Hennessy Equity and Income Fund divested its holdings in Equitable Holdings, Inc. (NYSE:EQH) during the second quarter of 2026, according to the fund's Q2 2026 investor letter released Monday. The move came after EQH triggered what the fund described as a soft stop-loss review mechanism, with managers citing inconsistent core business performance and a lack of insider buying to reinforce conviction in the position.
Market Context
Equitable Holdings operates across life insurance, annuities, asset management, and retirement solutions—a business mix that has faced headwinds throughout 2025 and into 2026 as interest rate uncertainty and changing consumer behavior weighed on individual life and retirement segment performance. The diversified financial services company closed at $50.13 per share on August 31, 2026, trading near the middle of its 52-week range of $35.19 to $55.15.
Analysis
In the investor letter, Hennessy managers acknowledged that Equitable continues to generate strong cash flow and return capital in a disciplined manner. However, the fund's confidence in the company's ability to deliver consistent results and successfully execute a turnaround was undermined by what managers characterized as uneven earnings quality and mixed flows across business segments. "Although valuation appears attractive," the letter stated, "our confidence in the ability to deliver consistent results and successfully execute a turnaround was lowered." The absence of insider buying at EQH during the review period further diminished conviction in maintaining the position.
The decision reflects Hennessy's broader portfolio philosophy, which emphasizes high-quality firms with durable competitive advantages capable of withstanding economic uncertainty. The fund highlighted that its portfolio holdings delivered a 23.0% pre-tax return on invested capital versus 16.1% for the S&P 500, underscoring its focus on businesses generating superior returns relative to the broader market.
Key Numbers
- EQH share price (August 31, 2026): $50.13
- Monthly return: +3.90%
- One-year return: -4.97%
- Market capitalization: $13.67 billion
- 52-week range: $35.19 to $55.15
- Hennessy portfolio pre-tax ROIC: 23.0% vs S&P 500 at 16.1%
- Hedge funds holding EQH at end of Q2: 49 (up from 42 in prior quarter)
What to Watch
Investors should monitor Equitable Holdings' upcoming quarterly results for signs of improvement in the individual life and retirement segments, as well as any changes in capital allocation strategy that could signal management's confidence in a turnaround. The company's next earnings call will offer insight into whether flow trends are stabilizing and whether expense initiatives are gaining traction. For Hennessy Equity and Income Fund, watchers should track what positions replaced EQH in the portfolio and how the fund deploys capital given its stated focus on overlooked valuations of quality companies with durable advantages.