Hennessy Cornerstone Mid Cap 30 Fund (HFMDX)

Objective & Overview

The Hennessy Cornerstone Mid Cap 30 Fund seeks long-term growth of capital by investing in 30 Mid Cap companies, screening for undervalued stocks with above-average growth potential.

  • Investment Strategy

    The Hennessy Cornerstone Mid Cap 30 Fund formula marries value with momentum, seeking growth at a reasonable price. Stocks for the portfolio are selected by strict adherence to the following time-tested, quantitative formula:

    Market capitalization between $1 and $10 billion, excluding foreign stocks/ADR's

    This market cap spread allows for inclusion of a broad range of mid-cap companies. Foreign stocks/American Depositary Receipts, or “ADR's” are excluded as they do not generate additional returns for the additional associated risk.

    Price to sales ratio below 1.5

    This value metric helps to uncover relative bargains. The formula chooses sales as its guide because sales figures are more difficult for companies to manipulate than earnings and frequently provide a clearer picture of a company's potential value.

    Annual earnings higher than the previous year

    While sales may be the best indicator of a company's value, the formula considers improvement in earnings as an indicator of a company's financial strength.

    Positive stock price appreciation, or relative strength, over 3 and 6-month period

    Historically, relative strength has been one of the most influential variables in predicting which stocks will outperform the market.

    Select the 30 stocks with the highest 12-month price appreciation

    Limiting the portfolio to 30 stocks allows just the top performers to be included, while providing ample diversification

    The portfolio is rebalanced once annually, generally in the Fall

    Video: View Portfolio Manager Brian Peery's comments on the Fund's Investment Strategy

    View Portfolio Manager Brian Peery's comments on the Fund's Investment Strategy

Price to sales ratio is a tool for calculating a stock's valuation relative to other companies. It is calculated by dividing a stock's current price by its revenue per share.

Diversification does not assure a profit or protect against loss in a declining market.