Whatever Happened to The...Wildcat ETF?

As we noted recently regarding the IndexIQ Global Oil Small Cap Equity ETF

, there are enough equity-based energy ETFs on the market today that it's inevitable some will go unnoticed. The aforementioned IndexIQ Global Oil Small Cap Equity ETF is one fine example. Another is the Jefferies | TR/J CRB Wildcatters Exploration & Production Equity ETF

. Less than two months removed from its second birthday, the Jefferies | TR/J CRB Wildcatters Exploration & Production Equity ETF still only trades 3,100 shares a day and has just $12 million in assets under management. Statistics like those usually indicate a cap on an ETF's popularity and WCAT's almost 22.6% year-to-date decline doesn't help matters. With an expense ratio of 0.65%, WCAT is more expensive than the popular Energy Select Sector SPDR

or the SPDR S&P Oil & Gas Exploration & Production ETF

and several other more well-known energy ETFs. All those sentiments aside, there is some utility to WCAT and it lies in the fact that stocks like Exxon Mobil

and Chevron

aren't found here. Heck, even the Apaches

and the Anadarko Petroleums

aren't included here. The types of stocks that call WCAT are mainly found at the lower end of the mid-cap spectrum and arguably more levered to rising oil prices than major independents or integrateds. Think Energy XXI

, Gulfport Energy

and Bill Barrett

, just to name a few. That lineup doesn't just indicate an ETF that's useful for rising oil prices. It also underscores WCAT's usefulness as play on increased energy sector mergers and acquisitions activity. We're probably not going out on a limb by saying that at least three of WCAT's top-10 holdings are legitimate takeover targets and there might be double that number in prospective acquisition candidates throughout the entire ETF. Then again, that's kind of the rub with WCAT. One should never by a stock just because it's a takeover target and that theory should be extended to ETFs no matter how many takeover candidates the ETF may be home to. Bull case: Oil prices and demand increase, but more importantly, some of WCAT's top holdings make marquee discoveries. That will boost their share prices and their attractiveness as takeover plays. Bear case: Oil prices fall. Risk on remains off for an extended period. Energy M&A is scaled back.