Hernandez was the subject of intense speculation during the closing days of the transfer window as Villa attempted to convince the striker to step back down into the Championship.
"In the background there was a lot of speculation that he wanted to move on last month," said Phelan to the Hull Daily Mail.
"That was never brought to my attention other than what I picked up through the media.
"Possibly what helped us was that he played the game (Manchester United) and then flew off to Uruguay (for international duty), so he was miles away.
"There was an opportunity that came his way to leave but we decided that wasn't going to happen.
"To be fair to him, he's come back and he's raring to go. It sometimes makes me wonder if he knew much about it himself. He's back with us and he seems to be enjoying his training.
"He now knows there's a challenge because we've brought a couple of strikers in. That can only be good for him and for us."