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."

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Comments (2)
  • Kboyd78
    , contributor
    Comments (162) | 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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