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Monday, July 29, 2013

Three Things To Know From WisdomTree's Earnings

Reported by Casey Quinlan

WisdomTree [profile] had good second quarter growth and performance, posting $5 billion in inflows in the second quarter up from just $300 million during the second quarter last year. Assets under management are up a whopping 93 percent.

WisdomTree's ETF AUM almost doubled from $15 billion in the second quarter of 2012 to $29 billion in the second quarter this year, and total revenues also nearly doubled, reaching $37.3 billion from $20.4 in the second quarter last year.

The Wall Street Journal's Kirsten Grind writes that WisdomTree is well-positioned to take advantage of the ETF market as the sole firm that only manages ETFs.

Looking through WisdomTree's earnings call transcript at Seeking Alpha, three issues were raised that merit being mentioned:

POINT 1: WisdomTree is adding more personnel to contact people over the phone.

POINT 2: WisdomTree is looking to do some M&A.

POINT 3: The firm is doing some big spending in light of the heavy inflows it's bringing in.

POINT 1: WisdomTree is adding more personnel to contact people over the phone.
Amit Muni, chief financial officer, principal accounting officer and executive vice president of finance at WisdomTree in response to a question from John Joseph Dunn at Sidoti & Company, LLC:
I would say that all the channels have promise. I mean, they all performed at the highest level in the first half that we never had at WisdomTree. We've continue to make investments where we felt they were necessary. In certain cases you need more people, you need more contact clients. In other cases, more can be done through phone, and through a more concentrated sales team. But we are thinking about and we are executing, adding personnel to all major channels. We've done that in the first half of the year and we have plans in the second half to continue to add bodies where we feel we need to do to grow quicker.
POINT 2: WisdomTree is looking to do some M&A.

Amit Muni, chief financial officer, principal accounting officer and executive vice president of finance at WisdomTree in response to a question from Dan Weiskopf at Asset Solution:
Dan, it's Amit. As far as the dividend, our business is doing very well. The cash balance is growing. But we're a growth company and our focus is on investing that cash back into the business over the short term. There may be opportunities for us to do some M&A. There may be opportunities for us to do something possibly internationally, so our focus is on building that cash. But to the extent we cannot put it back into the business, I would say it's natural for us to do dividends. But over the short term, that's not on the horizon right now.

POINT 3: The firm is doing some big spending in light of the heavy inflows it's bringing in.

Amit Muni, chief financial officer, principal accounting officer and executive vice president of finance at WisdomTree in response to a question from Adam Beatty at Bank of America Merrill Lynch:
Sure. So we spent about $1.3 million in those growth initiatives in Q1, about $2.1 million in Q2. We knew the spend was a little bit light in the first quarter, that's why we indicated we did expect it to trend up closer to the mid to the higher end of that range. And that's our intention. We believe it's important for us to spend in those growth initiatives to help build our business. We've added to our sales force. The marketing and the sales related spending was roughly flat with what you saw in the first quarter. We are launching more funds, as we noted on the call.

And there's going to be more coming in the back half of the year. And I think you can see the results. Look at the very, very strong net inflows. We are continuing to diversify our product suite and so we think it's important for us to make those investments. But again, I think one of the key things to understand is that even though we have seen a tremendous amount of revenue growth from DXJ, we are not changing our expense discipline. We said we're going to spend $5 million to $8 million, we're still spending $5 million to $8 million.
See the Seeking Alpha transcript of WisdomTree' earnings call and the earnings release for more on how WisdomTree is doing.  

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