Hennessy Advisors (HNNA) 10-Q 3 Aug 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Jun. 30, 2016	Jul. 20, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q3
Trading Symbol	HNNA
Entity Registrant Name	HENNESSY ADVISORS INC
Entity Central Index Key	1,145,255
Current Fiscal Year End Date	--09-30
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		5,066,699

Balance Sheets

Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2016	Sep. 30, 2015
Current assets:
Cash and cash equivalents	$ 11,419	$ 3,086
Investments in marketable securities, at fair value	8	7
Investment fee income receivable	4,260	4,052
Prepaid expenses	772	1,049
Deferred income tax asset	683	683
Other accounts receivable	591	535
Total current assets	17,733	9,412
Property and equipment, net of accumulated depreciation of $888 and $733, respectively	285	319
Management contracts	63,007	62,681
Deferred offering costs	13	12
Other assets, net of accumulated amortization of $438 and $328, respectively	614	709
Total assets	81,652	73,133
Current liabilities:
Accrued liabilities and accounts payable	5,378	4,699
Income taxes payable		1,097
Deferred rent	49	94
Current portion of long-term debt	4,375	4,375
Total current liabilities	9,802	10,265
Long-term debt, net of current portion	27,343	30,625
Deferred income tax liability	10,632	9,148
Total liabilities	47,777	50,038
Commitments and Contingencies (Note 8)
Stockholders' equity:
Adjustable rate preferred stock, $25 stated value, 5,000,000 shares authorized: zero shares issued and outstanding
Common stock, no par value, 15,000,000 shares authorized: 5,066,680 shares issued and outstanding at June 30, 2016 and 5,046,628 at September 30, 2015	12,768	11,654
Retained Earnings	21,107	11,441
Total stockholders' equity	33,875	23,095
Total liabilities and stockholders' equity	$ 81,652	$ 73,133

Balance Sheets (Parenthetical)

Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2016	Sep. 30, 2015
Statement of Financial Position [Abstract]
Property and equipment, accumulated depreciation	$ 888	$ 733
Other assets, accumulated amortization	$ 438	$ 328
Adjustable rate preferred stock, stated value	$ 25	$ 25
Adjustable rate preferred stock, shares authorized	5,000,000	5,000,000
Adjustable rate preferred stock, shares issued	0	0
Adjustable rate preferred stock, shares outstanding	0	0
Common stock, no par value
Common stock, shares authorized	15,000,000	15,000,000
Common stock, shares issued	5,066,680	5,046,628
Common stock, shares outstanding	5,066,680	5,046,628

Statements of Income (Unaudited

Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Revenue
Investment advisory fees	$ 11,747	$ 10,622	$ 34,561	$ 30,021
Shareholder service fees	1,248	1,346	3,779	2,239
Total revenue	12,995	11,968	38,340	32,260
Operating expenses
Compensation and benefits	3,017	2,628	8,873	7,007
General and administrative	1,301	1,191	4,245	3,839
Mutual fund distribution	231	480	682	2,100
Sub-advisor fees	2,225	1,923	6,429	5,256
Amortization and depreciation	88	67	265	197
Total operating expenses	6,862	6,289	20,494	18,399
Operating income	6,133	5,679	17,846	13,861
Interest expense	279	242	949	756
Other income	(1)		(2)	(1)
Income before income tax expense	5,855	5,437	16,899	13,106
Income tax expense	1,961	2,134	6,072	5,143
Net income	$ 3,894	$ 3,303	$ 10,827	$ 7,963
Earnings per share:
Basic	$ 0.77	$ 0.57	$ 2.14	$ 1.36
Diluted	$ 0.76	$ 0.56	$ 2.11	$ 1.34
Weighted average shares outstanding:
Basic	5,066,541	5,776,116	5,065,158	5,861,921
Diluted	5,154,094	5,855,397	5,135,765	5,961,096

Statement of Changes in Stockho

Statement of Changes in Stockholders' Equity (Unaudited) - 9 months ended Jun. 30, 2016 - USD ($) $ in Thousands	Total	Common Stock [Member]	Retained Earnings [Member]
Beginning balance at Sep. 30, 2015	$ 23,095	$ 11,654	$ 11,441
Beginning balance, Shares at Sep. 30, 2015		5,046,628
Net income	10,827		10,827
Dividends paid	(1,115)		(1,115)
Shares issued pursuant to the 2015 Dividend Reinvestment and Stock Purchase Plan	22	$ 22
Shares issued pursuant to the 2015 Dividend Reinvestment and Stock Purchase Plan, Shares		727
Employee & Director restricted stock vested	0	$ 0	0
Employee & Director restricted stock vested, Shares		23,250
Repurchase of vested employee restricted stock for tax withholding	(98)	$ (52)	(46)
Repurchase of vested employee restricted stock for tax withholding, Shares		(3,925)
Deferred restricted stock unit compensation	1,049	$ 1,049
Tax effect of restricted stock unit vesting	95	95
Ending balance at Jun. 30, 2016	$ 33,875	$ 12,768	$ 21,107
Ending balance, shares at Jun. 30, 2016		5,066,680

Statements of Cash Flows (Unaud

Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows from operating activities:
Net income	$ 10,827	$ 7,963
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	265	197
Deferred income taxes	1,484	1,061
Tax effect from restricted stock units and vestings	95	65
Restricted stock units repurchased for employee tax withholding	(98)	(34)
Deferred restricted stock unit compensation	1,049	498
Unrealized gains on marketable securities	(1)
Deferred rent	(45)	(31)
(Increase) decrease in operating assets:
Investment fee income receivable	(208)	(820)
Prepaid expenses	277	(599)
Other accounts receivable	(56)	128
Increase (decrease) in operating liabilities:
Accrued liabilities and accounts payable	679	834
Income taxes payable	(1,097)	958
Net cash provided by operating activities	13,171	10,220
Cash flows used in investing activities:
Purchases of property and equipment	(121)	(114)
Deferred offering costs	(1)	(12)
Payments related to management contracts	(326)	(37)
Net cash used in investing activities	(448)	(163)
Cash flows provided by (used in) financing activities:
Principal payments on bank loan	(3,282)	(2,813)
Loan fee payments on bank loan	(15)
Proceeds from shares issued pursuant to the 2015 Dividend Reinvestment and Stock Repurchase Plan	22
Dividend payments	(1,115)	(1,024)
Net cash used in financing activities	(4,390)	(3,837)
Net increase in cash and cash equivalents	8,333	6,220
Cash and cash equivalents at the beginning of the period	3,086	7,645
Cash and cash equivalents at the end of the period	11,419	13,865
Cash paid for:
Income taxes	5,350	3,624
Interest	$ 911	$ 765

Basis of Financial Statement Pr

Basis of Financial Statement Presentation	9 Months Ended
	Jun. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Financial Statement Presentation	(1) Basis of Financial Statement Presentation The accompanying condensed balance sheet as of September 30, 2015, which has been derived from audited financial statements, and the unaudited interim condensed financial statements as of June 30, 2016, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and include the accounts of Hennessy Advisors, Inc. (the “Company”). Certain information and footnote disclosures in these unaudited interim condensed financial statements, normally included in financial statements prepared in accordance with generally accepted accounting principles, have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission for Quarterly Reports on Form 10-Q. In the opinion of management, the unaudited interim condensed financial statements reflect all adjustments, consisting only of normal, recurring adjustments, necessary for a fair presentation of the Company’s financial position at June 30, 2016, the Company’s operating results for the three and nine months ended June 30, 2016 and 2015, and the Company’s cash flows for the nine months ended June 30, 2016 and 2015. These unaudited interim condensed financial statements and notes should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended September 30, 2015, which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2015. The Company’s operating activities consist primarily of providing investment advisory services to 16 open-end mutual funds branded as the Hennessy Funds. The Company serves as the investment advisor to all classes of the Hennessy Cornerstone Growth Fund, the Hennessy Focus Fund, the Hennessy Cornerstone Mid Cap 30 Fund, the Hennessy Cornerstone Large Growth Fund, the Hennessy Cornerstone Value Fund, the Hennessy Large Value Fund, the Hennessy Total Return Fund, the Hennessy Equity and Income Fund, the Hennessy Balanced Fund, the Hennessy Core Bond Fund, the Hennessy Gas Utility Fund, the Hennessy Small Cap Financial Fund, the Hennessy Large Cap Financial Fund, the Hennessy Technology Fund, the Hennessy Japan Fund, and the Hennessy Japan Small Cap Fund. The Company also provides shareholder services to Investor Class shares of the entire family of Hennessy Funds. Prior to March 1, 2015, the Company only earned shareholder service fees from Investor Class shares of some of the Hennessy Funds. The Company’s operating revenue consists of contractual investment advisory and shareholder service fees paid to it by the Hennessy Funds. The Company earns investment advisory fees from each Hennessy Fund by, among other things: • acting as portfolio manager for the fund or overseeing the sub-advisor • performing a daily reconciliation of portfolio positions and cash for the fund; • monitoring the fund’s compliance with its investment objectives and restrictions and federal securities laws; • performing activities such as maintaining a compliance program, conducting ongoing reviews of the compliance programs of the fund’s service providers (including its sub-advisor, on-site sub-advisor, • overseeing the selection and continued employment of the fund’s sub-advisor, • overseeing service providers that provide accounting, administration, distribution, transfer agency, custodial, sales and marketing, audit, information technology, and legal services to the fund; • maintaining in-house • overseeing an ongoing and wide-ranging public relations campaign on behalf of the fund; • being actively involved with preparing all regulatory filings for the fund, including writing and annually updating the fund’s prospectus and related documents; • preparing or reviewing a written summary of the fund’s performance for the most recent six-month twelve-month semi-annual • monitoring and overseeing the accessibility of the fund on third party platforms; • paying the incentive compensation of the fund’s compliance officers and employing other staff such as management executives, legal personnel, marketing personnel, national accounts and distribution personnel, sales personnel, administrative personnel, and trading oversight personnel; • providing a quarterly certification to Hennessy Funds Trust; and • preparing or reviewing materials for the Funds’ Board of Trustees, presenting or leading discussions to or with the Funds’ Board of Trustees, preparing or reviewing meeting minutes, and arranging for training and education of the Funds’ Board of Trustees. The Company earns shareholder service fees from Investor Class shares of the Hennessy Funds by, among other things, maintaining an “800” number that the current investors of the Hennessy Funds may call to ask questions about the Hennessy Funds or their accounts, or to get help with processing exchange and redemption requests or changing account options. These fee revenues are earned and calculated daily by the Hennessy Funds’ accountants at U.S. Bancorp Fund Services, LLC. The fees are computed and billed monthly, at which time they are recognized in accordance with Accounting Standard Codification 605 “Revenue Recognition.” In the past, the Company has waived fees with respect to some of the Hennessy Funds to comply with contractual expense ratio limitations, but all such expense ratio limitations expired or were terminated as of February 28, 2015. The fee waivers were calculated daily by the Hennessy Funds’ accountants at U.S. Bancorp Fund Services, LLC and were charged to expense monthly by the Company as an offset to revenue. The waived fees were deducted from investment advisory fee income and reduced the amount of advisory fees that the Hennessy Funds paid in the subsequent month. To date, the Company has only waived fees based on contractual obligations, but the Company has the ability to waive fees at its discretion to compete with other mutual funds with lower expense ratios. If the Company were to elect voluntarily to waive fees, the decision to waive fees would not apply to previous periods, but would only apply on a going forward basis. As of June 30, 2016, the Company has never voluntarily waived fees, and has no current intention to voluntarily waive fees. The Company’s contractual agreements for investment advisory and shareholder services provide persuasive evidence that an arrangement exists with fixed and determinable fees, and the services are rendered daily. The collectability is probable as the fees are received from the Hennessy Funds in the month subsequent to the month in which the services are provided.

Management Contracts Purchased

Management Contracts Purchased	9 Months Ended
	Jun. 30, 2016
Text Block [Abstract]
Management Contracts Purchased	(2) Management Contracts Purchased The Company has purchased assets related to the management of open-end Under the FASB guidance on “Intangibles – Goodwill and Other,” intangible assets that have indefinite useful lives are not amortized but are tested at least annually for impairment. The Company reviews the life of the management contracts each reporting period to determine if they continue to have an indefinite useful life. The Company considers the mutual fund management contracts to be intangible assets with an indefinite useful life as of June 30, 2016.

Investment Advisory Agreements

Investment Advisory Agreements	9 Months Ended
	Jun. 30, 2016
Text Block [Abstract]
Investment Advisory Agreements	(3) Investment Advisory Agreements The Company has management contracts with Hennessy Funds Trust, under which it provides investment advisory services to all classes of the 16 Hennessy Funds. The management contracts must be renewed annually by (i) the Funds’ Board of Trustees or by the vote of a majority of the outstanding shares of the applicable Hennessy Fund and (ii) by the vote of a majority of the trustees of Hennessy Funds Trust who are not interested persons of the Hennessy Funds. If the management contracts are not renewed annually as described above, they will terminate automatically. In addition, there are two other circumstances in which the management contracts would terminate. First, the management contracts would automatically terminate if the Company assigned them to another advisor (assignment includes “indirect assignment,” which is the transfer of the Company’s common stock in sufficient quantities deemed to constitute a controlling block). Second, each management contract may be terminated prior to its expiration upon 60 days’ notice by either the Company or the applicable Hennessy Fund. As provided in the management contracts with the 16 Hennessy Funds, the Company receives investment advisory fees monthly based on a percentage of the respective Hennessy Fund’s average daily net assets. The Company has entered into sub-advisory agreements for the Hennessy Focus Fund, the Hennessy Large Value Fund, the Hennessy Equity and Income Fund, the Hennessy Core Bond Fund, the Hennessy Japan Fund, and the Hennessy Japan Small Cap Fund. Under each of these sub-advisory agreements, the sub-advisor sub-advisors sub-advisory In exchange for the sub-advisory services, the Company (not the Hennessy Funds) pays sub-advisor fees to the sub-advisors, which are based on the amount of each applicable Hennessy Fund’s average daily net assets.

Bank Loan

Bank Loan	9 Months Ended
	Jun. 30, 2016
Debt Disclosure [Abstract]
Bank Loan	(4) Bank Loan The Company has an outstanding bank loan with U.S. Bank National Association (“U.S. Bank”), as administrative agent and as a lender, and California Bank & Trust, as syndication agent and as a lender, which replaced and refinanced the bank loan previously entered into by the Company and U.S. Bank on October 26, 2012, and amended on November 1, 2013. Immediately prior to September 17, 2015, the Company’s outstanding bank loan with U.S. Bank had a principal balance of $23.0 million. On September 17, 2015, in anticipation of the repurchase of up to 1 million shares of the Company’s common stock at $25 per share pursuant to its self-tender self-tender (1) LIBOR plus a margin that ranges from 2.75% to 3.25%, depending on the Company’s ratio of consolidated debt to consolidated earnings before interest, taxes, depreciation and amortization (excluding, among other things, certain non-cash gains and losses) (“EBITDA”), or (2) the sum of (a) the highest of the prime rate set by U.S. Bank from time to time, the Federal Funds Rate plus 0.50%, or one-month LIBOR plus 1.00%, and (b) a margin that ranges from 0.25% to 0.75%, depending on the Company’s ratio of consolidated debt to consolidated EBITDA. From the effective date of the new term loan agreement through February 29, 2016, the interest rate in effect was U.S. Bank’s prime rate plus a margin. The applicable margin was initially 0.75% and then decreased to 0.5% as of January 21, 2016, based on the Company’s ratio of consolidated debt to consolidated EBITDA as of December 31, 2015. This margin decrease reduced the effective interest rate on the term loan from 4.25% to 4.0%. Effective March 1, 2016, the Company converted $32.8 million of its principal loan balance to a 1-month LIBOR contract, which has been renewed each subsequent month. As of June 30, 2016, the effective rate is 3.45665%, which is comprised of the LIBOR rate of 0.45665% as of June 1, 2016, plus a margin of 3.0% based on the Company’s ratio of consolidated debt to consolidated EBITDA as of March 31, 2016. The Company intends to renew the 1-month LIBOR contract on a monthly basis provided that the LIBOR-based rate-based All borrowings under the term loan agreement are secured by substantially all of the Company’s assets. The final installment of the then-outstanding The previous amended loan agreement included, and the new term loan agreement includes, certain reporting requirements and loan covenants requiring the maintenance of certain financial ratios. The Company was in compliance for the periods ended June 30, 2016 and 2015. The Company did an evaluation of the debt modification and determined that the portion of the loan refinanced with the same creditor (the $20.0 million with U.S. Bank) is not considered “substantially different” from the original loan with U.S. Bank per the conditions set forth in Accounting Standards Codification 470-50 — Debt; Modifications and Extinguishments. Furthermore, due to the variable nature of the interest rate, this feature of the loan was examined for potential bifurcation as an embedded derivative, and it was determined that the feature does not require bifurcation from the host contract. In connection with securing the financings discussed above, the Company incurred loan costs in the amount of $0.41 million. These costs are included in other assets and the balance is being amortized on a straight-line basis over 48 months. Amortization expense during the nine-month

Income Taxes

Income Taxes	9 Months Ended
	Jun. 30, 2016
Income Tax Disclosure [Abstract]
Income Taxes	(5) Income Taxes The Company’s effective income tax rates for the nine months ended June 30, 2016 and 2015, were 35.9% and 39.2%, respectively, and differ from the federal statutory rate of 35% primarily due to state taxes. The effective income tax rate was lower for the period ended June 30, 2016, due to changes in state apportionment factors. We are subject to income tax in the U.S. federal jurisdiction and multiple state jurisdictions. Our U.S. federal tax returns for 2012 and subsequent years remain open to examination. Generally, we are no longer subject to state examinations by tax authorities for years prior to fiscal 2011. For state tax jurisdictions with unfiled tax returns, the statute of limitations will remain open indefinitely.

Earnings per Share and Dividend

Earnings per Share and Dividends per Share	9 Months Ended
	Jun. 30, 2016
Text Block [Abstract]
Earnings per Share and Dividends per Share	(6) Earnings per Share and Dividends per Share Basic earnings per share is determined by dividing net earnings by the weighted average number of shares of common stock outstanding, while diluted earnings per share is determined by dividing net earnings by the weighted average number of shares of common stock outstanding adjusted for the dilutive effect of common stock equivalents. All common stock equivalents were dilutive and therefore included in the diluted earnings per share calculation for the three and nine months ended June 30, 2016. Quarterly cash dividends of $0.06, $0.08 and $0.08 per share, respectively, were paid on December 9, 2015, to shareholders of record as of November 16, 2015; on March 7, 2016, to shareholders of record as of February 12, 2016; and on June 13, 2016, to shareholders of record as of May 19, 2016.

Stock-Based Compensation

Stock-Based Compensation	9 Months Ended
	Jun. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock-Based Compensation	(7) Stock-Based Compensation On March 26, 2014, the Company adopted, and the Company’s shareholders approved, the Amended and Restated 2013 Omnibus Incentive Plan (the “Plan”). Under the Plan, participants may be granted restricted stock units (“RSUs”), representing an unfunded, unsecured right to receive a share of the Company’s common stock on the date specified in the recipient’s award. The Company issues new shares of its common stock when it is required to deliver shares to an RSU recipient. The RSUs granted under the Plan vest over four years, at a rate of 25 percent per year. The Company recognizes compensation expense on a straight-line basis over the four-year vesting term of each award. There were no RSUs granted under the Plan during the nine months ended June 30, 2016, and 62,500 RSUs granted under the Plan during the nine months ended June 30, 2015. RSU activity for the nine months ended June 30, 2016, was as follows: Restricted Stock Unit Activity Nine Months Ended June 30, 2016 Weighted Avg. Fair Value Number of Restricted Per Share at Share Units Each Date Non-vested Balance at September 30, 2015 244,827 $ 18.67 Granted — — Vested (1) (59,625 ) 17.58 Forfeited — — Non-vested Balance at June 30, 2016 185,202 $ 19.67 (1) The restricted share units vested includes partially vested shares. Shares of common stock have not been issued for the partially vested shares, but the related compensation costs have been charged to expense. There were 19,325 shares of common stock issued for restricted stock units vested in the nine months ended June 30, 2016. Restricted Stock Unit Compensation Nine Months Ended June 30, 2016 (In Thousands) Total expected compensation expense related to Restricted Stock Units $ 7,742 Compensation expense recognized through June 30, 2016 (4,099 ) Unrecognized compensation expense related to RSUs at June 30, 2016 $ 3,643 As of June 30, 2016, there was $3.6 million of total RSU compensation expense related to non-vested awards not yet recognized, which is expected to be recognized over a weighted-average vesting period of 2.6 years.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Jun. 30, 2016
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	(8) Commitments and Contingencies The Company’s headquarters is located in leased office space under a single non-cancelable operating lease at 7250 Redwood Blvd., Suite 200, in Novato, California. The lease expires on March 31, 2017, with one five-year extension available thereafter. The Company also has office space under a single non-cancelable The Company also has office space under a single non-cancelable As of June 30, 2016, there were no material changes in the leasing arrangements that would have a significant effect on future minimum lease payments reported in the Company’s Annual Report on Form 10-K

Fair Value Measurements

Fair Value Measurements	9 Months Ended
	Jun. 30, 2016
Fair Value Disclosures [Abstract]
Fair Value Measurements	(9) Fair Value Measurements The Company applies the FASB standard “Fair Value Measurements” for all financial assets and liabilities, which establishes a framework for measuring fair value and expands disclosures about fair value measurements. The standard defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” It also establishes a fair value hierarchy consisting of the following three “levels” that prioritize the inputs to the valuation techniques used to measure fair value: • Level 1 – Unadjusted, quoted prices in active markets for identical assets or liabilities that an entity has the ability to access at the measurement date. • Level 2 – Other significant observable inputs (including, but not limited to, quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, and model-derived • Level 3 – Significant unobservable inputs (including the entity’s own assumptions about what market participants would use to price the asset or liability based on the best available information) when observable inputs are not available. Based on the definitions, the following table represents the Company’s assets categorized in the Level 1 to 3 hierarchies as of June 30, 2016: Fair Value Measurements at Reporting Date (amounts in thousands) Level 1 Level 2 Level 3 Total Money market fund deposits $ 8,592 $ — $ — $ 8,592 Mutual fund investments 8 — — 8 Total $ 8,600 $ — $ — $ 8,600 Amounts included in: Cash and cash equivalents $ 8,592 $ — $ — $ 8,592 Investments in marketable securities 8 — — 8 Total $ 8,600 $ — $ — $ 8,600

New Accounting Standards

New Accounting Standards	9 Months Ended
	Jun. 30, 2016
Accounting Changes and Error Corrections [Abstract]
New Accounting Standards	(10) New Accounting Standards In November 2015, the FASB issued Accounting Standards Update No. 2015-17 non-current. The In March 2016, the FASB issued Accounting Standards Update No. 2016-09

Pending Asset Purchase of The W

Pending Asset Purchase of The Westport Funds	9 Months Ended
	Jun. 30, 2016
Business Combinations [Abstract]
Pending Asset Purchase of The Westport Funds	(11) Pending Asset Purchase of The Westport Funds On May 2, 2016, the Company announced that it signed a definitive agreement with Westport Advisers, LLC to purchase the assets related to the management of The Westport Funds, which are the Westport Fund and the Westport Select Cap Fund. The definitive agreement includes customary representations, warranties and covenants of the Company and Westport Advisers, LLC, and provides for a payment upon closing based on the aggregate average assets under management for the Westport Fund and the Westport Select Cap Fund as measured at the close of business on the effective date of the definitive agreement and on each of the two trading days immediately preceding the date of the definitive agreement, which were approximately $644.1 million based on assets as of April 28, April 29, and May 2, 2016. Based upon the aggregate average assets under management of the Westport Funds of $644.1 million, the purchase price will be approximately $11.3 million, to be paid upon completion of the transaction. The transaction is expected to be completed in the Company’s fourth fiscal quarter of 2016. Upon completion of the transaction, the assets related to the Westport Fund and the Westport Select Cap Fund will merge into the Hennessy Cornerstone Mid Cap 30 Fund, with shareholders of the Westport Fund and the Westport Select Cap Fund becoming Institutional Class shareholders of the Hennessy Cornerstone Mid Cap 30 Fund. The transaction is subject to regulatory review and the approval of the Hennessy Funds’ Board of Trustees, The Westport Funds’ Board of Trustees and the Westport Funds’ shareholders.

Basis of Financial Statement 18

Basis of Financial Statement Presentation (Policies)	9 Months Ended
	Jun. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Revenue Recognition	The accompanying condensed balance sheet as of September 30, 2015, which has been derived from audited financial statements, and the unaudited interim condensed financial statements as of June 30, 2016, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and include the accounts of Hennessy Advisors, Inc. (the “Company”). Certain information and footnote disclosures in these unaudited interim condensed financial statements, normally included in financial statements prepared in accordance with generally accepted accounting principles, have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission for Quarterly Reports on Form 10-Q. In the opinion of management, the unaudited interim condensed financial statements reflect all adjustments, consisting only of normal, recurring adjustments, necessary for a fair presentation of the Company’s financial position at June 30, 2016, the Company’s operating results for the three and nine months ended June 30, 2016 and 2015, and the Company’s cash flows for the nine months ended June 30, 2016 and 2015. These unaudited interim condensed financial statements and notes should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended September 30, 2015, which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2015. The Company’s operating activities consist primarily of providing investment advisory services to 16 open-end mutual funds branded as the Hennessy Funds. The Company serves as the investment advisor to all classes of the Hennessy Cornerstone Growth Fund, the Hennessy Focus Fund, the Hennessy Cornerstone Mid Cap 30 Fund, the Hennessy Cornerstone Large Growth Fund, the Hennessy Cornerstone Value Fund, the Hennessy Large Value Fund, the Hennessy Total Return Fund, the Hennessy Equity and Income Fund, the Hennessy Balanced Fund, the Hennessy Core Bond Fund, the Hennessy Gas Utility Fund, the Hennessy Small Cap Financial Fund, the Hennessy Large Cap Financial Fund, the Hennessy Technology Fund, the Hennessy Japan Fund, and the Hennessy Japan Small Cap Fund. The Company also provides shareholder services to Investor Class shares of the entire family of Hennessy Funds. Prior to March 1, 2015, the Company only earned shareholder service fees from Investor Class shares of some of the Hennessy Funds. The Company’s operating revenue consists of contractual investment advisory and shareholder service fees paid to it by the Hennessy Funds. The Company earns investment advisory fees from each Hennessy Fund by, among other things: • acting as portfolio manager for the fund or overseeing the sub-advisor • performing a daily reconciliation of portfolio positions and cash for the fund; • monitoring the fund’s compliance with its investment objectives and restrictions and federal securities laws; • performing activities such as maintaining a compliance program, conducting ongoing reviews of the compliance programs of the fund’s service providers (including its sub-advisor, on-site sub-advisor, • overseeing the selection and continued employment of the fund’s sub-advisor, • overseeing service providers that provide accounting, administration, distribution, transfer agency, custodial, sales and marketing, audit, information technology, and legal services to the fund; • maintaining in-house • overseeing an ongoing and wide-ranging public relations campaign on behalf of the fund; • being actively involved with preparing all regulatory filings for the fund, including writing and annually updating the fund’s prospectus and related documents; • preparing or reviewing a written summary of the fund’s performance for the most recent six-month twelve-month semi-annual • monitoring and overseeing the accessibility of the fund on third party platforms; • paying the incentive compensation of the fund’s compliance officers and employing other staff such as management executives, legal personnel, marketing personnel, national accounts and distribution personnel, sales personnel, administrative personnel, and trading oversight personnel; • providing a quarterly certification to Hennessy Funds Trust; and • preparing or reviewing materials for the Funds’ Board of Trustees, presenting or leading discussions to or with the Funds’ Board of Trustees, preparing or reviewing meeting minutes, and arranging for training and education of the Funds’ Board of Trustees. The Company earns shareholder service fees from Investor Class shares of the Hennessy Funds by, among other things, maintaining an “800” number that the current investors of the Hennessy Funds may call to ask questions about the Hennessy Funds or their accounts, or to get help with processing exchange and redemption requests or changing account options. These fee revenues are earned and calculated daily by the Hennessy Funds’ accountants at U.S. Bancorp Fund Services, LLC. The fees are computed and billed monthly, at which time they are recognized in accordance with Accounting Standard Codification 605 “Revenue Recognition.”

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	9 Months Ended
	Jun. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Schedule of Non-Vested Restricted Stock Units Activity	RSU activity for the nine months ended June 30, 2016, was as follows: Restricted Stock Unit Activity Nine Months Ended June 30, 2016 Weighted Avg. Fair Value Number of Restricted Per Share at Share Units Each Date Non-vested Balance at September 30, 2015 244,827 $ 18.67 Granted — — Vested (1) (59,625 ) 17.58 Forfeited — — Non-vested Balance at June 30, 2016 185,202 $ 19.67 (1) The restricted share units vested includes partially vested shares. Shares of common stock have not been issued for the partially vested shares, but the related compensation costs have been charged to expense. There were 19,325 shares of common stock issued for restricted stock units vested in the nine months ended June 30, 2016.
Schedule of Non-Vested Restricted Stock Units Compensation	Restricted Stock Unit Compensation Nine Months Ended June 30, 2016 (In Thousands) Total expected compensation expense related to Restricted Stock Units $ 7,742 Compensation expense recognized through June 30, 2016 (4,099 ) Unrecognized compensation expense related to RSUs at June 30, 2016 $ 3,643

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	9 Months Ended
	Jun. 30, 2016
Fair Value Disclosures [Abstract]
Assets Categorized on Basis of Various Levels	Based on the definitions, the following table represents the Company’s assets categorized in the Level 1 to 3 hierarchies as of June 30, 2016: Fair Value Measurements at Reporting Date (amounts in thousands) Level 1 Level 2 Level 3 Total Money market fund deposits $ 8,592 $ — $ — $ 8,592 Mutual fund investments 8 — — 8 Total $ 8,600 $ — $ — $ 8,600 Amounts included in: Cash and cash equivalents $ 8,592 $ — $ — $ 8,592 Investments in marketable securities 8 — — 8 Total $ 8,600 $ — $ — $ 8,600

Basis of Financial Statement 21

Basis of Financial Statement Presentation - Additional Information (Detail)	9 Months Ended
	Jun. 30, 2016Funds
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of Hennessy funds to which company provides investment advisory services	16
Contractual expense ratio limitations termination date	Feb. 28, 2015

Management Contracts Purchased

Management Contracts Purchased - Additional Information (Detail)	Jun. 30, 2016USD ($)Funds
Contractors [Abstract]
Number of mutual funds | Funds	23
Management contracts impairment amount | $	$ 0

Investment Advisory Agreements

Investment Advisory Agreements - Additional Information (Detail)	9 Months Ended
	Jun. 30, 2016Funds
Investments Schedule [Abstract]
Number of Hennessy funds to which company provides investment advisory services	16
Notice period for termination of agreement	60 days

Bank Loan - Additional Informat

Bank Loan - Additional Information (Detail) $ / shares in Units, shares in Millions	Jun. 01, 2016	Mar. 31, 2016	Jan. 21, 2016	Sep. 17, 2015USD ($)$ / sharesshares	Jun. 30, 2016USD ($)Installment	Jun. 30, 2015USD ($)	Jan. 20, 2016	Sep. 16, 2015USD ($)
US Bank National Association Loan [Member]
Debt Instrument [Line Items]
Number of monthly installments payable | Installment					48
Required monthly loan principal repayment					$ 364,583
Common stock repurchase, share | shares				1
Common stock repurchase, price per share | $ / shares				$ 25
Outstanding bank loan				$ 35,000,000
Long-term loan outstanding principal balance								$ 23,000,000
Effective interest rate on debt			4.00%				4.25%
Final installment date					Sep. 17, 2019
Amortized loan costs					$ 410,000
Amortized cost on straight-line basis in months					48 months
Amortization expenses					$ 110,000	$ 60,000
Unamortized loan cost					$ 480,000
US Bank National Association Loan [Member] | Promissory Note [Member]
Debt Instrument [Line Items]
Outstanding bank loan				20,000,000
California Bank And Trust Loan [Member] | Promissory Note [Member]
Debt Instrument [Line Items]
Outstanding bank loan				$ 15,000,000
Prime Rate [Member] | US Bank National Association Loan [Member]
Debt Instrument [Line Items]
Debt instrument, interest rate					0.50%
One Month Libor [Member] | US Bank National Association Loan [Member]
Debt Instrument [Line Items]
Debt instrument, interest rate		3.00%			1.00%
Effective interest rate on debt					3.45665%
Principal loan balance converted					$ 32,800,000
Debt instrument converted rate	0.45665%
Debt conversion description					The Company intends to renew the 1-month LIBOR contract on a monthly basis provided that the LIBOR-based interest rate remains favorable to the prime rate-based interest rate.
Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member] | US Bank National Association Loan [Member]
Debt Instrument [Line Items]
Debt instrument, interest rate					2.75%
Minimum [Member] | One Month Libor [Member] | US Bank National Association Loan [Member]
Debt Instrument [Line Items]
Debt instrument additional basis spread			0.75%		0.25%
Maximum [Member] | London Interbank Offered Rate (LIBOR) [Member] | US Bank National Association Loan [Member]
Debt Instrument [Line Items]
Debt instrument, interest rate					3.25%
Maximum [Member] | One Month Libor [Member] | US Bank National Association Loan [Member]
Debt Instrument [Line Items]
Debt instrument additional basis spread			0.50%		0.75%

Income Taxes - Additional Infor

Income Taxes - Additional Information (Detail)	9 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Income Tax Examination [Line Items]
Effective tax rates	35.90%	39.20%
Federal statutory rate	35.00%
Domestic Tax Authority [Member] | Earliest Tax Year [Member]
Income Tax Examination [Line Items]
Open tax year	2,012
Domestic Tax Authority [Member] | Latest Tax Year [Member]
Income Tax Examination [Line Items]
Open tax year	2,016

Earnings per Share and Divide26

Earnings per Share and Dividends per Share - Additional Information (Detail) - $ / shares	Jun. 13, 2016	Mar. 07, 2016	Dec. 09, 2015
Earnings Per Share [Abstract]
Dividend paid	$ 0.08	$ 0.08	$ 0.06
Date of record	May 19, 2016	Feb. 12, 2016	Nov. 16, 2016

Stock-Based Compensation - Addi

Stock-Based Compensation - Additional Information (Detail) - Restricted Stock Units (RSUs) [Member] - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum Vesting Period	4 years
Rate of restricted stock units vest under plan	25.00%
Granted, Number of Restricted Share Units	0	62,500
Compensation expense related to non-vested awards not yet recognized	$ 3,643
Weighted-average vesting period for compensation expenses not yet recognized	2 years 7 months 6 days

Stock-Based Compensation - Sche

Stock-Based Compensation - Schedule of Non-Vested Restricted Stock Units Activity (Detail) - Restricted Stock Units (RSUs) [Member] - $ / shares	9 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-vested Beginning Balance, Number of Restricted Share Units	244,827
Granted, Number of Restricted Share Units	0	62,500
Vested, Number of Restricted Share Units	(59,625)
Forfeited, Number of Restricted Share Units	0
Non-vested Ending Balance, Number of Restricted Share Units	185,202
Non-vested Beginning Balance, Weighted Fair Value Per Share at Each Date	$ 18.67
Granted, Weighted Fair Value Per Share at Each Date	0
Vested, Weighted Fair Value Per Share at Each Date	17.58
Forfeited, Weighted Fair Value Per Share at Each Date	0
Non-vested Ending Balance, Weighted Fair Value Per Share at Each Date	$ 19.67

Stock-Based Compensation - Sc29

Stock-Based Compensation - Schedule of Non-Vested Restricted Stock Units Activity (Parenthetical) (Detail) - shares	Jun. 30, 2016	Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, shares issued	5,066,680	5,046,628
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, shares issued	19,325

Stock-Based Compensation - Sc30

Stock-Based Compensation - Schedule of Non-Vested Restricted Stock Units Compensation (Detail) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total expected compensation expense related to Restricted Stock Units	$ 1,049	$ 498
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total expected compensation expense related to Restricted Stock Units	7,742
Compensation expense recognized through June 30, 2016	(4,099)
Unrecognized compensation expense related to RSUs at June 30, 2016	$ 3,643

Commitments and Contingencies -

Commitments and Contingencies - Additional Information (Detail)	9 Months Ended
	Jun. 30, 2016
California [Member]
Loss Contingencies [Line Items]
Lease expiration date	Mar. 31, 2017
Extension period available after expiration of lease	5 years
North Carolina [Member]
Loss Contingencies [Line Items]
Lease expiration date	Nov. 30, 2015
Lease renewal period	3 months
Massachusetts [Member]
Loss Contingencies [Line Items]
Lease expiration date	Nov. 30, 2015
Lease renewal period	1 year

Fair Value Measurements - Asset

Fair Value Measurements - Assets Categorized on Basis of Various Levels (Detail) $ in Thousands	Jun. 30, 2016USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market fund deposits	$ 8,592
Mutual fund investments	8
Total	8,600
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market fund deposits	8,592
Mutual fund investments	8
Total	$ 8,600

Pending Asset Purchase of The33

Pending Asset Purchase of The Westport Funds - Additional Information (Detail) - The Westport Funds [Member] - USD ($) $ in Millions	9 Months Ended
	Jun. 30, 2016	May 02, 2016	Apr. 29, 2016	Apr. 28, 2016
Business Acquisition [Line Items]
Assets under management, carrying amount		$ 644.1	$ 644.1	$ 644.1
Assets under management, average balance	$ 644.1
Purchase price of the assets related to management of the funds	$ 11.3