AllianceBernstein Executing Well, But Operating Conditions Are Increasingly Challenging

AllianceBernstein (AB) has been my favorite asset manager for some time now and the recent performance trends (both company-specific financials and stock market) have done nothing to shake my preference – AB has strongly outperformed peers/rivals like Invesco (IVZ), Franklin Resources (BEN), BlackRock (BLK), Cohen & Steers (CNS), Waddell & Reed (WDR), Janus Henderson (JHG), BrightSphere (BSIG), Eaton Vance (EV), and Legg Mason (LM) over the past two years, outperformed all of those and T.Rowe Price (TROW) over the past year, and outperformed most of those since my last update in September.

This current year is shaping up to be a more challenging one for the entire space, as market-driven AUM declines undermine the fee base and jittery investors may well pull more funds from the market. In the case of AB, though, the company has continued to outperform with respect to fund flows and I see more long-term potential from operating leverage, even if the next year or two do see a step down in keeping with the broader sector challenges. Although AB shares aren’t appropriate for all investors or portfolios (consult with a tax professional on this), I believe the shares remain undervalued enough to be worth considering, particularly if you want a more income-skewed return profile.

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AllianceBernstein Executing Well, But Operating Conditions Are Increasingly Challenging