David Ellison manages the Hennessy Large Cap Financial Fund - HLFNX and the Small Cap Financial Fund – HSFNX. As of 11/30/19, since their inception on 1/3/97, HLFNX has outperformed the Russell 1000® Financial Services Index by 75 basis points annually, and HSFNX has outperformed the Russell 2000® Financial Services Index by 125 basis points annually. Ellison has over three decades of investment management experience and has been recognized by Morningstar as the most tenured mutual fund portfolio manager in the financial services sector.

Prior to joining Hennessy Funds in 2012, Dave served as president and chief investment officer of the FBR Funds, where he launched and oversaw the line-up of FBR Funds. David began his career at Fidelity, where he managed the Select Home Finance Fund, and he developed his investing discipline and strategy under the tutelage of famed value investor, Peter Lynch.

Dave received a BA in Economics from St. Lawrence University and an MBA from Rochester Institute of Technology.

I spoke with Dave on December 12.

What are the mandates of the Hennessy Small Cap and Large Cap Financial Funds, and what are your general guidelines for buying and selling securities and constructing the portfolios?

These are both financial sector funds. They have to be 80% invested in the sector. The market cap breakpoint is $3 billion between the two funds. They can invest in any financial companies.

We don't try to do too much buying and selling. We hold for the long term. We're looking for companies that can grow book value and capital over a period of time, those that are paying attention to all the things that you would hope they'd pay attention to, like costs, credit, and liquidity. The well-run companies tend to stay well-run and the poorly run company stay poorly run. That tends to make for low turnover in the portfolio. The small-cap fund is comprised primarily of traditional banks as opposed to other types of companies.