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Why AllianceBernsteinʻs Stock Jumped 44.6% in 2021

By Dave Kovaleski – Jan 6, 2022 at 4:49PM

Key Points

  • AllianceBernsteiin had net inflows into all three channels for four of the last five quarters.
  • It outperformed most of its asset manager rivals, including BlackRock and T. Rowe Price.
  • About 70% of the firmʻs portfolios outperformed their benchmarks.

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The asset manager saw consistent net inflows, buoyed by its ESG portfolios

What Happened

AllianceBernstein Holding (AB -4.32%) capped off a strong 2021 as its share price increased 44.6% for the year, according to S&P Global Market Intelligence

The asset management firm outperformed the S&P 500, which was up 26.9% in 2021. AllianceBernsteinʻs stock is currently trading at around $47 per share, down roughly 4% in 2022 as of Jan. 6.

A person on her laptop, deep in thought.

Image source: Getty Images.

So what

Asset managers generally had a good year across the board, as a stock market that was up nearly 27% will increase the value of assets and promote more inflows into portfolios.

AllianceBernstein saw assets hit a peak of $765 billion at the end of October, only to drop down slightly in November to $759 billion. Thatʻs still up about 10% from the start of the year. The year-end asset total should be higher since the markets had a solid month in December.

In four of the last five quarters, AllianceBernstein had net inflows into all three channels -- retail, institutional, and private wealth -- buoyed by its ESG (environmental, social, and governance) portfolios. As an active manager, about 70% of its equity and fixed-income portfolios outperformed their benchmarks over one-, three-, and five-year periods.

In the third quarter, net revenue was up 21% year over year to $1.1 billion while operating income was up 29% to $280 million. The operating margin was up 160 basis points year over year to 25.7%.

AllianceBernstein outperformed most of its competitors, including BlackRock, T. Rowe Price Group, Franklin Resources, Invesco, and State Street.

Now what

It will be difficult for asset managers to match the success of 2021 this year as projections for stock markets are more in line with historical averages, with many analysts projecting 8% to 12% gains.

Fitch Ratings rates the industry outlook as neutral and calls for more consolidation to build scale and diversify.

AllianceBernstein should be in pretty good shape because two years ago it acquired Autonomous Research to better diversify its revenue and bolster its research operation. Also, most of its assets are with institutional clients, which tend to be more stable than retail.

Analysts project a consensus price target of $57 per share for 2022, which is about a 20% gain from its current $47. It also has a reasonable price-to-earnings ratio of 13.5.

Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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