ETFS Capital Limited (“ETFS Capital”), the largest combined owner
of common stock, $0.01 par value (the “Common Stock”), and Series A
Non-Voting Convertible Preferred Stock (the “Series A Preferred
Stock”) of WisdomTree, Inc. (“WisdomTree” or the “Company”) (NYSE:
WT), with ownership of approximately 10% of the outstanding Common
Stock, which together with its Series A Preferred Stock would
represent approximately 18% of the Company’s outstanding Common
Stock on an as-converted basis, today responded to the board of
directors’ of WisdomTree (the “Board”) May 13, 2024 letter to
stockholders (the “May 13 Letter”).
In its attempts to avoid being held accountable by stockholders
for WisdomTree’s unsuccessful attempts to transform the Company
into a decentralized finance (“DeFi”) company, the Board has
resorted to a familiar playbook – distract attention from the
Company’s failure to unlock the value of the core ETF business,
deny stockholders access to the KPIs required to judge DeFi
initiatives, and demonize ETFS Capital and Graham Tuckwell.
The Board’s refusal to run an independent strategic
review process is the reason ETFS Capital was
compelled to launch this campaign. If the Board
commences a strategic review, as outlined below, then ETFS Capital
intends to suspend its campaign.
The Company’s upcoming 2024 Annual Meeting of
Stockholders is a simple referendum on the Company’s ill-advised
diversification strategy. The Board continues to deprive
stockholders of any meaningful performance insights into WisdomTree
Prime and other DeFi initiatives in our view, and is now refusing
to unlock value through an independent strategic review
process.
The focus of ETFS Capital’s campaign is NOT about
removing or replacing long tenured directors, Win Neuger, Anthony
Bossone or the CEO, Jonathan Steinberg, as the Company would have
stockholders believe. Instead, the focus of ETFS Capital’s campaign
is about unlocking value for all Stockholders, which the Board, led
by Messrs. Neuger, Bossone and Steinberg, refuses to take the
necessary actions to do. We believe the Board has demonstrated that
it will only act when stockholders compel them to and that is why
this vote is so important.
As ETFS Capital outlined in its May 6, 2024 letter to fellow
stockholders, it believes that WisdomTree’s ETF business is worth
$2.1 to $3.0 billion to common stockholders – significantly more
than the Company’s market value.1 Considering ETFS Capital’s thesis
is that WisdomTree’s share price could be significantly higher if
the Company was managed better, the Board’s constant repetition of
Total Shareholder Return or recent analyst ratings should be moot.
Importantly, despite taking over a week to consider ETFS Capital’s
analysis, WisdomTree’s May 13 Letter is notably silent on
the core issue of undervaluation. Nor has the Company
offered stockholders KPIs that would allow them to determine the
success of the Board and Management team’s pursuit of DeFi
initiatives. The Board appears to prefer spending millions of
dollars of stockholder capital to fight stockholders – rather than
spend a fraction of that to undertake a genuine independent
strategic review. Instead, stockholders were treated to a
full-throated defence of the Board’s vulnerable directors and dark
warnings in the May 13 Letter. This approach appears consistent
with the Board’s pantomime of engagement with ETFS Capital over the
past years and we believe it is emblematic of the Board and
management team’s unwillingness to be held accountable to
stockholders.
The Board has repeatedly lashed out at its stockholder critics
and is trying to distract stockholders from the serious issues
driving this referendum on its own failure to deliver for
stockholders, by attacking ETFS Capital’s Chairman, Mr. Graham
Tuckwell. In fact, much of the meaningful Board refreshment and
governance enhancements at the Company that stockholders can point
to over the past two to three years were the direct result of ETFS
Capital’s efforts, including the appointment or election of three
highly qualified directors and the declassification of the Board.
The Board has repeatedly shown it will only act when pushed to do
so by stockholders, which is why we are conducting this
campaign.
ETFS Capital believes Messrs. Neuger, Bossone, and Steinberg are
leading the anti-stockholder resistance at the Company and should
be held accountable. The Board’s defense of these three
long-tenured directors underscores their central role in
perpetuating the Company’s value destructive DeFi pursuits. ETFS
Capital acknowledges that, if voted off, the Board may choose to
reappoint these individuals, but it will not be able to evade the
fact that stockholders made their views very clear.
ETFS Capital is aligned with its fellow stockholders and its
request is a simple one: The Board should form a special committee
of truly independent directors with a mandate to consider strategic
alternatives including, but not limited to, a sale of part or all
of the business and returning capital to stockholders, and a
significant repositioning of the business including the replacement
of members of WisdomTree’s senior leadership team. To assist in
this work, ETFS Capital further proposes that the special committee
retain a recognized tier-one investment bank along with counsel,
both of whom are also truly independent.
ETFS Capital is urging stockholders to join it in voting
AGAINST the re-election of the Chairman Win
Neuger, Director Anthony Bossone, and CEO and Director Jonathan
Steinberg to send a clear message to the Board – that WisdomTree
should hire a reputable banker and evaluate all options to unlock
value as soon as possible.
A copy of ETFS Capital’s letter, definitive proxy statement, and
information on how to vote AGAINST the re-election
of the Chairman Win Neuger, Director Anthony Bossone, and CEO and
Director Jonathan Steinberg on
the GOLD proxy card
or GOLD voting instruction form are
available at www.UnlockWT.com.
Stockholders who have questions or require assistance in voting
their GOLD proxy card, or need additional copies
of ETFS Capital’s proxy materials, are encouraged to contact
Saratoga Proxy Consulting LLC at (888) 368-0379 or (212) 257-1311
or info@saratogaproxy.com
About ETFS Capital Limited
In 2018, WisdomTree spent $611 million to acquire the European
ETC business of ETF Securities Limited (now called ETFS Capital
Limited) for cash and shares, becoming the largest shareholder in
WisdomTree.
ETFS Capital is a London-based strategic investment company
focused on growth opportunities across the ETF ecosystem. As part
of its investment process, ETFS Capital receives and analyses many
dozens of business ideas and proposals within the ETF ecosphere
each year and conducts in-depth technical and commercial due
diligence on the companies where it chooses to deploy capital.
Thereafter it engages in a hands-on approach, as a partner to
management teams and Boards bringing its unparalleled
industry-specific expertise for the benefit of those companies.
Investor Contact:
John FergusonSaratoga Proxy Consulting LLCToll free (888)
368-0379+1-212-257-1311info@saratogaproxy.com www.UnlockWT.com
Media Contact:
Dan Gagnier / Riyaz LalaniGagnier Communications
LLC+1-646-569-5897ETFS@gagnierfc.com
1 Current market value of $1.4 billion based on a share price of
$9.26 as of May 3, 2024 (Bloomberg) and shares outstanding of
approximately 152 million (Company SEC filings).The lower intrinsic
valuation of $2.1 billion is calculated as follows: (i) annual
revenue of $382 million, based on current AUM of $106 billion and
weighted average fees of 36 bps (Company website and SEC filings)
as of May 3, 2024 (ii) an operating margin of 42.5%, being the
mid-range of our estimated achievable margin as discussed in our
prior solicitation materials (iii) deduct non-operating expenses,
including net interest expense, of $11 million as per the Company’s
2023 Form 10-K (iv) apply a tax rate of 21% to give net income of
$119 million (v) apply a Price(P)/NTM (Next Twelve Months) Earnings
multiple of 17.5x, which is the 3-year average for WisdomTree’s NTM
P/E trading multiple as of May 3, 2024 (FactSet).The higher
intrinsic valuation of $3.0 billion assumes a sale of the ETF
business at a valuation of 2.8% of current AUM of $106 billion,
which valuation multiple is the average of the acquisition multiple
for Guggenheim in 2017 and Oppenheimer in 2018 of 3.3% and 2.3%
respectively (Bloomberg). We note that when WisdomTree announced
the purchase of the European business of ETFS Capital in November
2017, it was at a valuation of 3.5% of AUM (the consideration was
valued at $611 million for $17.6 billion of AUM).
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