The Market Maven - Week 19
QXO, Ally Financial
QXO 🇺🇸 (NYSE: QXO, EV: $12.1B, Last Close: $13.39)
QXO is a bet on Brad Jacobs. He has a stellar track record having built and led five multibillion-dollar companies including logistics providers XPO, GXO, and RXO, United Rentals, and United Waste Systems. QXO recently purchased Beacon, the largest publicly traded distributor of roofing, waterproofing, and related exterior products in the United States. QXO trades for a fully diluted EV of $12.1B, a 10% premium to the $11B purchase price for Beacon.
Ally Financial 🇺🇸 (NYSE: ALLY, MCap: 10.0B, Last Close: $32.54)
Ally Financial is both the largest all-digital bank, and prime auto lender in the United States. Since emerging out of General Motors captive financial arm after the financial crisis, Ally has gone from a wholesale-funded, captive finance company into a full-service deposit funded automotive finance and insurance provider. The market is concerned over rising auto delinquencies and used car prices declines post COVID. However, Ally’s balance sheet remains favorable, 90% of the loan book is prime credit and already reflects a 30% decline in used car prices from 2021. Ally has also reserved 3.6% of its auto loans for losses compared to a peak of 2.3% in 2009. Ally should be capable of earning 20%+ on equity and shares currently trade for 90% tangible book.
Silver Beech Capital’s Ally Thesis from Their Q1 2023 Letter (Link, pg. 5).
A Recent VIC Writeup (Link).
Disclosure: This newsletter does not provide investment advice. Information presented is for informational purposes only and should not be considered a recommendation to buy or sell securities. The author may or may not own the securities discussed.