Is the glass half-full or half-empty for AllianceBernstein (AB)? It’s one of the country’s major money managers with $473 billion under management at the end of May. Assets have dropped 43 percent from their peak of $837 billion in 2007 amid poor performance by its stock funds and mass desertions by institutional customers. In February, AllianceBernstein took last place among 23 rivals in an institutional investor brand-loyalty poll by Cogent Research.
On the plus side, net outflows shrank to $14.4 billion in the first quarter from $29.3 billion in the fourth quarter of 2010, with most of that improvement coming from institutional investors. Institutions account for 56 percent of assets under management, with retail investors making up 28 percent and private clients 17 percent.
Also on the plus side, AllianceBernstein has been able to make up for much of the outflow from its stock funds with inflow into its bond funds. Bonds accounted for 46 percent of the firm’s assets under management on May 31, up from 43 percent March 31.
In addition, its research arm Sanford Bernstein is one of the most respected in the business.
Safety vs. value
If you are looking for a safe stock, AllianceBernstein probably isn’t your cup of tea. But if you’re looking for a value play in the money management space, this may be a company to consider.
Peter Kraus, a former top executive at Goldman Sachs and Merrill Lynch, took over as CEO in December 2008. He has brought in new money managers, linked pay more closely to stock performance and launched new investment products.
AllianceBernstein’s stock investment performance has improved since 2009, but institutional investors like to see successful three-to-five-year track records before committing their money, so it could be a while before the firm regains investor confidence.
Kraus acknowledges there’s plenty of room for improvement. “After 2008 this was a firm that needed to change,” he said in a conference call with analysts. “We created a more nimble and progressive firm. There's never a quick fix, these things take time.”
Citigroup analyst rates AllianceBernstein’s shares a hold.
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