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 long thesis on Ally Financial has been validated by a strong +68.7% price gain, consistent with the market re-rating the stock as the post-Covid recovery thesis played out. The thesis's core drivers — a safer deposit-funded balance sheet, expected earnings recovery toward ~$3.70/share, and resilient auto loan spreads supported by rising used car prices — are directionally consistent with such a substantial appreciation from an already cheap 80% of book value. Because the time elapsed is unknown, we cannot verify each fundamental milestone (e.g., whether EPS actually reached $3.70), which tempers confidence slightly, but the magnitude of the return decisively supports the long direction.