Investing Weak Stocks

robertbanking

Hello you wonderful, pleasant and intelligent individuals, i do hope you have had a good week and are ready for the weekend.

I normally invest in companies that are showing increasing profits or revenues and these tend to do well steadily over time. I have noted that Warren Buffett has recently invested in Ally Financial Inc which specializes in auto financing and mortgage lending. On the recent quarterly financials, it shows Revenue down (13.52%), and Net Profit Margin down (51.45%). He is clearly hoping this will rebound in the long term. Can i please kindly ask if anyone had any thoughts on what he may have looked at in terms of why profits are down and how he sees this recovering please? If anyone had a short analysis or thoughts on this i would be forever grateful. I am learning all the time and i would be thankful for any help you can give.

Thank you so much for reading my post and i do hope you have a very lovely weekend. Take care and best wishes. 

Millyonare

A quick scan suggests a classic Buffett purchase.

He's (basically) bought a cheap online bank with a falling book value and rising dividends. People will always need cars, and cars will always need bank loans. Ally bank sells a lot of car loans. Guess he will pressure Ally to increase their buybacks or dividends in a year or two, after the Covid recovery, like he did with Apple.

Undervalued + rising dividends (cashflow) = Buffett.

Not a recommendation. Dyor, etc.

Millyonare

The ALLY share price today is US$29, with a US$9b marcap.

Be interesting to see where this sits in 2-5 years.