|Written by GSCR Staff|
|Wednesday, 19 February 2014 08:50|
In yesterday’s Goldman Guide we highlighted the changing world of the financial reporting and analysis industry. The important takeaway is that change and innovation are inevitable in sectors of the economy where large amounts of capital flow and millions of motivated people work to gain an advantage over competitors.
The same can be said with the asset management sector of financial services. Mutual funds have almost become passé with the advent of the ETF and firms that lead the way have gained the upper hand in capital inflow from retail investors.
We rarely highlight financial stocks, primarily because they usually do not dwell in the small cap space, but about a year ago we featured Wisdom Tree Investments, Inc. (NASDAQ – WETF - $15.46) in the Market Monitor and the stock is up nearly 65% over that time. The bull run influx of capital from John and Jane investor has been the main culprit for the Company’s growth over this time.
Though some bears may say it might indicate that news like the company’s Europe Small Cap Dividend Fund (DFE) has reached $1 billion as bad sign, we feel the stock still has room to run. Wisdom Tree has a diverse product line and has taken some proactive steps in the anticipation of a possible slowdown in stocks. For example, the Company introduced the Bloomberg Floating Rate Treasury Fund (USFR) fixed income product designed to help investors reduce their interest rate risk, while generating income backed by the full faith and credit of the U.S. government. New products to meet the times will be key in keeping revenue growing.
We say to target $17 and anticipate WETF should hit that mark sometime in 2Q14.
Have a great day!
Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.
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