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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (60427)	3/1/2018 10:13:31 AM
From: robert b furman	2 Recommendations Recommended By dvdw© Lance Bredvold Read Replies (3) \| Respond to of 78426

Hi paul, Having been a Chevrolet dealer for 27 years, my impression of Ally is they have very little subprime loans and if they do - they will be those with higher beacon credit scores. Ally buys on a stricter algorythm (utilizing fewer people). They also have a strong business model with their internet banking (with few offices) - a big change made when GMAC went away. Their floor plan is historically high compare tp JPM or Capital One. When car sales slow GM has a horrible reputation for overloading the dealer body with inventory (which makes the floorplan business make large profits. As a GMI grad I had many accounting courses - one specifically on dealership management. Proper flooring levels should be NO MORE than 60 days for cars and 90 days for trucks (if you stock work trucks). When times slow down GM will pump dealers up to 180 days inventory and stick their head in the sand ( I cleaned that up - smile) about not having a rebate that moves the inventory. Still venting frustrations of being a GM dealer.<smile> They strong arm their dealer body to stay floored with them (buy offering cheap floorplan insurance on the inventory). Most GM dealers are incredibly loyal to Ally. I've always taken a more competitive approach to choosing my floor plan sources - it is after all just flooring with dollars - every ones dollars are the same - so it comes down to who has the lowest floating rate over Libor and then how can one find cheaper floorplan insurance. Add the two together and who ever is the cheapest gets my business. I left Gmac to go with JPM. Then Ally came with a competitive program (but a dealer had to jump through hoops : buy so many rental units,send a % of all paper to Ally) - bunch of BS that proves they are too high on flooring and far from competitive on good to great credit buyers (JPM owns that crown imo). We have recently switched our flooring from Ally to Capital One. The losses on the cheap insurance that hurricane Harvey inflicted on Ally were the reason they increased their floor plan insurance rates. With that move we found similar insurance rates and a smaller floating rate over the Libor rate and made the change in October. Not sure if that helps or hinders your investment decision but that's an opinion from some one who worked with Ally ever since their inception. The real buyers of subprime go much lower into a person" beacon score, and then charge fees to buy the paper (reserved for repo losses. I do not think they participate in that but I've been out of the day to day for 8 years now. Bob