WisdomTree shares slid Monday after the company, which puts together funds for investors, said its two biggest stockholders may sell up to 30 million shares.
THE SPARK: WisdomTree Chairman Michael Steinhardt and RRE Ventures LLC, a venture capital firm, may cut their holdings, according to paperwork filed with the U.S. Securities and Exchange Commission Friday.
Steinhardt could sell nearly 11.7 million of his own shares and those held by a foundation bearing his name, cutting his take in the company to 15.9 percent from 25.1 percent. RRE could sell up to 18.2 million shares, its entire stake.
The regulatory filing is not a commitment to sell, and no offering has officially begun.
THE BIG PICTURE: WisdomTree Investments Inc., based in New York, sells and manages exchange-traded funds, or ETFs. Created as trading tools for professional money managers, the funds' comparatively low costs and index investing approach are drawing more average investors. Big ETF providers have lately been cutting fees for their products in an effort to win more investors.
WisdomTree also announced Friday that it planned to close three of its ETFs.
News of big stock offerings tend to weigh on a company's shares on fears that a rush of stock for sale will bring down prices. Sales by major investors could also suggest pessimism about the company's prospects.
A representative for WisdomTree could not be reached immediately for comment.
THE ANALYSIS: The filing comes as little surprise as RRE has been invested in the company for more than seven years, said Sterne Agee analyst Jason Weyeneth in a research note. That's an older investment for venture capital funds, which tend to invest in young companies, Weyeneth said.
SHARE ACTION: Shares fell 42 cents, or 6 percent, to $6.63 in afternoon trading. Shares have gained about 10 percent this year.
- Investment & Company Information