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WisdomTree Delays Plan to Explore Sale Until Shares Rebound

Zacks Equity Research

Per an article by Bloomberg, WisdomTree Investments Inc. WETF was in talks with JPMorgan Chase JPM regarding sale of business in late 2018.

However, the parties failed to reach a conclusion, per people familiar with the matter, as they could not agree upon an acceptable sale price. WisdomTree has delayed plans of sale until its shares rebound.

Amid cyclical movements in the asset management industry, asset managers are striving for growth through different avenues. In April 2018, WisdomTree acquired ETF Securities' European exchange-traded commodity, currency and short-and-leveraged business, which included $17.6 billion of assets under management (AUM) as of Apr 10, 2018.

ETFs are one of the fastest-growing products in the asset management industry. These allow investors the ease of trading the entire portfolio of stocks against trading only one stock. ETFs are often constructed to track a broad market index, which can be done at quite a low cost.

On Feb 1, the asset manager released fourth-quarter numbers. It reported a net loss of $11.6 million for the quarter against net income of $0.2 million a year ago. WisdomTree witnessed rise in AUM along with higher advisory fees, which were more than offset by rise in expenses.

The company remains focused on executing strategic growth initiatives, including expansion of distribution capabilities, investment in technology, launch of innovative products, as well as addition of personnel.

However, the asset manager has significant exposure to internationally-hedged products, particularly major currency-hedged funds — HEDJ and DXJ — which are highly unstable and might act as headwinds.

Shares of WisdomTree have lost 22.2% over the past six months compared with 13.5% decline recorded by the industry.

Currently, WisdomTree carries a Zacks Rank #4 (Sell).

Stocks to Consider

Evercore Inc EVR has witnessed 1.4% upward estimate revisions over the past 30 days. Moreover, the stock has appreciated more than 12% in the past three months. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

LPL Financial Holdings Inc. LPLA has witnessed 5.3% upward estimate revisions for the past 30 days. Additionally, the company’s shares have rallied 24.3% in the past three months. It holds a Zacks Rank of 2, at present.

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