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Ally Financial: Still Some Meat On The Bone

Jun. 09, 2020 2:17 PM ETAlly Financial Inc. (ALLY)6 Comments


  • Shares in Ally Financial have bounced back nicely since their COVID-19 meltdown lows.
  • However, the stock still trades under adj. tangible book value and yields almost 3.3% with some recent insider buying.
  • A full investment analysis follows in the paragraphs below.
  • I do much more than just articles at The Insiders Forum: Members get access to model portfolios, regular updates, a chat room, and more. Get started today »

A wise man can learn more from a foolish question than a fool can learn from a wise answer."-Bruce Lee

Exactly one month ago, Ally Financial (NYSE:ALLY) was added to the model portfolio at The Insiders Forum. The stock rose some 50% since then. The market has continued to have a fantastic rally over that time as well on optimism around the economic restart happening across the country on a region by region basis.

S&P 500 incredibly moved into the black for the year. S&P 500 profits projected by FactSet to be down more than 40% in the second quarter of this year. That is the biggest decline since the financial crisis. That is one of many reasons we think the market is due for a least a bout of significant profit taking as we articulated in a piece posted yesterday.

We are doing very little buying in this market, content to let our covered call positions expire in the money the third Friday of every month on option expiration day. Most stocks and sectors in the market feel overbought here. However, Ally still sports more than reasonable valuations on a 'normalized' basis. We update our investment thesis on it to reflect additional data over the past month in the paragraphs below.

Company Overview:

Ally Financial is a Detroit headquartered bank holding company, providing car finance, online banking via a direct bank, corporate lending, vehicle insurance, mortgage loans, and an electronic trading platform. With $180.6 billion in assets, $120.8 billion in deposits, and ~4 million retail bank accounts at YE19, Ally ranked as the 18th largest bank in the U.S. Known as General Motors Acceptance Corporation until 2010, the company has roots dating back to 1919. Owing to the recent shutdown of the economy, its shares took a beating earlier this year. Even with the recent rally, they are still down a tad over 30% from their 52-week highs.

Author's note: I present an update my best small and mid-cap stock ideas that insiders are buying only to subscribers of my exclusive marketplace, The Insiders Forum. Try a free 2-week trial today by clicking on our logo below!

This article was written by

The Insiders Forum profile picture

We are a team of analysts led by Bret Jensen, Chief Investment Strategist at Simplified Asset Management.

We run the investing group The Insiders Forum where we specialize in small and mid-cap stocks that insiders are buying. The Insiders Forum portfolio managed by Bret Jensen consists of 12-25 top stocks in different sectors of the market that are attractively valued and have had some significant and recent insider purchases. Our goal is to outperform the Russell 2000 (the benchmark) over time.

Analyst’s Disclosure: I am/we are long ALLY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (6)

Nate. G profile picture
With Wells Fargo out of used car loans Ally will take most of the used car loans and the Carvana deal, Market share will grow, revenue and profits will increase
CFO spoke about this on 6/10. She said this would not have a material impact on Ally's business. Different customers.
I use ally for multiple things. They are my third brokerage account but the one i used longest (I like TD better, fidelity worse, hated chase). I use them for checking, savings as well. (Although my primary checking is chase). There customer service is pretty awful just fyi. It sometimes takes them weeks to respond to an online request and if you call they usually are a confused, English as a second language customer service rep. I frankly cant count on there support if something goes wrong. There brokerage used to be tradeking but it has not at all evolved and mostly grew worse for trading (hense my switch to TD). If you are just a regular investor or buy and hold type then its fine just dont expect prompt service (even if you have a brokerage account with 450K in it). There ally invest live crashes constantly. There app works well for online banking and is ok for brokerage. I at one time would have invested but the product has declined in last several years. I just use the brokerage for passive value plays now as all my futures, options, tradeing has migrated to TD. I have used ally since 2013.
Ironic you mention their "English as a second language customer service rep" but misused "their" vs "there" five times.
This one is a heartburn buying out liar loans from Carvana. There's bound to be trouble
smurf profile picture
I like NTB for the dividend and upside potential. Have to buy it lower, though, because it's volatile as hell with a 2.2 beta.

However, in the few years it's paid a dividend, it's always covered it nicely with both earnings and free cash flow.
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