In recommending shares to investors, BTIG analyst Mark Palmer put a $31 price target on the stock, compared to its IPO price of $25. In recommending shares of the former GMAC, Palmer cites low funding costs as the bank increases deposit gathering and reduced regulatory restrictions as it pays back its government loan. Palmer also sees Ally reducing expenses on personnel, information technology, and professional fees.
Palmer also believes Ally will continue to be an important player in auto finance.
"Despite loss of exclusivity with General Motors (GM) and Chrysler, ALLY is well positioned to maintain and grow its leading market share in the North American auto finance space," Palmer writes.Most analysts won't begin publishing reports on Ally for a few weeks since their investment banking divisions advised on the IPO. Ally's IPO comes as the U.S. Treasury further reduces its stake in the former GMAC Inc., which it bailed out during the 2008 financial crisis. The Treasury, advised by a group of 19 investment banks led by Citigroup (C) Goldman Sachs (GS), Morgan Stanley (MS) and Barclays (BCS), sold 95 million shares to raise $2.375 billion and reduce its stake to 14.1% from 36.8%. The largest private shareholder is Dan Loeb's Third Point LLC, which has a 9.5% stake acquired over a six month period in late 2013 and early 2014, according to a recent S-1 filing and a Third Point investor letter dated Jan. 21, 2014. Cerberus Capital Management, which unlike Third Point owned Ally before it had to be bailed out, retains an 8.6% stake. Ally has received $17.2 billion in taxpayer assistance, according to Bloomberg. The Treasury said it had recovered $15.3 billion before the IPO.
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