For Hennessy, Both Oil and Retail Pay

Something odd is going on in this rally. Oil stocks and retail stocks are going up at the same time. That's not supposed to happen.

Is it?

Not to worry, says Neil Hennessy, president of Hennessy Funds, a quant-based family of funds that holds both retail and energy shares. Hennessy does not buy into the belief that higher prices at the pump mean lower sales at Wal-Mart(WMT Quote).

And judging from the performance of his (HFTFX Quote)Hennessy Focus 30 fund, he may have a point.

The fund, which lists Valero Energy(VLO Quote) at 5.1% of assets and Sears Holdings(SHLD Quote) at 4.1%, is up more than 20% year to date.

Less successful has been his (HODGX Quote)Hennessy Total Return fund, which is slightly down for the year. That fund holds 75% of its assets in the so-called "dogs of the Dow," or the 10 highest-yielding members of the Dow 30. Despite the fact that its largest holding is oil giant Exxon Mobil(XOM Quote), the fund has been weighed down by blowups at General Motors(GM Quote) and Merck(MRK Quote).

Hennessy stopped by TheStreet.com's offices to chat about energy stocks, the dogs of the Dow and M&A in the fund world.

To view Gregg Greenberg's StreetWatch interview with Hennessy, click here.