Wednesday October 10, 2012
by Stephen Leeb, editor Income Performance Letter
Global asset manager AllianceBernstein Holding LP (AB) is one of the most leveraged plays on a stock market recovery and growth in international investing.
A leading company in the financial service industry, it is one of the most original and interesting MLPs we know of operates outside of the energy industry, where your average master limited partnership is typically found.
Plus, because fixed income accounts constitute about 57 percent of total assets under management, it is an investment that will benefit from the strength of fixed income as an asset class.
There are several reasons why we think its strong leverage to the stock and fixed markets businesses should be beneficial to our subscribers going forward.
The company is in the financial research and investment business, and it offers investment management services to institutional, retail, and high net worth individuals through its operating partnership, AllianceBernstein L.P.
And while as a money manager the company has not been a great success since the bear market of 2008 (experiencing asset outflows for 17 quarters), there are several signs that, under its new CFO, John Weisenseel, the firm has begun to turn its business around.
In the latest reported quarter Alliance posted the lowest net outflow of those past 17 quarters, helped by stronger product sales and lower redemptions, both being good signs of a turnaround in progress.
The company’s legacy equity business, which has long been a source of outflows, has become relatively stabilized, and its fixed income business, whose total role in the company’s fortune has now doubled, has been growing steadily.
Moreover, AllianceBernstein is a strong international player: about a third of its assets under management belongs to non-US clients, and this portion of its business has been steadily growing over the last few years.
Its broker-dealer arm, which differentiates itself by having a strong institutional research team, is poised to gain market share, too.
The partnership’s current yield of nearly 6 percent holds the potential for an increase because of the MLP structure under which AllianceBernstein operates.
And because AllianceBernstein Holdings LP is majority-owned by AXA Financial, it’s likely to keep that master limited partnership structure, which allows for a high payout.
Of course, even though it’s not an energy MLP, all the usual disclaimers apply: master limited partnerships are better suited for taxable accounts, so be sure to consult your tax professional to maximize your benefits from the MLP structure. AllianceBernstein L.P. is a buy up to $16.
Learn more about this financial newsletter at Stephen Leeb's Income Performance Letter.