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Rating:WisdomTree Has the Dry Powder, But Steinberg Has a Very High Hurdle For M&A Not Rated 0.0 Email Routing List Email & Route  Print Print
Friday, November 14, 2014

WisdomTree Has the Dry Powder, But Steinberg Has a Very High Hurdle For M&A

Reported by Neil Anderson, Managing Editor

"We feel like we're seeing all of the deals that are being shown, so we are in the loop. So we're looking at everything."

Jonathan Steinberg, CEO and president of WisdomTree Investments [profile], shared that tidbit and more on the ETF shop's recent third quarter earnings call with analysts [see Seeking Alpha's transcript of the call]. On October 31 WisdomTree reported earnings of $0.08 per diluted share (in line with estimates), thanks in part to rising net inflows (of $748 million) [see the Q3 2014 earnings release]. WisdomTree's U.S. ETF assets under management rose 14.3 percent year-over-year (and 0.9 percent in Q3 2014 alone) to $35.8 billion on September 30, 2014. Its AUM in Europe rose 8.8 percent in the quarter to $123.2 million.

Amit Muni, chief financial officer at WisdomTree, confirmed on the call that the firm continues "to have dry powder to be opportunistic." Steinberg agreed, elaborating in response to a question from Goldman Sachs analyst Marc Irizarry;

We do have the resources to execute on anything that we choose to go after, but I would say that, as we've said in the past, historically, we have such a high return on organic growth that we have a very high hurdle for M&A.


Steinberg also pointed to "a scarcity of players" for M&A activity in the ETF space.

Alternatives are also on Steinberg's mind. He told analysts, in response to another question from Irizarry, that his team is "completely focused on trying to build out more of liquid alts as a suite within the WisdomTree product suite."

Oh, and as for WisdomTree's push into Europe, thanks to its April purchase of Boost ETP in the UK, don't expect Boost to cross the Atlantic just yet. Steinberg, in response to a question from BofA Merrill Lynch analyst Adam Beatty, said that he has "no intention certainly at the moment to bring the Boost product set to the United States." 

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