Seeking Alpha

WisdomTree: Far better values elsewhere says Citi

  • Expectations of $2B-$5B of quarterly inflows "leave little room for error" for WisdomTree (WETF -6.4%), says Citi's William Katz, who cut the stock to a Sell this morning. Stripping out the spectacular (and likely unrepeatable) success of the Japan Hedged Equity Fund, WisdomTree has hit this range just once in the last two years.
  • There are better values in asset management elsewhere, says Katz, noting double-digit organic growth at Waddell and Reed (WDR -0.5%) and Artisan Partners (APAM -0.8%), but at far lower P/Es than WisdomTree's 39x. Then there's Invesco (IVZ -0.5%) - which runs PowerShares ETFs - enjoying margins nearly as large as WETF, but with a P/E ratio more than 50% smaller.
  • Is WisdomTree - the only "pure play" ETF stock - deserving of a buyout premium? Maybe not, suggests Katz, noting insider selling, continued heavy investment in the business, and acquirers more interested in "seeking de novo growth in the passive arena."
  • Earlier coverage
Comments (2)
  • Kboyd78
    , contributor
    Comments (159) | Send Message
    Eps growth is projected at 47% per year for the next 3-5 years. With that in mind and a forward PE of 26 I disagree that WETF is at a lofty valuation. And to compare it to IVZ is pretty far off course. I'll happily accumulate.
    19 Mar 2014, 12:48 PM Reply Like
    , contributor
    Comments (3) | Send Message
    Does anyone know what other "pure play" ETFs Katz is referring to? Outside of IVZ
    19 Mar 2014, 04:48 PM Reply Like
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