WisdomTree Appears Way Overvalued

The New York Post’s Chris Byron this morning takes on ETF provider WisdomTree (WSDT), pointing out that its stock – which closed at $4.85 on Friday, and was trading around $4.65 at noon today – is richly valued, and looks kindalike the stuff Jono Steinberg used to push in his less than entirely unconflicted Individual Investor days:

To match Google's price-earnings multiple, WisdomTree would have to earn at least 36 cents a share next year to justify its $4.85 a share price this year, and any shortfall in earnings would require an upward valuation in the multiple simply to keep the share price from falling, never mind about making it rise.

But 36 cents per share in year-ahead earnings for WisdomTree is just a fantasy. That's because WisdomTree already has more than 78.5 million shares trading in the market, which means total net income for 2007 would need to top $28 million - this for a company that hasn't yet reported any top-line gross revenues, let alone any net income at the bottom of the page.

A classic example of buy-the-manager-not-the-fund, as I pointed out… about three months ago. Oh, and no sign yet that, despite a message positioning WisdomTree as a paragon of indexing virtue, the pink-sheet listed company is planning to expose itself to the glare of disclosure that would accompany its listing on a regular exchange.