ETF and the STF Tactical Growth & Income ETF, with combined assets of approximately $220 million, from STF Management, LP.

Summary

• Hennessy Advisors, Inc. (Nasdaq: HNNA) has entered into a definitive agreement to acquire the STF Tactical Growth ETF (TUG) and the STF Tactical Growth & Income ETF (TUGN) from STF Management, LP (STFM).
• The combined assets under management for these ETFs are approximately $220 million.
• The transaction is expected to close in the third quarter of 2025.
• Upon completion, the STFM ETFs will be reorganized as a series of Hennessy Funds Trust and renamed the Hennessy Tactical Growth ETF and the Hennessy Tactical Growth and Income ETF.
• Hennessy Advisors, Inc. will become the investment advisor to both funds.
• Jonathan Molchan, the current portfolio manager for the STFM ETFs, will join Hennessy Advisors and continue to manage the portfolios.
• The acquisition is subject to customary closing conditions, including approvals from the SEC, the Hennessy Funds Trust Board of Trustees, the Listed Funds Trust Board of Trustees, and the STFM ETFs shareholders.
• The transaction is structured to qualify as a tax-free reorganization under the Internal Revenue Code of 1986.

Sentiment

Score: 8

Explanation: The announcement is positive due to the expansion of ETF offerings and the addition of an experienced portfolio manager. The transaction is structured to be tax-free, which is beneficial for shareholders.

Positives

• Hennessy Advisors will significantly expand its ETF offerings through this acquisition.
• The addition of Jonathan Molchan brings 20 years of industry experience to Hennessy Advisors.
• The transaction is expected to be a tax-free reorganization, providing benefits to STFM ETF shareholders.
• Hennessy Advisors strengthens its position in the ETF market.

Risks

• The transaction is subject to customary closing conditions, including regulatory and shareholder approvals, which may not be obtained.
• The ability of Hennessy Advisors, Inc. to successfully merge the assets of the STFM ETFs into the Hennessy investment portfolio is uncertain.

Future Outlook

Hennessy Advisors expects to strengthen its position in the ETF market and provide investors with long-term investment solutions through this acquisition.

Management Comments

• Teresa Nilsen, President and COO of Hennessy Advisors, Inc., stated that this transaction is a natural extension of Hennessy Advisors' long-term growth strategy through acquisitions.
• Jonathan Molchan stated that he is confident that shareholders will continue to benefit from disciplined portfolio management, exceptional shareholder service, and trusted oversight.

Industry Context

This acquisition reflects a trend of consolidation and expansion in the ETF market, as firms seek to broaden their product offerings and increase assets under management.

Comparison to Industry Standards

• Acquiring existing ETFs is a common strategy for asset managers to quickly increase their AUM and market presence, similar to BlackRock's acquisition of Credit Suisse's ETF business.
• The focus on tax-free reorganization aligns with industry best practices to minimize tax implications for shareholders during fund mergers, similar to how Vanguard structures its fund consolidations.

Management Changes

Stakeholder Impact

• Shareholders of the STFM ETFs should not recognize any gain or loss for federal income tax purposes as a result of the transaction.
• Shareholders of the STFM ETFs will benefit from the resources and expertise of Hennessy Advisors.
• Hennessy Advisors' shareholders will benefit from the increased assets under management and expanded ETF offerings.

Next Steps

• Obtain approvals from the SEC, the Hennessy Funds Trust Board of Trustees, the Listed Funds Trust Board of Trustees, and the STFM ETFs shareholders.
• Complete the reorganization of the STFM ETFs as a series of Hennessy Funds Trust.
• Rename the funds to the Hennessy Tactical Growth ETF and the Hennessy Tactical Growth and Income ETF.
• Transition Jonathan Molchan and the STFM ETF shareholders to the Hennessy family.

Key Dates