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ETF Firm WidsomTree’s Shares Eye Breakout Before Q3 Earnings


Shares of ETF provider WisdomTree Investments (WETF) are trying to break out of the range they’ve been stuck in since June as the firm prepares to report third-quarter results later this month.

The stock is also testing its 200-day moving average, which has acted as technical resistance during the back half of 2012. WETF gained 2% on Thursday morning.

WisdomTree is expected to report third-quarter earnings on Oct. 24, according to Zacks Equity Research, which is forecasting profit of 3 cents a share.

Zacks rates WisdomTree shares a strong buy. “Better-than-expected second quarter earnings and decent ETF assets position are the primary rank drivers for this stock,” Zacks says.

WisdomTree shares have delivered a total return of 14.2% year to date, according to Morningstar. [New WisdomTree Dividend ETF Targets China]

In July, the company reported net income of $0.1 million, down from $0.7 million in the year-ago period and $1.1 million for the first quarter of 2012.

“WisdomTree gathered $338 million predominantly in our dividend based equity strategies in a difficult market environment where, at an industry level, net inflows were almost entirely concentrated in domestic fixed income,” WisdomTree CEO Jonathan Steinberg said in the second-quarter earnings release. “While this market cycle was challenging for our product set, our ability to buck the trend in equities demonstrates our strategies are differentiated and desirable.”

‘Impressive’ growth

In June, WisdomTree celebrated its sixth anniversary in the ETF business. At the end of the second quarter, its ETF assets under management totaled $15 billion.

The firm’s total revenue rose 22% in the second quarter from the year-ago period to $20.4 million.

Earlier this week, WisdomTree announced the appointment of Gregory Barton as chief operating officer. Barton was most recently general counsel at TheStreet.

Saibus Research in an August commentary said it has been “impressed” with WisdomTree’s growth.

“In an era where even blue chip asset management firms are struggling to generate positive organic growth, it is refreshing to see strong organic growth rates from a company that did not even exist in its current form less than seven years ago,” Saibus said.

“Granted, Wisdomtree is operating in the ETF sector and that is the fastest growing segment of the asset management industry,” it added. “Still, we are impressed with the fact that Wisdomtree has transformed itself from a publisher of financial magazines into the 7th largest ETF sponsor in the asset management industry.”

WisdomTree’s assets under management rose 23.2% during the first half of 2012. It saw record net inflows of $2.3 billion in the first quarter. Inflows slowed to $300 million in the third quarter “due to the market conditions, as well as the fact that investors favored U.S fixed income products, a category in which we do not currently offer ETFs,” according to a regulatory filing.

Legendary hedge fund manager Michael Steinhardt is the company’s chairman. Finance professor and “Stocks for the Long Run” author Jeremy Siegel is senior investment strategy advisor at WisdomTree.

WisdomTree Investments

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.