Overstone Global Equity Fund on Ally Financial Inc.
Thesis
Ally's second-quarter results were satisfactory but third-quarter net interest margin will be approximately flat after Stellantis lease losses and a further Fed hike. Its liability-sensitive balance sheet suffers as rates rise. The fund nevertheless expects return on equity to rise toward the mid-teens from about 11% in 2026, treating the rate pressure as a delay rather than permanent impairment. At 0.9 times tangible book and six times earnings, the shares appear inexpensive relative to normalized profits.
“further Fed rate hikes simply delay this rather than destroy it.”
Key risks
- Further Fed rate increases hurt funding economics.
- Stellantis recall lease losses are about $20 million.
- Third-quarter net interest margin is expected to be flat.