A battle for control of WisdomTree is underway, with the largest shareholder of the $77.7 billion US wealth manager demanding that the CEO resign and new directors be appointed to the board.
Graham Tuckwell, the driving force behind the creation of the world’s first exchange-traded gold fund, has teamed up with Lion Point, an activist hedge fund, to oust Jonathan Steinberg from his role as CEO at WisdomTree.
The dispute follows years of underperformance by WisdomTree, whose share price has fallen 79 percent from its peak in August 2015, despite being frequently touted as a potentially attractive takeover target for a larger wealth manager looking to expand or get into the fast-growing $10 trillion company ETF industry.
Tuckwell founded ETF Securities in 2005, a London-based ETF specialist, which sold its European arm to WisdomTree $611 million cash and stock deal in November 2017. Both parties believed the deal would strengthen the expanded group – which was ranked the ninth-largest ETF manager in the world – and make it a more effective competitor to larger rivals like BlackRock and Vanguard. They also hoped the combination would increase their appeal to any potential buyer.
Steinberg versus the FT in 2018 that he expected WisdomTree’s fortune to reach $100 billion without giving a timeframe – a goal that was not met.
Since the closing of the transaction, WisdomTree has reported net inflows of approximately $6.4 billion, but that hasn’t been enough to quell growing tensions between Tuckwell, a outspoken Australian entrepreneur, and Steinberg, the son of one of Wall Street’s most famous corporate robbers. to defuse Saul Steinberg.
Tuckwell argues that Steinberg and his management team destroyed half of WisdomTree’s market value, approximately $400 million, and is pushing for new directors to be elected to the board at the June AGM.
Tuckwell, which is WisdomTree’s largest shareholder with 18.7 percent, has been nominated for election to the board along with Lynn Blake, a former executive at US wealth manager State Street Global Advisors, and Deborah Fuhr, the firm’s founder ETFGI, known as the “fairy godmother” of ETFs for her role in promoting the industry over three decades.
But Tuckwell’s ultimate goal is to force the departure of Steinberg, who founded WisdomTree as a publisher of investment magazines and expanded it into an ETF provider in 2006.
“WisdomTree needs a new CEO and improved board oversight to restore its lost credibility with shareholders,” Tuckwell said.
The wealth manager has developed a sophisticated “poison pill” defense to ward off the attack.
Steinberg, who is married to the well-known business journalist on US television Maria Bartiromo, is determined to fight. Hiring Bank of America as a consultant, he created a complex “shareholder rights plan” — which involves the issuance of non-voting preferred stock — to prevent Tuckwell and Lion Point from gaining control without having to pay a premium.
“We are committed to increasing value for all shareholders and will continue to take actions that we believe will enable us to achieve that goal,” said a WisdomTree spokesperson.
Lion Point, a hedge fund co-founded in 2015 by Didric Cederholm and Jim Freeman, both of whom previously worked at Elliott Associates, holds a 3.1 percent stake in WisdomTree. Lion Point has been researching WisdomTree for three years and interviewed more than 50 people, including former employees and potential acquirers. It has concluded that the “ineffective management culture” overseen by Steinberg must be addressed if the company is to thrive.
https://www.ft.com/content/40736bb6-3445-4024-8d5c-b0374dde4e48 Activist calls for resignation of WisdomTree CEO