Great trade : ALLY +350% (2/17)

• Wed 1/25:  10, 15, 37
• 9, 10, 15, 22, 37, 59, 97
• bot ALLY Feb 17  $20 calls @ 0.35
• sold @ 1.60 on Wed 2/1
• profit $1.20 or 350%  (stock +10%) 

Wed 1/25 bot

Trade

Details

5,016

vol 540

0.04

0.31

0.30

0.35

20.00

Wed 2/1 sold

Trade

Details

5,077

0

0.00

1.20

1.60

1.70

20.00

 

Ally Financial (ALLY) : 10-month performance

• Dropped after earnings

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Ally Financial (ALLY) : 4-month performance

Ally Financial (ALLY) began trading on the NYSE on 10 April 2014

• The former mortgage unit of GM had its IPO today -- Ally Financial Inc. (ALLY) -- the largest IPO of 2014 so far.

Ally Financial Inc. (ALLY) shares fell 1.6% to $24.57 a share on Thursday during its first trading day after pricing its initial public offering at $25 a share. The offering price came in at the low end of the auto-loan company's $25 to $28 range. Ally has offered 95 million shares for sale. At the $25 price, the IPO hoped to raise $2.38 billion of capital for the U.S. Treasury Department, which wound down its remaining 37% stake in Ally after its $17.2 billion bailout of the company in 2008-2009. Ally shares are trading on the New York Stock Exchange with the ticker ALLY.

The IPO is considered the largest initial public offering this year and was underwritten by Citigroup Inc. (C ), Goldman Sachs Group & Co. (GS) , Morgan Stanley (MS) and Barclays PLC (BCS) .

Citi Traders Thomas Ferrigno (L ) and Christopher Fuchs await the IPO of Ally Financial on the floor of the New York Stock Exchange April 10, 2014.

Ally said it wants to increase its loans to used-car buyers to 50% from around 20% currently. Used-car loans also carry higher risk than new-car loans, and that raises a red flag for anyone who recalls how the flood of cheap money to subprime borrowers nearly collapsed the economy in 2008.

Others, including Ally, aren’t so concerned about another financial crisis, especially in the auto-loan business, where car sales and profit margins on subprime loans have both been going up.

There’s another interesting stat to back this view. According to a recent study by TransUnion, people are more likely to default on their credit cards or even their mortgage before they’ll miss a car payment. The reason? They need their car to get to work – or look for work.

Ally Financial IPO seeks to generate up to $2.7B

The US government plans to sell the bulk of its stake in bailed-out auto lender Ally Financial to raise up to $2.66 billion.

Detroit-based Ally Financial Inc., the auto lender rescued by the U.S. government during the 2008 financial crisis, is helping the Treasury Department divest its stake by seeking as much as $2.7 billion in an initial public offering.

Treasury plans to pare its holding to 17 percent by selling 95 million shares for $25 to $28 apiece, according to a regulatory filing last week with the U.S. Securities and Exchange Commission. The government currently owns 37 percent of the former subsidiary of General Motors Co.

The IPO is the culmination of a more than three-year process for Ally, which originally filed to go public in March 2011. The company, which provides car loans, bank accounts and other savings products, shelved the plan in June of that year until equity markets improved. CEO Michael Carpenter later said the bank had to resolve problems with its mortgage unit before restarting the process.

The company's money-losing mortgage business entered bankruptcy in May 2012 and got court approval to end the process in December.

The U.S. stake in Ally, which was reduced in November to 64 percent from 74 percent, was cut to 37 percent in January when the government sold about $3 billion of common stock to private investors.

Third Point LLC, the hedge-fund firm led by billionaire Daniel Loeb, said in January that it had amassed a 9.5 percent stake, making it one of Ally's largest shareholders. Affiliates of Cerberus Capital Management LP own 8.6 percent, according to the new filing.

Citigroup Inc., Goldman Sachs Group Inc., Morgan Stanley and Barclays Plc are leading the IPO. Ally plans to trade on the New York Stock Exchange under the ticker symbol ALLY.

Ally to Record $100 Million Cost on Mortgages

Ally Financial Inc., the auto and home lender that got a $17.2 billion bailout, will record a second-quarter cost of about $100 million to cover losses suffered by trusts that bought its mortgages. The firm also got subpoenas from U.S. investigators relating to home loans.

The cost will help cover losses on insured mortgages where insurers later canceled the policies because “they believe certain loan underwriting requirements have not been met,” Detroit-based Ally said today in a filing. The mortgages had been sold to trusts, which packaged them into securities to sell to bond investors.

“These payments resulted from a review of securitized mortgages as to which mortgage insurance was rescinded, although no claims have been made against us to date with respect to these mortgages,” Ally said in the filing.

The disclosure was contained in an update to the prospectus, initially filed in March, for the company’s planned public share offering. The share sale has been delayed until equity markets improve, a person familiar with the plans said earlier this month.

Ally, 74 percent owned by the U.S. Treasury Department, also said in the filing that it has received subpoenas from the U.S. Department of Justice and the Securities and Exchange Commission relating to how it handled mortgages.

The DOJ subpoena “includes a broad request for documentation and other information in connection with its investigation of potential fraud” tied to the origination or underwriting of home loans, the company said.

Ally Financial delaying $6 bln IPO

Ally Financial Inc., the Detroit automotive financing firm formerly known as GMAC, has decided to delay its $6 billion initial public offering until at least September, the news agency Reuters reported.

• Delaying IPO due to bad market conditions
• IPO could now launch in late summer or fall
• A six-week stock slump has caused Ally Financial Inc. to delay an initial public stock offering that had been scheduled for late June, two people briefed on the decision said Friday.

The $5 billion to $7 billion IPO by the former finance arm of General Motors was meant to repay the U.S. government for $17.2 billion in aid that Ally received during the financial crisis. The offering has been postponed indefinitely until markets improve, said the people, both of whom asked not to be identified because the decision has not been made public.

Ally would not get any money from the sale. It has returned $4.9 billion to the government through dividend payments and the sale of trust preferred securities. The government currently owns 74 percent of Ally's stock.

Ally and the U.S. Treasury have not said officially when the company would go public or how many shares the government will sell.

The Dow Jones industrial average closed below 12,000 on Friday for the first time since March. It was the market's sixth-straight weekly loss — the longest down series since the fall of 2002. Stocks have suffered this month as weak economic news dampened hopes for a quick economic recovery.

The Dow fell 172 points, or 1.4 percent, to close at 11,952.

Ally spokeswoman Gina Proia and Treasury spokesman Matthew Anderson would not comment on the delay, which was reported Friday by the Financial Times.

Ally, formerly known as GMAC Inc., makes loans to GM and Chrysler customers and finances dealer inventories of cars and trucks. The Detroit-based company received government aid in late 2008 as part of the Bush administration's assistance to the U.S. auto industry. The Obama administration invested additional sums in May and December 2009.

In addition to Ally common stock, Treasury owns $5.9 billion in preferred shares, which are convertible into common stock. For Treasury to break even on the $17.2 billion it gave Ally, it will have to sell the preferred stock for the $5.9 billion it is valued at and make about $6.4 billion from the sale of the common stock.

The company, which also had a mortgage lending division, Residential Capital LLC, had suffered from a strained credit market, the housing downturn and sliding demand for new cars during the recession. At the time, analysts had speculated that the company might have to file for bankruptcy protection or shut down without financial help.

Ally is among the lenders facing billions in potential fines stemming from government investigations into improper mortgage foreclosures. Federal financial regulators already ordered Ally and 15 others to reimburse homeowners who were foreclosed on improperly.

Citi, Goldman Sachs, J.P. Morgan and Morgan Stanley are managing the IPO. The four banks were also involved with GM's IPO last year.

5% of IPO Shares Offered by Ally’s Financial to Auto Dealers

Ally Financial Inc had reported that it plans to propose up to 5% of the common shares from its initial public offering to its customers, as the auto lender revealed more explanation of its IPO. This move allows Ally’s primary customers, the auto dealers, to access the auto lender’s public stock offering anticipated this summer.

Ally’s main business is to offer financing to traders, serving them to put new vehicles on their lots.
Ally commented in its modified IPO prospectus, filing Friday with the US Securities and Exchange Commission that any shares left over from this 5% stock will be presented to the general public.

An Ally spokeswoman, Gina Proia, refused to comment on the probable size or timing of the stock offering, but people related to the agreement told in the beginning of this year that the plan is for the US Treasury to trade about $5 billion of common stock in the offering. If markets trend is optimistic, Ally’s shares should start trading before the end of June.

In May, Ally reported in an earlier adjusted IPO prospectus filing with the SEC, that the US Treasury Department, which owns 74% of Ally, had plans to switch $2.9 billion of its existing holding of $5.9 billion of compulsory convertible preferred securities into common stock.

US Treasury will replace the remaining $3 billion of its compulsory convertible preferred securities into so-called tangible equity units which is a security with a debt and equity factor. The Treasury will propose a part of these tangible equity units along with the common equity proposal.

Ally has listed Citigroup Inc. (NYSE:C), Goldman Sachs Group, Inc. (NYSE:GS), JPMorgan Chase & Co. (NYSE:JPM) and Morgan Stanley (NYSE:MS) as its top underwriters, but other banks are predicted to be added to the list.

Perella Weinberg to advise Treasury on Ally IPO

Perella Weinberg, the independent investment bank, has won the mandate of advising the US Treasury on the initial public offering of Ally Financial, the former financing arm of General Motors.

People familiar with the matter said that Perella’s appointment would be announced by the Treasury as soon as Thursday and comes as Ally executives begin to meet with banks to discuss its stock offering, expected to happen sometime this year.

Ally is interviewing about 10 banks as possible underwriters for the IPO – expected to include all the largest Wall Street institutions – in a series of meetings in New York this week. The offering could value Ally at between $8bn and $15bn, those people added.

Perella Weinberg, in contrast, will be tasked with representing the interests of the US government in the offering.

The Treasury owns about 74 percent of Ally – the new name for GMAC – after investing a total of $17.2bn into business during 2008 and 2009 as part of the bailout of the US car industry.

The government has taken to appointing an independent investment bank, sometimes called a boutique adviser, to advise it on the process of unwinding some of its crisis-time investments.

A spokesman for Perella referred inquiries to the Treasury, who did not respond to a request for comment. Ally declined to comment.

Perella lost out to Lazard in the battle to advise the Treasury in last year’s IPO of General Motors. GM in November raised $20.1bn in one of the world’s largest public offerings, allowing the US government to cut its stake in the carmaker.

In December, Ally took the first step towards an IPO when the Treasury said it would convert $5.5bn of preferred stock in the financing company into common equity.

The conversion bolstered Ally’s common equity, bringing its capital ratios into line with other lenders in the sector and was designed to help the company raise funds on more favourable terms.

However, the US government still owns a further $5.9bn of convertible preferred stock, which could hamper the IPO process unless proceeds were used to redeem the remaining government ownership in the company.

Auto financing companies are once again back in vogue following the financial crisis. GM itself last year bought AmeriCredit, an independent auto finance business, for $3.5bn.

In December, Toronto-Dominion Bank snapped up Chrysler Financial, which was separated from its parent when Chrysler filed for bankruptcy, for $6.3bn as part of a push by the Canadian bank into the US consumer finance market.

Ally Financial Said to Interview Banks to Manage IPO

(Bloomberg) -- Ally Financial Inc., the auto lender majority owned by the U.S. government, is interviewing investment banks this week to manage its initial public offering, said two people with knowledge of the matter.

Ally asked for proposals last week and is likely to select four underwriters, though the final decision hasn’t been made, said one of the people, who declined to be identified because the talks are private. The size of the IPO hasn’t been decided and will depend on valuation, the person said.

The U.S. Treasury Department, which owns 73.8 percent of Detroit-based Ally, will play a large role in deciding the size and may sell its entire stake if the valuation is high enough, one of the people said.

Ally spokeswoman Gina Proia declined to comment. CNBC reported the development earlier today.