Steady As She Goes For AllianceBernstein

A key part of the AllianceBernstein Holding LP (AB) story, and one that I've been saying for a while has been undervalued by the market, is the extent to which the company can unlock the benefits of prior investments in distribution platforms to generate better margins on rising AUMs. That story continues to work out, helping drive these units about 25% higher over the past year and 10% higher since my last update, all while paying an attractive tax-advantaged distribution.

I continue to believe that AllianceBernstein is a worthwhile holding to consider for investors who want a return story that skews toward the income side (and for whom an LP makes sense). The improvements in the company's equity funds is driving better asset growth and the company's overall strategy to drive more retail AUM still has room to run. Meanwhile, the expense benefits of shifting back-office operations out of New York City won't really show for several years, and can drive another leg of margin improvement. With a fair value in the low-to-mid $30s, I believe these shares continue to hold appeal for those willing and able to own an LP.

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Steady As She Goes For AllianceBernstein