ETFS Capital, an investor in ETF Stream, has nominated an additional three candidates to the WisdomTree board as it looks to address the ETF issuer’s “dismal performance” in recent years.
ETFS Capital has identified Bruce Aust, former vice president at Nasdaq and Fidelity, Tonia Pankopf, managing partner at Pareto Advisers and its founder and chairman Graham Tuckwell as board nominees at WisdomTree’s 2023 annual shareholder meeting.
In an open letter, signed by Tuckwell, ETFS Capital said the additions to the firm’s board would bring governance, capital allocation and stockholder perspective insights, which could address issues such as WisdomTree’s 2% decline in operating income, even as its assets under management (AUM) increased more than 50% over the past five years.
The recent calls for board changes follow WisdomTree agreeing to offer board seats to two nominations made by ETFS Capital and fellow activist investor Lion Point Capital last May – including former State Street Global Advisors (SSGA) CIO Lynn Blake and ETFGI founder Deborah Fuhr – while refusing to offer Tuckwell a seat.
The letter said the two firms have not engaged in meaningful dialogue since 25 May 2022 despite ETFS Capital giving presentations last August and November to raise areas of concerns.
WisdomTree responded by reinstating the ‘poison pill’ – or shareholder rights agreement – first introduced last March, which effectively halves the stake of all shareholders if any attempt to acquire more than 10% ownership in the firm. It also chose to “further enhance” its Executive Severance Plan.
“We consider these to be the actions of a board who is afraid to be held to account by its stockholders,” ETFS Capital said, which currently owns 18% of WisdomTree.
WisdomTree’s share price has fallen 34% since it acquired the European exchange-traded commodity (ETC) business of ETF Securities in April 2018. In the same time, ETF market leader BlackRock has seen its stock increase in value by 51%.
ETFS Capital attributed this “destruction of shareholder value” to WisdomTree’s lack of focus on its core business, poor capital allocation and cost management and misplaced emphasis on the “misguided” WT Prime initiative.
With the right board, the letter said the firm could generate “significant value” for shareholders. It concluded by stating despite previous lack of progress, ETFS Capital remains open to a mutually agreeable solution.
ETFS Capital is an investor in ETF Stream