AllianceBernstein Holding LP (AB) rose the most in eight months after earnings and revenue at the New York-based asset manager exceeded analysts’ estimates and redemptions slowed.
AllianceBernstein rose 7.2 percent to close at $16.69 in New York trading after reporting yesterday that revenue increased 10 percent in the third quarter to $708 million and adjusted earnings per share gained 20 percent to 36 cents. Results beat estimates for $659 million in sales and profit of 27 cents a share in a Bloomberg survey, prompting analysts at Keefe, Bruyette & Woods and Sandler O’Neill to upgrade the stock.
“This report gives us confidence that flow momentum is building and that they will take in money starting this quarter,” Michael Kim, an analyst with Sandler O’Neill & Partners LP in New York, said in a telephone interview, after he raised the stock to buy from hold.
AllianceBernstein has been plagued by redemptions since the financial crisis as customers pulled about $200 billion from its equity products since the end of 2008. This year the firm has cut the pace of withdrawals as it attracted money from retail investors, especially into bond funds sold outside the U.S.
Customers withdrew $4.4 billion in the quarter ended Sept. 30, down from $15.4 billion a year earlier. AllianceBernstein said it won $5 billion in deposits from individual investors during the quarter.
AllianceBernstein has risen 28 percent this year compared with an 18 percent increase for the 20-member Standard & Poor’s index of asset managers and custody banks.
Its largest mutual fund, the Luxembourg-based $23.7 billion AllianceBernstein Global High Yield Portfolio (ACGHYAT), attracted more than $1 billion in each of the first two quarters of 2012, according to data from Strategic Insight, a New York-based research firm. The fund beat 80 percent of rivals over five years, according to data compiled by Bloomberg.
The company had “improved flows into fixed income and ‘other’ products, particularly in the retail channel, which we believe will be instrumental in garnering positive flows again,” Robert Lee at Keefe, Bruyette & Woods Inc. said in a note to clients yesterday. He raised his recommendation to outperform from market-perform.
AllianceBernstein in December 2008 named Peter Kraus, a former executive at Goldman Sachs Group Inc., chief executive officer. In June, Kraus’s contract was extended five years through January 2019, even though the company’s shares fell and redemptions continued during his leadership.
Pete Smith, a member of AllianceBernstein’s compensation committee, said in June that Kraus had been effective at guiding the firm “through a period of unprecedented challenges since the financial crisis.”
The company attributed its better performance in the third quarter to higher distribution fees from outside the U.S. and progress in cutting its real-estate costs. AllianceBernstein said in August it would save $38 million to $43 million a year by cutting back on the real estate it occupies.
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