4 Reasons to Follow Warren Buffett and Buy Ally Financial
This year, shares of Ally Financial (NYSE: ALLY) have been trading hands more often than usual thanks to a tacit endorsement from Warren Buffett. Berkshire Hathaway, the holding company that Buffett's managed since 1965 opened a new position in the all-digital bank during the first quarter and then significantly raised its stake during the second.
On Oct. 20, Ally Financial shares fell slightly because investors are nervous about the company's somewhat negative outlook regarding loan repayment rates. If you're worried that Buffett made a mistake when he bought shares of this bank you might be overreacting. Here's why.
Ally Financial, and banks in general, are having a rough time right now thanks to rising interest rates, and a general economic slowdown caused those higher rates. Over time, though, wider spreads between interest paid to savings account holders and the loans Ally originates will improve profitability.
Source Fool.com
