NEW YORK - ETFS Capital Limited, a major shareholder in WisdomTree, Inc. (NYSE: WT), is calling on the company's board to explore strategic alternatives, including a potential sale, to maximize shareholder value.
With a stake of approximately 18.3% on a converted basis, ETFS Capital has publicly expressed dissatisfaction with WisdomTree's current strategy and performance.
ETFS Capital criticized WisdomTree's shift from its core exchange-traded fund (ETF) business to decentralized finance (DeFi) ventures, which according to ETFS, have been unsuccessful. The shareholder highlighted the underperformance of WisdomTree's flagship DeFi initiatives, WisdomTree Prime and the Bitcoin ETF, as examples of the company's misdirection.
Despite WisdomTree's record assets under management (AUM), ETFS Capital argues that the company's profitability remains weak. They estimate the intrinsic value of WisdomTree's ETF business at approximately $15.50 per share, significantly higher than the current market price of $9.00 per share.
This valuation follows a share price increase of almost $2.00 since ETFS Capital's engagement with the board on February 13, 2024.
In a letter to fellow shareholders, ETFS Capital's Chairman, Graham Tuckwell, expressed frustration with the board's response to their proposal for a strategic review. The shareholder group has suggested forming a special committee of independent directors to consider various strategic alternatives, including a sale of the business or parts of it, and changes in the senior leadership team.
ETFS Capital's attempts to address what they perceive as operational and governance failures at WisdomTree have led to proxy campaigns over the past three years. However, they believe these efforts have not sufficiently changed the board's composition to challenge the management's status quo.
As a result, ETFS Capital plans to withhold votes from board members at the upcoming shareholder meeting and invites other shareholders to do the same. They urge the board to hire a reputable investment bank to conduct a thorough review process to unlock shareholder value.
This push for change by ETFS Capital, which acquired WisdomTree's European ETC business in 2018 for $611 million, represents a significant challenge to WisdomTree's current strategic direction. The information is based on a press release statement from ETFS Capital.
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