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Monday, July 02, 2012

AllianceBernstein is a "Poster Child" for Asset Managers' Woes

News summary by MFWire's editors

AllianceBernstein [profile] has "become a poster child for the agonies of asset management since the crash of 2008", but Peter Kraus "hasn't done a bad job as CEO." So concludes Barron's in look at the $400 billion AUM asset manager.

That $400 billion in AUM at the end of May, the weekly paper notes, is only about half its peak at year-end 2007. Barron's adds that shareholders have made net sells every quarter since then.

All of that is hitting AllianceBernstein's bottom line: revenue fell 7 percent last year and adjusted net income per share fell 29 percent.

It should be no surprise then, that AllianceBernstein's stock price has fallen 86 percent since it peaked on October 5, 2007.

Kraus missed the first -- and perhaps the most crucial -- part of that fall. He took over for Lew Sanders in January 2009 only to see PMs such as value CIO John Mahedy and growth-equities head Lisa Shalett follow Sanders out the door.

Kraus has tried to revive the firm by reducing its head count (staffing is down 40 percent) and rolling out as many as 100 new products, including funds-of-hedge-funds, real estate funds, and a Chinese renminbi fund.

Bright spots in the product line include AllianceBernstein Global Bond Fund (ANAGX) and AllianceBernstein Small-Cap Growth (QUASX), according to Bob Keith, head of AllianceBernstein's global client group.

Kraus has also focused on distribution, winning a key ally in Bank of America Merrill Lynch's Andrew Sieg. The head of global wealth and retirement solutions at BofA Merrill, told Barron's that he is "impressed" by Kraus' accomplishments so far and that he thinks Kraus can fix AllianceBernstein's performance shortfalls.

The paper also found a supporter in Morningstar analyst Greggory Warren: "Kraus is doing a decent job given what he has inherited," he says.

Kraus himself tells Barron's that he is not expecting everyone to be his backer.

"If it is a minority, that's a success," Kraus is quoted as saying. 

Edited by: Sean Hanna, Editor in Chief


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