AB

Equitable Holdings Acquires $757.8M Stake in AllianceBernstein($AB), Boosting Ownership to 68.6% Amid Strong Dividend Appeal

04/04/2025 21:32

Equitable Holdings has completed a significant expansion of its stake in AllianceBernstein Holding LP ($AB). According to insider trading disclosures released this week, AXA Equitable Holdings purchased approximately 19.7 million shares of AB on April 2, 2025, at a price of $38.50 per share, for a total transaction value of $757.8 million. This massive purchase was part of a tender offer announced on February 24, which targeted up to 46 million units. While Equitable initially aimed to increase its ownership from 62% to as much as 77.5%, preliminary results announced on April 2 indicated that its actual stake rose to 68.6%. $AB shares closed at $39.01 on April 2, representing a 3.53% increase from the previous day. However, on April 3, Bank of America downgraded its investment rating from 'buy' to 'neutral' and set a price target of $38, suggesting a potential downside of approximately 2.6%. BofA cited weak investment performance and management concerns as reasons for the downgrade. Interestingly, before this massive purchase, AXA Equitable Holdings had been steadily acquiring AB shares. Insider trading records show that on September 20, 2024, it purchased 500,000 shares at $34.18 per share, and an additional 700,000 shares at $35.12 per share on the same day. In contrast, there were small sales by executives in July and August 2024, with Officer Christopher Hogbin selling 12,781 shares and Director Charles GT Stonehill selling 4,000 shares. AllianceBernstein is a global asset management firm with approximately $793 billion in assets under management as of February 28, 2025. Of this, 42% is invested in equity strategies, 37% in fixed income, and the remainder in alternative investments. The company reported robust earnings in its most recent quarter, with $1 billion in revenue exceeding expectations by $362 million. Currently, $AB's P/E ratio stands at 10.37, which is below the industry average, making it attractive from a valuation perspective. Additionally, its high dividend yield of 8.47% appeals to income-seeking investors. The annual dividend of $3.26 represents an 88% payout ratio, demonstrating the company's commitment to shareholder returns. In December of last year, reports emerged that AllianceBernstein was preparing to sue Switzerland for $225 million over the Credit Suisse debt wipeout, relating to the $17 billion of debt that was written off when the Swiss government orchestrated UBS's takeover of Credit Suisse. Over the past year, $AB shares have gained 22.8%, outperforming the broader market. The stock's recent price trajectory shows a significant upward movement beginning in mid-October 2024, reaching around $39 by late January 2025, followed by a sharp decline in early February and a gradual recovery starting in March. The analyst consensus remains 'Strong Buy,' with a 12-month price target of $43, suggesting an upside potential of approximately 11.78% from current levels. UBS recently upgraded Equitable Holdings from 'neutral' to 'buy' following the news of its increased stake in AB, setting a price target of $77. This large insider transaction represents a strategic move by Equitable Holdings to strengthen its asset management business and become more deeply involved in AB's growth. It's particularly noteworthy that this transaction followed Equitable's recent reinsurance deal, which freed up over $2 billion in capital. Investors should monitor how these ownership changes might affect AB's long-term strategy and direction, while also considering whether the high dividend yield and relatively low valuation will continue to make it an attractive investment proposition.

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