Market News

ALLY Surges on Buffett Takeover Rumors

Bank stocks have had a wild ride of late. Multiple collapses and a pervasive feeling of dread in the sector will do that. But there’s someone looking to buy banks, and Ally Financial (NYSE:ALLY) in particular may be about to benefit. Ally jumped better than 5.4% in Monday’s trading session, all thanks to some takeover rumors.

Admittedly, as rumors go, these are especially potent. Why? Because they feature none other than the Oracle of Omaha himself, Warren Buffett. Reports note that Buffett has been seen talking to Biden Administration officials, particularly about regional banking issues. Given that Buffett’s Berkshire Hathaway (NYSE:BRK.B) is already the second-largest shareholder at Ally, holding 9.9%, he may be able to land the rest of it without incident.

The move comes as Fitch Ratings recently confirmed Ally’s rankings on its Long-Term Issuer Default Rating. They’re not the greatest ratings at BBB-, but having the rating confirmed at least suggests that nothing’s gotten any worse in the meantime. An outlook of Stable from Fitch doesn’t hurt matters either. However, Fitch also points out that a lot of Ally’s business is retail auto, and given conditions in that field lately, that’s not likely to turn out well.

Regardless of whether or not Buffett buys the bank, analysts are clearly sticking to caution. Analyst consensus right now calls Ally stock a Hold. Furthermore, with an average price target of $34.07, Ally offers 44.98% upside potential.


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