Ally Financial Inc.
Thesis
Ally Financial is well-positioned to thrive post-Covid due to its shift to a deposit-funded model, which reduces risk compared to its previous reliance on short-term debt. The company is expected to return to pre-Covid earnings of about $3.70 per share, representing a compelling valuation at 80% of book value. Additionally, Ally's strong position in the auto loan market allows it to maintain good spreads despite low interest rates, and the rising used car prices provide a buffer against potential defaults.
Did it work?
The stock price has increased by 79.0%, indicating strong performance that aligns with the long thesis. The shift to a deposit-funded model and the recovery in earnings towards pre-Covid levels suggest that the company's fundamentals are improving as anticipated. This significant price appreciation supports the thesis that Ally Financial is well-positioned for growth.
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