WisdomTree Investments (WETF) Well-Positioned to Capitalize on Positive ETF Trends

April 1, 2013

WisdomTree Investments (WETF), the only pure-play ETF provider, is well-positioned to benefit from increased ETF flows, and its growth prospects, product base and strong management team make WETF an attractive play, says Macrae Sykes, Research Analyst at Gabelli & Company, Inc.

“First, it completed a major sale by several insiders, which removed, in my opinion, a technical overhang. Second, it announced a resolution with Research Affiliates in terms of a legacy litigation battle. Third, it changed the back-office agreement with the custodian, which improved its margin going forward. And then, at that time, the valuation was certainly compelling relative to its growth prospects,” Sykes said.


Sykes says that WisdomTree has since executed very well as it is led by a strong management team, and is benefiting from its solid business model, thus allowing WETF to capitalize on the positive ETF trends in the sector.

“It has had $4.2 billion of net inflows this year — a very rapid growth rate, and the industry trends around its business still continue as ETFs are still a very low percentage of the market in terms of both institutional and retail investor allocation. WisdomTree has a strong product base, an innovative product team and terrific incremental margins just due to the business model. So I think that WisdomTree is very well-positioned and can capitalize on the positive ETF trends and eventually could be a takeover target by a larger financial firm,” Sykes said.