Please ensure Javascript is enabled for purposes of website accessibility

Why WisdomTree Investments Stock Jumped Today

By Jordan Wathen - Apr 13, 2016 at 4:40PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The asset manager's stock reverses course with a Wednesday pop.

What: Shares of ETF manager WisdomTree Investments (WETF -0.52%) are trading higher by about 11% as of 3 p.m. ET.

So what: WisdomTree's jump today is a little perplexing, happening with no company or industry-specific news to report. There are, however, a couple market-related factors that may be playing part.

WisdomTree's popularity among short-sellers may have something to do with today's pop. As of March 31, about 25.6 million shares were sold short, roughly equivalent to about 10.7 days of trading volume. Even modest profit-taking by short sellers can have a big impact on day-to-day swings in heavily shorted companies. To lock in a profit, short sellers must buy back stock they previously sold, often causing share prices to rise.

Likewise, today's strength of the U.S. dollar against the Japanese yen, and a lift in Japanese stocks is helping propel the WisdomTree Japan Hedged Equity Fund about 4% higher today. Currency-hedged ETFs are WisdomTree's bread-and-butter product, representing roughly $24 billion of its $42.8 billion of total AUM at the beginning of April.

Now what: In the short run, WisdomTree's stock is often a proxy for investors who want to make leveraged investment on the performance of the U.S. dollar. It's widely understood that the company's fee-earning assets tend to ebb and flow with the U.S. dollar index. A rising dollar is great for its hedged ETFs, while a falling U.S. dollar generally isn't.

As such, the company's stock is particularly volatile as investors use it to express a view on macro events on a day-to-day basis.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

WisdomTree Investments, Inc. Stock Quote
WisdomTree Investments, Inc.
WETF
$5.80 (-0.52%) $0.03

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
334%
 
S&P 500 Returns
117%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.