I think the flows are absolutely terrible and getting worse here. This biz is roughly a quarter of the AUM of the company and a higher share of operating profits - so its significant.
Institutional Equity AUM declined from $122B at Feb end to $112B at March end, or about an 8% drop in the month alone. Most of this drop was redemptions as the market was only down 1%. About 7% of assets leaving in a single month is catastrophic, and a marked acceleration from prior months.
Earnings for this stock are about $0.40 a quarter and declining. What should the stock be worth on that basis? I would argue not more than $16/share, or a 10x multiple. The stock likely goes lower.
The management of this company is the brainless. If you have ever worked in asset management you would know that when PMs and analysts UNDERPERFORM consistently they should be FIRED. AB focuses on firing people who PERFORM because they are expensive. THIS COMPANY IS HOPELESS NO ONE WILL BUY IT and AXA is lost
Upper management is littered with grossly overpaid dead wood who have beeen there so long they have no outside experience with the world.
In terms of middle management, all the top advisors have left the private wealth business and are out in the field taking AB's clients to other firms, I know because they come meet with me.
AB's performance is horrible, they can't even beat the S&P 500 but charge private clients 1-2% or more for the priviledge. I'm a lawyer and sat in an advisor pitch one day where the guy was trying to convince me that if you measure AB's performance from 1973 they actually outperformed the market by 1%. How many people care about that? Most people I know are interested in 1, 3 and 5 year performance and theirs stinks.
Imho, AUM will continue to shrink regardless of the market direction. Clients are leaving in droves.
Obviously the whole asset management sector is in the tank but these guys are leading the brigade.
The brisk pace of redemptions continues.
AB Institutional Equity AUM declined to $103B at May end (down from $113B) at April end. (And note it was at $122B just three months ago at Feb end from my note below).
Of that $10B decline, probably only $3B can be ascribed to the down market in May, the other $7B is redemptions. These numbers are nothing short of terrible.
I would imagine the stock sees downgrades and moves lower.
May numbers: http://finance.yahoo.com/news/AllianceBernstein-Announces-prnews-3318069947.html?x=0&.v=1
April numbers: http://finance.yahoo.com/news/AllianceBernstein-Announces-prnews-2273120753.html?x=0&.v=1
You may like this article it gives some weight to your basic concept but I note AB is already over 30% down from its high for the past year with improved earnings forcasted and supported by analysts for the next three . Though estimates vary month to month the trend for this forcast has been supported overall . Why do you think the analysts have upgraded this recently from sell or strong sell to hold and conservative S & P rates it a buy ? I find usually press coverage lags actual events and by the time you read somthing the oppisite is occuring same with reporting from companies . Please keep writting but with more facts then warnings if possible .
On the drop in Assets under managment there has been some discussion of staff cuts resulting in transfers of books of business . With most staffing cuts done that should now stabilize if it is more then rumour . I think there was even a report of proprietary software leaving the company . Patience there are reasons to doubt short term trends becoming long term issues within AB . I do appreciate hearing valid arguements against long positions I hold .
I would suggest you trim your long holdings. The shear magnitude of the outflows month to month is clearly making this a difficultbturn around. Equitable can not support their assets being in this for much longer - they need, as do all insurance companies, approximate 6 percent return. The equity management is sickening in returns and the 52million dollar CEO cannot bs his way out of this. It was not just one year returns, it is recurring sub par returns in a bad market which compounds the problem. The fees are on the equity side so get ready for massive layoffs again. They really just need to merge now.
AllianceBernstein Sues Three Who Joined JPMorgan Chase
AllianceBernstein Holdings LP, a New York-based investment management company, sued three former employees for trade secret misappropriation.
According to the complaint filed April 14 in New York state court, the three ex-employees -- all of whom were financial advisers -- violated confidentiality agreements and their obligations not to solicit AllianceBernstein clients or employees. Each of the three had an annual compensation of at least $300,000.
The three former employees went to work for New York’s JPMorgan Chase & Co. (JPM), and, according to court papers, retained “voluminous amounts of confidential data relating to AllianceBernstein’s clients. The information was returned to their former employer “only after they received demand letters from AllianceBernstein’s in-house and outside counsel, the company said in its court filing.
They were also accused of sending e-mails with their new contact information to AllianceBernstein’s clients.
Their former employer asked the court to bar any use of its confidential information and for awards of money damages, attorney fees and litigation costs.