Loan Losses Just Spiked at Ally Financial; Did Warren Buffett Make a Mistake?
Credit quality might still be squeaky clean at many of the large traditional banks, but it's deteriorating much faster at Ally Financial (NYSE: ALLY), a large consumer digital bank that specializes in auto lending. Loan losses and delinquencies -- which have been extremely low thanks to pandemic stimulus and built-up savings -- began surging higher in the third quarter faster than some might have expected.
Ally received a big endorsement this year when Warren Buffett's Berkshire Hathaway opened a position in the first quarter and then bought more in the second quarter. Ally is a relatively small stake in Berkshire's massive equities portfolio, but the conglomerate now owns close to 10% of Ally's outstanding shares.
With credit now weakening and a recession on the horizon, did Buffett and Berkshire make a mistake?
Source Fool.com
