AllianceBernstein Holding L.P.AB

Morningstar Rating

Stock Research and Analysis

by Greggory Warren, CFA

AllianceBernstein has struggled with the impact that the bear market has had on its operations. Underperformance in its equity and fixed-income operations have spurred investor outflows, which have not been confined to the retail side of the business Read more

Bulls Say

Even with the outflows, AllianceBernstein's AUM has increased close to 10% this year from $460 billion at the end of 2008 to $495 billion at the end of November 2009.

The company's product distribution continues to be weighted more heavily toward institutional clients and high-net-worth individuals, which tend to be far stickier than retail investors.

With more than half of its AUM invested internationally and more than one third of its client base domiciled outside of the United States, AllianceBernstein is one of the more global asset managers.

AllianceBernstein has relaunched its equity capital markets business (after a seven-year hiatus), hoping to leverage the strength of its reputation as an independent research firm.

The lower taxes charged on publicly traded limited partnerships relative to those assessed on corporations allows AllianceBernstein to pass along more of its earnings to investors. Read more

Bears Say

AllianceBernstein's diversification across asset classes, distribution channels, and geographic markets has done little to stem the redemptions made by retail investors, institutions, and private clients this past year.

The firm underperformed benchmarks in almost all of its investment strategies and asset classes during 2008 because of outsized bets on poor-performing sectors, weak international markets, and unfavorable currency exchange.

Having sold off its cash management operations to Federated Investors FII in 2005, AllianceBernstein was unable to offer investors the option of swapping from fixed income or equity strategies into money market funds during the bear market.

AllianceBernstein's decision to re-establish its equity capital markets business could prove problematic for its research arm, which had built up a strong reputation as an independent source of equity research for institutional investors.

Publicly traded limited partnerships like AllianceBernstein have unique tax issues. Quarterly cash distributions, for example, are considered a return of capital as opposed to interest or dividend income. As such, investors should consider consulting a tax advisor before buying units. Read more

Strategy

AllianceBernstein is focused on two growth opportunities: international expansion and retirement plan management. The firm believes it can further diversify its sources of income by expanding its asset Read more

Management

Peter Kraus has been chairman and CEO of AllianceBernstein since December 2008. The abrupt departure of his predecessor, Lewis Sanders, who'd come up through the ranks on the Bernstein side of the business and was the driving force behind the firm's Read more

Profile

AllianceBernstein is a global asset manager and one of the largest independent investment research firms around. The firm services institutional (61% of AUM), retail (24%), Read more

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