WisdomTree Sends Letter To Stockholders Outlining Company's Performance, Recent Milestones And Strategy For Continued Growth

Author: Benzinga Newsdesk | April 29, 2024 04:41pm

Fellow WisdomTree stockholders:

At the upcoming 2024 Annual Meeting of Stockholders ("2024 Annual Meeting") of WisdomTree, Inc. ("WisdomTree" or the "Company"), you will have the opportunity to show your support for the Company's proven ability to drive long-term value and growth, and the leaders we believe will continue to build on that momentum moving forward.

We are proud of our track record and are well-positioned to continue our growth trajectory in 2024 and beyond. Importantly, in 2023 and 2024-to-date we have further advanced our strategic objectives with numerous achievements, and our recent results highlighted below demonstrate that our long-term growth strategy, led by WisdomTree's Board and management team, is realizing the full potential of our business model.

Our diverse, independent and highly qualified Board has been substantially refreshed since 2021, and all committee chair positions have been rotated and are held by female directors who joined the Board during the past three years. Each director brings valuable perspectives and extensive experience critical to overseeing WisdomTree's strategy and performance. To continue this momentum, it is important that stockholders vote "FOR" all nine of WisdomTree's directors, each of whom has directly supported the Company's significant growth.

STOCK PRICE INCREASE AND POSITIVE FINANCIAL RESULTS ARE EVIDENCE OF WISDOMTREE'S STEADFAST COMMITMENT TO GENERATING STOCKHOLDER VALUE

Sustainable organic growth, operational efficiency and disciplined capital management is our formula for revenue growth, margin expansion and accelerated EPS growth. We are succeeding and the facts speak for themselves:

• Our stock price was up approximately 40% over the 12-month period ended April 26, 2024 and more than 30% during Q1 2024, and in March 2024 surpassed its 5-year high;
• We have ranked among the top two of 13 companies comprised of WisdomTree and a peer group of U.S. publicly-traded asset managers1 (the "Publicly-Traded Asset Manager Peer Group") in Total Shareholder Return over the most recent 1-, 2- and 3-year time periods and among the top four in the most recent 4-year time period;
• Our market capitalization has increased by approximately $200 million2 since the 2023 annual meeting of stockholders, a direct indication that our strategy is delivering value creation for stockholders;
• Five out of eight analysts covering WisdomTree now have implemented "BUY" ratings, with two analyst rating upgrades to "BUY" and one analyst initiating coverage with a "BUY" rating within the past six months;
• Record assets under management ("AUM") of $107.2 billion as of March 31, 2024;
• Over three consecutive calendar years of positive inflows with $29.2 billion of cumulative inflows from January 1, 2021 through March 31, 2024, while our fee capture on flows during the past 15 months ended March 31, 2024 was 2x greater than FY 2022;
• Best-in-class organic flow growth rate in 2023 of 13%, as compared to our Publicly-Traded Asset Manager Peer Group, with a long and sustainable runway ahead driven by a diverse product suite and nascent managed models franchise;
• Revenue growth of 16% for FY 2023, as well as revenue growth of 18% for Q1 2024 as compared to Q1 2023;
• Adjusted3 operating margin expansion of 540 basis points during FY 2023 and 820 basis points measured at March 31, 2024 as compared to Q1 2023; and
• Adjusted organic4 operating margin expansion of 140 basis points during FY 2023 and 280 basis points measured at March 31, 2024 as compared to Q1 2023.

WISDOMTREE IS REALIZING POTENTIAL ACROSS ITS DIGITAL ASSETS AND BLOCKCHAIN-ENABLED FINANCE PORTFOLIO

Our mission is to provide the best transparent product structures in the market. Today, we do this through ETPs, but we believe the future is through tokenized assets and blockchain-enabled finance, which are reshaping the future of our industry and creating new opportunities for growth and value creation.

As an early mover in the space, we launched a direct-to-consumer channel and our blockchain-native wallet, WisdomTree Prime™, which provides investors access to tokenized gold and U.S. dollar tokens, blockchain-enabled mutual funds and select crypto currencies. We are also exploring strategic partnerships and other business development opportunities for both our platform and product suite that could result in additional tokenization revenue streams in the future.

Earlier this year, we announced that WisdomTree was granted a charter from the New York State Department of Financial Services to operate as a limited purpose trust company under the New York Banking Law, which allows us to launch WisdomTree Prime in New York. Including the forthcoming launch in New York, we have expanded the availability of WisdomTree Prime to 41 states and nearly 75% of the U.S. population.

Recently, we also launched the WisdomTree Prime Visa Debit Card, a digital and physical card enabling users to spend outside the WisdomTree Prime app. We are enhancing WisdomTree Prime's products and capabilities and have plans to enable peer-to-peer transfers and payments in the upcoming quarters.

GRAHAM TUCKWELL'S CLAIMS ARE FALSE AND MISLEADING – AND HIS TWO PREVIOUSLY NOMINATED DIRECTORS SUPPORT THE BOARD'S CURRENT STRATEGIC PLAN AND VISION

Dissident stockholder Graham Tuckwell, founder and Chairman of ETFS Capital Limited ("ETFS Capital"), is unfortunately attempting for the third year in a row to stop our positive momentum and hinder our growth by waging an activist campaign. He has, yet again, published numerous false and misleading statements that risk diverting attention from the fact that WisdomTree is successfully executing on its stated strategic plan and outperforming all companies in the Publicly-Traded Asset Manager Peer Group. His campaign is self-serving and not in the best interests of all WisdomTree stockholders. Moreover, Mr. Tuckwell filed his own proxy statement in support of his misguided campaign without alerting stockholders in his earlier public communications that he planned to do so, which deprived other stockholders of important information. He has not offered alternative nominees for election, yet continues his unproductive and value-destructive crusade against the Company. Indeed, two of our current directors who were handpicked by Mr. Tuckwell fully support the Board's strategic plan and direction.

Mr. Tuckwell fails to recognize that our digital assets business is a valuable addition to the future of our Company and, as our results demonstrate, we remain laser-focused on our traditional ETP business as we build our digital assets business. Instead, he consistently issues information that is false. By cherry picking dates and data, he misleads investors as to how our operating margins and market share benchmark compared to peers.

Operating Margins

Our Publicly-Traded Asset Manager Peer Group had average and median reported adjusted operating margins of 33% and 31%, respectively, for FY 2023. Street consensus currently projects WisdomTree's adjusted operating margin to continue expanding during the course of this year and finishing Q4 2024 at approximately 33%, which includes our digital assets spend.

We have significant operating leverage, and as our AUM continues to grow, our margins are expected to continue to expand. Our adjusted operating margins have expanded by 140 basis points organically during FY 2023 and by 280 basis points measured at March 31, 2024 as compared to Q1 2023.

Market Share

Mr. Tuckwell falsely claims that our focus on digital assets has resulted in a loss of ETP market share as compared to ProShares, VanEck and Global X.

Our digital assets efforts began in 2021, the first year we began recognizing the expense. At December 31, 2020, the AUM of WisdomTree's U.S. business was $38 billion and the combined AUM of the U.S. businesses of WisdomTree, ProShares, VanEck and Global X was $159 billion, giving WisdomTree a market share of 24.0%. At March 31, 2024, the AUM of WisdomTree's U.S. business was $78 billion and the combined AUM of these four companies' U.S. businesses was $274 billion, giving WisdomTree a market share of 28.5%. This represents an 18.75% increase in market share, with WisdomTree having the largest share among the four companies. These numbers invalidate Mr. Tuckwell's false claims.

In addition, WisdomTree analyzed its market share as compared to the entire U.S. ETP market for the period from December 31, 2020 (0.70% AUM market share) through March 31, 2024 (0.88% AUM market share), noting an increase of 25%, or 18 basis points.

Mr. Tuckwell's assertions are false and misleading. Building our digital assets business has not been at the expense of our traditional ETP business. Our results speak for themselves – we have grown revenues, we have grown market share, we have expanded our operating margins, and our stock has significantly outperformed the average of our Publicly-Traded Asset Manager Peer Group.

WISDOMTREE HAS MADE SIGNIFICANT ENHANCEMENTS TO ITS CORPORATE GOVERNANCE, INCLUDING ROTATING ALL COMMITTEE CHAIRS, AND HAS THE RIGHT BOARD IN PLACE TO OVERSEE THE COMPANY'S STRATEGY

Our unified Board is diverse, independent and highly qualified, and includes the right mix of perspectives, experiences and skillsets critical to overseeing WisdomTree's strategy and performance. It also includes six new, independent voices with the right expertise to help the Company execute its strategy, three of whom chair our Audit, Compensation and Nominating and Governance Committees.

Given our current trajectory, the returns generated for stockholders and the progress demonstrated by our various value-creation initiatives, the Board does not believe that appointing an investment bank to review strategic alternatives as Mr. Tuckwell has proposed makes any sense, nor is it in the best interests of the Company and its stockholders. While our Board is always open to value-maximizing opportunities, following Mr. Tuckwell's plan at this time would likely destroy stockholder value.

Mr. Tuckwell seems to have forgotten that in 2022, we formed a special committee of the Board to review the entire business and evaluate WisdomTree's operations, corporate strategy, capital deployment, digital assets and executive compensation. This committee included two of Mr. Tuckwell's own director nominees who, after having direct access to all information, determined that WisdomTree is on the right path to generate significant stockholder value, and that we have the right management team to execute on this strategy and realize WisdomTree's full potential across traditional ETPs and digital assets. The committee also found that there were no material opportunities to streamline costs without risking our ability to execute.

We have the right Board, including two directors previously nominated by Mr. Tuckwell who support the Board's current strategic plan and vision and already provide ETFS Capital with Board representation commensurate with its ownership. This is not the time for further change.

VOTE "FOR" ALL OF OUR DIRECTORS ON THE WHITE PROXY CARD TO SHOW MR. TUCKWELL THAT YOU SUPPORT YOUR BOARD AND MANAGEMENT TEAM

Our Board and management team have made numerous enhancements to our business in recent years, and now we need your support to let us continue to successfully execute. WisdomTree's future is bright, and with our strong momentum and track record of growing our business, we are immensely confident in the ability of our Board, CEO and management team to succeed.

Do not let Mr. Tuckwell fool you. We have engaged with him extensively in good faith for several years and have considered and implemented many of his requests. However, he has continued to make false and misleading claims that paint an inaccurate picture of WisdomTree's performance, strategy and value proposition. He is diverting the Board and management team from focusing on our long-term growth strategy and value-creation initiatives, and as a result is disrespecting you, his fellow stockholders.

We are confident that we have the right vision, talent and leadership in place to continue to grow and succeed. It is time to send Mr. Tuckwell a clear message – enough is enough. Vote "FOR" all directors and all items on the WHITE proxy card to ensure that WisdomTree can continue to deliver superior results for our stockholders.

Sincerely,

Win Neuger

Independent Chair of the WisdomTree Board

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