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FBR sold to Hennessy

David_Snowball
edited June 2012 in Fund Discussions
FBR just announced the sale of their mutual fund unit to Hennessy Advisors. Of the 10 FBR funds, seven will retain their current management teams. The managers of FBR's Large Cap, Mid Cap and Small Cap funds are getting dumped and their funds are merging into Hennessy funds. One of the mergers (Large Cap) is likely a win for the investors. One of the mergers (Mid Cap) is a loss and the third (Small Cap) has the appearance of a disaster.
FBR Large Cap (FBRPX, 1.25% e.r., 9.2% over three years) merges into Hennessy Cornerstone Large Growth (HFLGX), three year old large value fund, 1.3% e.r., 13.8% over 3 years. Win for the FBR shareholders.

FBR Mid Cap (FBRMX, 1.35% e.r., five year return of 3.0%) merges into Hennessy Focus 30 (HFTFX), midcap fund, 1.36% e.r., five year return of 1.25%. Higher minimum, same e.r., lower returns - loss for FBR shareholders.

FBR Small Cap (FBRYX, 1.45% e.r., five year return of 4.25%) merges into Hennessy Cornerstone Growth (HGCGX), small growth fund, 1.33% e.r., five year return of (8.2). Huh? Slightly lower expenses but a huge loss in performance. The 1250 basis point difference is 5-year performance does not appear to be a fluke. The Hennessy fund is consistently at the bottom of its peer group, going back a decade. This is a clear "run away!" for the FBR shareholders.
One alternative for FBRYX investors is into FBR's own Small Cap Financial fund (FBRSX), run by Dave Ellison, FBR's CIO. Ellison's funds used to bear the FBR Pegasus brand. The fund only invests in the finance industry, but does it really well. That said, it's more expensive than FBRYX with weaker returns, reflecting the sector's disastrous decade.

David

Comments

  • Old_JoeOld_Joe
    Hi David- Do you have any comments or thoughts regarding the future of GASFX?

    Thanks- OJ
  • [Deleted User]
    edited June 2012
    The user and all related content has been deleted.
  • Old_JoeOld_Joe
    Reply to @Maurice: Thanks Maurice- I found similar info yesterday after the post above.
  • David_Snowball
    Reply to @Old_Joe: I suspect we're all stuck with the same press release until the formal filings occur. And the release said nothing about expenses or minimums. I'll keep an eye out at the SEC's website. David
  • Old_JoeOld_Joe
    Reply to @David_Snowball: Thanks, David!
  • VintageFreakVintageFreak
    I am so glad i left FBR and into AKREX. I did so, after article published on FA I think about how FBR executives were simply enriching themselves. Writing was on the wall.
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