AllianceBernstein Blends Value/Growth to the Upside - Barron's

AllianceBernstein (AB) is often perceived as the unsexy version of hedge funds and money managers because of its devotion to in-depth research, quantitative tools, forecasting models and investor psychology analysis. CEO Lew Sanders, a pioneer in the field of stock research from Sanford C. Bernstein, helped merge the value-oriented Bernstein and growth-oriented Alliance Capital in 2000.

After surviving the tech bust and a mutual fund fee scandal in 2003-2004, Barron's now says AB's investment model is clearly winning back investors.

With $800 billion under management, of which $90B is U.S. mutual funds, net inflows have grown to $8.7 billion in January-November, 2007, vs. $2.2B of net outflows in 2004. AllianceBernstein earned $1.20/share on Q3 revenues of $1.2B. It has added hedge funds and diversified its mutual fund models to appeal to many types of investors. Though not all of AB's funds are star performers, bulls say its global investments, long-term perspective and now back-in-vogue growth/value model—what it calls "blend strategies"—should see a strong upside. AllianceBernstein's $74 shares are down 22% from their peak this year, giving AB a 13.5 forward P/E. That's a big discount to peers like T. Rowe Price (TROW) and BlackRock (BLK). Barron's says AB's long-term record richly rewards its investors.

Additional Reading: Dividend Analysis: Alliance Bernstein Holding • Barron's Interview: The Top Publicly Traded Mutual Fund Providers for 2007