Tim Eriksen

Wisdom Tree Puts Forth New ETF Shoots, But Shows Some Earnings Blight

I came to essentially the same conclusion on burn rate.

Asif your chart makes it look like growth has just slowed. By having nearly a year long gap it misses that AUM peaked last fall and then fell for a while while the markets tumbled. The volatility of growth makes it hard to estimate what future rate of AUM growth to use in a model. I still don't see cash break even until about $11 billion and profitability until about $15 billion.

WisdomTree: Riding the ETF Wave

In the Sep qtr, revenue was $0.5 million and quarterly expenses were $5.9 million for Wisdom Tree. The big question to me is how much of expenses is one-time, fixed and variable. The $5.9 million in costs was for the Sep quarter in which they ended with about 0.5 billion in ETF assets. We know that there has to be some variable costs. If I assume no start up costs and no varialbe costs (obviously quite optimistic) then it would still require $4 to $5 billion in assets to breakeven, and $15 to $20 billion to report an after tax EPS of 10 cents. So, it looks to me that a lot of growth is priced into the stock.

If anyone has any insights I would appreciate hearing them.