Mr. Bartiromo Prints 52-week Lows

Will Jono Steinberg's, Maria Bartiromo's hardworking husband, succeed in making Wisdom Tree Investments Inc. (WSDT.PK) in to a winner? Jonathan's charmed life took a U-turn several years ago as his father's health failed and his Individual Investor publishing unit essentially shuttered. But it did not kill him, and he is slowly getting stronger, although the 52-week lows in his stock might mask his accomplishments:

As exchange-traded funds sponsor WisdomTree Investments Inc. (WSDT.PK) continues to build its base of assets, it faces the same quandary of most start-ups -- elusive profits.

In the second quarter, the company reported net losses of $7.96 million, or 8 cents a share, in its first-ever earnings call after markets closed on Thursday. That represented a 17% increase from a year earlier....That narrowing in losses between quarters came as a result of declining expenses and greater revenue streams in the three-month period ended June 30, according to the company.

The conference call was unusual since WisdomTree is the only pure-play publicly traded ETF provider. The meeting, which lasted more than an hour, provided a rare glimpse into the financials of a sponsor which has been particularly aggressive in the fast-growing $576 billion ETF marketplace. Seeking Alpha

Wisdom Tree is growing like a weed however, and might approach the break-even level within 18 months if they continue to garner new mandates and keep costs in line. They are getting inflows, a rare sight in this market:

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Getting interesting? Wisdom Tree two-year chart

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Meanwhile, its revenue of $6.2 million showed an increase of 40% from the same quarter a year ago and 15% from the first quarter. Muni credited much of that increase to rising asset levels, which were helped by new product launches.

As of June 30, WisdomTree had $4.9 billion under management representing an 11% increase from the previous quarter. That came in its 48 ETFs, nine of them launched in the second quarter.

Net inflows in the quarter were up by $745 million despite a hostile market. Turbulent market conditions actually sank the value of WisdonTree’s funds by some $305 million.

Based on WisdomTree’s current position, Muni estimated that WisdomTree would need $4.3 billion in additional assets to be at the break-even level.

The company is still burning cash, but with the current enterprise value a little north of $200 million, which equates to 4.4% of current AUM, and maybe 3% of where they will be by the end of 2009, the stock might be worth keeping an eye on.

While not everyone is sold on the merits of the strategy, money is tumbling in, and if they markets firm later in the year asset management operations might get a second look from the BuySide, who know all too well how attractive the economics can be.

Steinberg has surrounded himself with some credible talent, and is embracing transparency by holding quarterly conference calls. If he can make it off the pink sheets institutional investors who have been unable to buy the stock will finally be able to consider adding it to their portfolio’s.

Crazy thesis? Not really. It would also make a nice acquisition for a bigger asset management company.

Wisdom’s Tree’s skeptics might want to consider that the stock will outlast the Steinberg’s beach house where Jono and Maria were married. Saul Steinberg spent millions trying to shore up the sand dune separating the house from the Atlantic Ocean, but I bet the next Hurricane takes the house down.

Maybe Jono can sell his company and buy back the empty lot if the Hampton’s get a repeat of the storm of ‘38.

Making Maria swelter in the city all summer is not cool, Jonathan.
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$5 million barrier dune...going, going, gone?

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WisdomTree Reports ‘Improved’ Losses
Seeking Alpha
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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. No Position

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