Slide 1: Unlock Value at WisdomTree
Unlock Value at WisdomTree Campaign for Against Vote at WISDOMTREE, Inc. (NYSE: WT) www.unlockwt.com May 20, 2024
Slide 2: Disclaimer
Disclaimer The materials contained herein (the “Materials”) represent the opinions of ETFS Capital Limited and the other participant named in its proxy solicitation (collectively, “ETFS” or “we”) and are based on publicly available information with respect to WisdomTree, Inc. (“WisdomTree”, “WT” or
Slide 3: Table of Contents
Table of Contents Executive Summary and Message from Graham Tuckwell 4 Campaign Summary 6 The Value of the Core ETF Business – and WisdomTree’s Failure to Maximize It 13 WisdomTree’s DeFi Push – the Latest in a Long Line of Questionable Capital Allocation Decisions 19 WisdomTree’s Board Only Acts Un
Slide 4: Executive Summary
Executive Summary While our efforts to add relevant expertise and introduce significant governance changes to the WisdomTree Board of Directors (the “Board”) has been largely successful, the status quo persists due to the outsized influence of three long-tenured directors – CEO Jonathan Steinberg,
Slide 5: Message from Graham Tuckwell AO, Founder and Chairman of ETFS Capital Limited
Message from Graham Tuckwell AO, Founder and Chairman of ETFS Capital Limited We became the largest stockholder in WisdomTree because we had faith in the Company and its future. However, we and all stockholders have been badly let down by the Company’s management and Board. We believe that with the
Slide 6: 2024 Campaign Summary
2024 Campaign Summary What do stockholders To unlock value want? How do we get it? A truly independent strategic review Why aren’t we getting A badly behaved Board because of long-tenured directors it? When do we want it? Now … we want a review, not a proxy fight So what do we need? A vote AGAINST t
Slide 7: We Believe there is Significant Value to be Unlocked in the Core ETF Business
We Believe there is Significant Value to be Unlocked in 1 the Core ETF Business • We estimate WisdomTree’s core ETF business to be worth $2.1 - $3.0 billion1. • We think the intrinsic value of the core ETF business is being hamstrung by: Management’s failure to contain costs in the core ETF busine
Slide 8: We Believe the Time is Right for a Truly Independent Strategic Review of the Entire Company
We Believe the Time is Right for a Truly Independent 2 Strategic Review of the Entire Company • The lack of clarity around the DeFi initiative’s progress three years into its development places both the Company’s operating performance and its intrinsic value into question. • Stockholders have commun
Slide 9: Last Year, at the Company's 2023 Annual Meeting, Stockholders Voted for Significant Change
Last Year, at the Company’s 2023 Annual Meeting, 3 Stockholders Voted for Significant Change • Entrenched Chairman Frank Salerno failed to be re-elected by stockholders. • Long-tenured director Win Neuger received tepid stockholder support, receiving WITHHOLD votes from approximately 34% of the vote
Slide 10: We Have Spent Our Money to Help All Stockholders, While the Company Spends Stockholder Money
We Have Spent Our Money to Help All Stockholders, While the Company 4 Spends Stockholder Money to Fight Against…Stockholders • It appears the WisdomTree Board would rather spend stockholder money on fighting its stockholders rather than listening to them. • According to publicly available informatio
Slide 11: We Believe the Board is Behaving Badly
5 We Believe the Board is Behaving Badly The Board Continues to... Distract attention from the Company’s Deny stockholders relevant transparency Demonize ETFS Capital Limited and failure to unlock the value of the core ETF and access to the KPIs required to judge Graham Tuckwell. business. DeFi init
Slide 12: The Board Continues to Demonstrate it is Unwilling to Effect the Change Needed
The Board Continues to Demonstrate it is Unwilling to Effect the 6 Change Needed to Unlock Stockholder Value • We believe the Board has repeatedly shown it will only respond to stockholder pressure, and even then, will only do so begrudgingly. • This was exemplified by the 2023 Annual Meeting, when
Slide 13: The Value of the Core ETF Business – and WisdomTree's Failure to Maximize It
The Value of the Core ETF Business – and WisdomTree’s Failure to Maximize It
Slide 14: We Believe WisdomTree's Core ETF Business is Significantly Undervalued
We Believe WisdomTree’s Core ETF Business is Significantly Undervalued WT Bitcoin Prime Core ETF ETF Business Core ETF Business ETFS Estimate Current Market Value $2.1 - $3.0 billion $1.4 billion 14
Slide 15: We Believe WisdomTree's Core ETF Business, If Managed Efficiently, Could be Valued at $2.1B
We Believe WisdomTree’s Core ETF Business, If Managed Efficiently, Could be Valued at $2.1B WT FY23 (Excl. Gold Payable) WT FY23 as % of Revenue ETFS – FY24 Core ETF Business ETFS - % of Revenue Avg. AUM $93B $106B Weighted Fee (bps) 37.6 36 Revenue $349M $382M Fund Admin ($71M) 20% ($76M) 20% All O
Slide 16: We Believe The Core ETF Business Could Be Worth $3B in a Strategic Transaction
We Believe The Core ETF Business Could Be Worth $3B in a Strategic Transaction Precedent Transactions Suggest Significant Unlocked Value for ETF Business Transaction Target Total Multiple (Total Implied Value for Implied Value Per Potential Date AUM (Acquirer/target) Industry Consideration Considera
Slide 17: WisdomTree Has Consistently Failed to Generate Incremental Margins of 50%
WisdomTree Has Consistently Failed to Generate Incremental Margins of 50%, Resulting in Sub-par Performance for the Core ETF Business Despite Revenue Increasing by $26m, the Operating Margin in 1Q2024 was Lower than in 1Q2021 • The Company has been promising incremental margins of more than 50% sinc
Slide 18: None of the Analyst Estimates Show Confidence in the Existing Board and Management
None of the Analyst Estimates Show Confidence in the Existing Board and Management Being Able To Unlock the Value of the Core ETF Business In Our View Sell-side Target Price Estimates vs. Intrinsic Value Range $20.00 Higher-end of Intrinsic Value: $19.5 $18.00 $16.00 Value of Core ETF Business When
Slide 19: WisdomTree's DeFi Push – the Latest in a Long Line of Questionable Capital Allocation Decisions
WisdomTree’s DeFi Push – the Latest in a Long Line of Questionable Capital Allocation Decisions
Slide 20: WisdomTree CEO: "I am all in on DeFi"
WisdomTree CEO: “I am all in on DeFi” …I believe that over the next five years, we will be recognized as a DeFi business that has an ETF business… …when I think about where WisdomTree stacks in the competitive set: we were early in ETFs, but we were 13 years after State Street and 7 years after iSha
Slide 21: Why is WisdomTree Wanting To Transform Itself Into a DeFi Company?
Why is WisdomTree Wanting To Transform Itself Into a DeFi Company? Goal: Transform Into Source: 1Q2024 Earnings Presentation; WisdomTree website; Company SEC filings 21
Slide 22: The Promise of WisdomTree Prime
The Promise of WisdomTree Prime “I'm excited to introduce WisdomTree Prime, our new financial services mobile app. This digital wallet native to the blockchain will bring the look and feel that users are accustomed to from traditional mobile apps, while at the same time offering the benefits of a di
Slide 23: WisdomTree Appears to Be All In on DeFi
WisdomTree Appears to Be All In on DeFi Word Mentions • The shift in management focus from the core ETF business to Last 10 Earnings Calls the DeFi strategy has been reflected in past earnings calls. • On its most recent earnings call, WisdomTree referred to its DeFi initiatives 10x as often as its
Slide 24: Despite the Fanfare Surrounding WT Prime, Which is Now Available to 75% of the U.S. Population…
Despite the Fanfare Surrounding WT Prime, Which is Now Available to 75% of the U.S. Population… Source: 2Q2023 Earnings Presentation Source: 1Q2024 Earnings Presentation 24
Slide 25: Management Has Provided No Information to Evaluate the Future Prospects or Current Success
Management Has Provided No Information to Evaluate the Future Prospects or Current Success for the DeFi ‘Transformation’ Initiatives What do we know? Digital Funds AUM: US Availability: -$20.4m Total AUM as Total Amount Worried Stockholders: Original Waitlist Available across 41 of 05/15/20243 Inves
Slide 26: Key KPIs for Other DeFi Businesses that Investors Should Expect from WT Prime
Key KPIs for Other DeFi Businesses that Investors Should Expect from WT Prime Company Disclosed KPIs Number of retail customers, deposits, number of monthly transactions, monthly active customers, customers on paid plans, revenue, number of transactions, average account size, Net Profit Margin New m
Slide 27: The Board and Management's History of Poor Capital Allocation Gives Stockholders Ample Cause for Concern
The Board and Management’s History of Poor Capital Allocation Gives Stockholders Ample Cause for Concern We believe that, given a decade of misfires on external investments and strategic pivots without management accountability, the company’s shift to DeFi – and the lack of data supporting the wisdo
Slide 28: The Company's Unsuccessful Rollout of a US Spot Bitcoin ETF
The Company’s Unsuccessful Rollout of a US Spot Bitcoin ETF Suggests An Inability to Connect with the DeFi Marketplace What has management said about this performance? Q- “What are some of the early takeaways and what's your plan to grow in a crowded field?” JL – “…In terms of WisdomTree, just to re
Slide 29: Question:
Question: What information does the WisdomTree Board have which gives it the confidence to ‘unanimously’ support the DeFi strategy? And why doesn’t it share that information with the investor community? Source: WT press release, 6 May 2024 29
Slide 30: WisdomTree's Board Only Acts Under Stockholder Pressure
WisdomTree’s Board Only Acts Under Stockholder Pressure – Send the Message that a Truly Independent Review is Essential
Slide 31: Stockholder Led Changes At WisdomTree
Stockholder Led Changes At WisdomTree • At the 2023 Annual Meeting, long-tenured Chairman Frank Salerno failed to be re-elected by stockholders • In 2022 and 2023, three of ETFS’ director nominees were elected or appointed to the Board • In 2022, ETFS negotiated for the Board’s declassification as p
Slide 32: Investor Pressure Has Been a Positive Catalyst for WisdomTree Share Price
Investor Pressure Has Been a Positive Catalyst for WisdomTree Share Price 14.0 12.1 27-February-2024: 10-May-2023: WT announced settlement WT press release disclosing 12-April-2018: ETFS demand for strategic of Contractual Gold 10.3 Completed review acquisition of ETF 17-March-2023: Payments Securit
Slide 33: The Market Has Typically Responded Unfavorably to WisdomTree Earnings Announcements
The Market Has Typically Responded Unfavorably to WisdomTree Earnings Announcements 1-day change in share price following Earnings Announcement (%) 2.0 1.3 0.9 0.7 1.0 0.0 -1.0 -1.4 -1.4 -1.7 -2.0 -3.0 -3.3 -4.0 -4.4 -5.0 -5.5 -6.0 Mar '22 Jun '22 Sep '22 Dec '22 Mar '23 Jun '23 Sep '23 Dec '23 Mar
Slide 34: Since ETFS' Letter Requesting a Strategic Review Was Made Public, WT's TSR has Outperformed
Since ETFS’ Letter Requesting a Strategic Review Was Made Public, WT’s Total Shareholder Return (“TSR”) has Outperformed… Suggesting the Market Favors a Strategic Review Process TSR Since WT's Public Response to ETFS Letter (February 26, 2024 to May 8, 2024) 18.2% 2.1% 0.7% 0.4% 0.0% S&P 1500 Asset
Slide 35: Stockholder Pressure is Required to Narrow WisdomTree's Valuation Discount
We Believe Stockholder Pressure is Required to Narrow WisdomTree’s Valuation Discount. Absent Stockholder Pressure, WisdomTree’s Valuation Discount Appears to Increase 1.30 Relative P/E (NTM) Multiple: WisdomTree/BlackRock 1.20 • Since 2021, stockholder Post-2023 Annual Meeting pressure has seemingl
Slide 36: Give the Board the Message – A Truly Independent Review is Essential
Give the Board the Message – A Truly Independent Review is Essential • The market appears generally unimpressed by WisdomTree unless stockholders push for change • In 2022 and 2023, three of ETFS’ director nominees were elected or appointed to the Board • The WisdomTree board only changes when pushe
Slide 37: 2024 Campaign Summary
2024 Campaign Summary What do stockholders To unlock value want? How do we get it? A truly independent strategic review Why aren’t we getting A badly behaved Board because of long-tenured directors it? When do we want it? Now … we want a review, not a proxy fight So what do we need? A vote AGAINST t
Slide 38: Appendix: A Deeper Dive into WisdomTree's Struggling DeFi Strategy
Appendix: A Deeper Dive into WisdomTree’s Struggling DeFi Strategy
Slide 39: WisdomTree's Foray into Direct-to-Consumer May Struggle to Gain Traction
WisdomTree’s Foray into Direct-to-Consumer May Struggle to Gain Traction Really?? Source: WisdomTree 1Q 2022 earnings presentation 39
Slide 40: In 4Q2021, WT Management Began to Talk About the Virtues of a DeFi Business
In 4Q2021, WT Management Began to Talk About the Virtues of a DeFi Business Source: 4Q2021 Earnings Presentation 40
Slide 41: The Core ETF Business Has Failed To Deliver Promised Economies of Scale
We Believe the Core ETF Business Has Failed To Deliver Promised Economies of Scale Due to Management’s Focus on DeFi Initiatives, Most Notably WT Prime Sources: Company Press Release July 12, 2023, Blockworks Article July 28, 2023: WisdomTree Blockchain Native, Company Press Release March 5, 2024, B
Slide 42: … and Bitcoin ETFs
… and Bitcoin ETFs (1): https://www.dlnews.com/articles/defi/wisdomtree-follows-blackrock-applies-for-bitcoin-etf/; (2) https://cryptoslate.com/wisdomtree-submits-new-filing-for-bitcoin-etf/; (3) https://www.nasdaq.com/articles/eye-wisdomtrees-take-on- spot-bitcoin-etfs; (4) https://www.coindesk.com
Slide 43: And After Spending Millions on the WT Prime Initiative…
And After Spending Millions on the WT Prime Initiative… Our digital asset spend, which is included in the guidance just communicated, is anticipated to range from $9 million to $14 million. This includes both compensation and discretionary spending such as professional fees, marketing, product devel
Slide 44: Stockholders Still Have No Real KPIs or Metrics to Evaluate the Adoption or Success of WT Prime
… Stockholders Still Have No Real KPIs or Metrics to Evaluate the Adoption or Success of WT Prime 4Q2021 Earnings Call 3Q2023 Earnings Call Keith Housum, Northcoast Research Partners LLC: Chris Kotowski, Analyst, Oppenheimer & Co., Inc. Okay. I appreciate that. And then, as you kind of think about t
Slide 45: Nor a Clear Understanding of What the Synergies Are between WT Prime and Core ETF Business
… Nor a Clear Understanding of What the Synergies Are between WT Prime and Core ETF Business Adam Q. Beatty, UBS Securities LLC William Peck, Head-Digital Assets, WisdomTree, Inc. I want to follow-up on kind of the flywheel effect on I mean, I think that it's completely leveraging the core competenc
Slide 46: Or Know how to Measure Success for WT Prime Business
… Or Know how to Measure Success for WT Prime Business Michael J. Cyprys, Analyst, Morgan Stanley & Co. LLC William Peck, Head-Digital Assets, WisdomTree, Inc. And just a follow up question on WisdomTree Prime, I was hoping you could maybe talk about your go-to- Yes. I'm happy to start and then if y
Slide 47: Clearly, WisdomTree Is Not Evaluating The Core ETF Business on Any Metric Other than AUM Growth
Clearly, WisdomTree Is Not Evaluating The Core ETF Business on Any Metric Other than AUM Growth Keith Housum, Northcoast Research Partners LLC Robert Jarrett Lilien, President & Chief Operating Officer, Great. If I can follow-up there and I'm sure AUM is WisdomTree, Inc. the easiest way to measure s
Slide 48: After Two Years of No Real Results, The Sell Side Community Remains Skeptical
After Two Years of No Real Results, The Sell Side Community Remains Skeptical “Except for expenses, our model does not assume any revenue from WT Prime. We remain skeptical of any material near-term revenue "still don't have any significant numbers on the "New digital asset initiatives could create
Slide 49: Appendix: WisdomTree ETF Business Performance versus Competitors
Appendix: WisdomTree ETF Business Performance versus Competitors
Slide 50: WisdomTree's Global ETF Ranking Has Deteriorated According to Its 10-K Disclosures
WisdomTree’s Global ETF Ranking Has Deteriorated According to Its 10-K Disclosures Global ETP Rankings: 2017 10-K Global ETP Rankings: 2023 10-K Source: Morningstar Source: Morningstar Source: WisdomTree 10-K filings 50
Slide 51: Case Study: WisdomTree Needs a Better-Balanced Portfolio
Case Study: WisdomTree Needs a Better-Balanced Portfolio AUM Distribution of WT ETF Products AUM Distribution of GlobalX ETF Products (Total AUM: $105B) (Total AUM: $56B) Source: WisdomTree; based on monthly AUM data on WisdomTree’s website Source: Based on AUM data on GlobalX website 51
Slide 52: Case Study: WT's Gold ETF has Underperformed its Key Competitors
Case Study: WT’s Gold ETF has Underperformed its Key Competitors • WT’s lack of focus on the core ETF business is reflected in its failure to maintain and grow AUM for the gold-related ETFs • Since 2019, key competitors have either increased their gold-related AUM or maintained their standing. WT is
Slide 53: Appendix: Why BlackRock Is a Good Comparable for WisdomTree
Appendix: Why BlackRock Is a Good Comparable for WisdomTree
Slide 54: Peer Valuation: BlackRock is the Only Publicly Listed Relevant Peer for WisdomTree
Peer Valuation: BlackRock is the Only Publicly Listed Relevant Peer for WisdomTree In our View In USD Billions. In USD Millions. Total AUM: $10T Total Revenue: $17,859 Cash AUM 2023 Revenue • BlackRock offers managed management models, similar to model 8% portfolios offered by WisdomTree* • ETF Reve