Ally financial not in S&P indices

Water Cooler Investing
#1

Does anybody know why Ally Financial (NYSE: ALLY) is not in any of the S&P indices?

#2

it’s a piece of poo

#3

Wow, so insightful.

#4

poo is short for poop

#5

thank you for clarifying bs. many of our readers may not be familiar with poo.

#6

grape thread. tank

#7

Can someone please answer the question?

#8

here is an excellent article:"

https://www.fool.com/investing/2019/02/09/how-are-sp-500-stocks-chosen.aspx

#9

Thank you for the link. The thing is I know that the company/stock already meets all the criteria to be included in the S&P 500, but it still isn’t. Further, it isn’t even included in the S&P 400 index.

#10

perhaps there is too many bank stocks in the roster. thats what i would have guessed.

#11

Yeah, I’ll keep looking. Thank you for your help though.

#12

It’s already been discussed actually.

https://www.analystforum.com/forums/water-cooler/91338519

#13

Ok, let me walk you through the reasoning, why do you think it would be in the S&P500?

#14

i will answer your question. there are 85 financial stocks that are larger than ALLY in the US. and many of them are massive. so unless the S&P 500 is a financial sector index, it is obviously excluded. also, it is a piece of poo.

#15

Yeah, was going to walk him through it using the Socratic method.

Basically what MLA said. It’s limited to 500 companies, and criteria is minimal, it doesn’t automatically get you in, since obviously there are more than 500 companies meeting the criteria. Any amount of simple reasoning should have led you to that conclusion, particularly since their site basically states the same. Beyond that, ally is a sh*thole HY financial company with ~$11B in market cap.

#16

what you don’t think an insanely cyclical subprime auto lender that goes bankrupt every credit cycle should not be in the S&P 500? forshame! hey why isn’t 1-800-Flowers in the S&P 500? that’s a solid core holding right? any other below investment grade “banks” or silly companies we need to explain here?

#17

So the sector weighting of S&P 500 is dependent on the sector weight of S&P total market index and the financial sector is 14% in the total market index vs 13.45% in the S&P 500. So saying that there are already many stocks larger than Ally isn’t really a factor because there actually should be more. Additionally, the company is making some good changes, the stock is trading near all-time high plus they gave a decent result today.

But I am not really concerned about the company, just trying to figure out why it isn’t in any of the S&P indices.

#18

^not sure on what ur saying. there a ton of larger banks, so they will only limit it to the largest ones. and ally just aint big enough.

anyways on ally. its really cheap relative to other banks.because

  1. their performance is a bit shitty in both earnigns and rev. they should really be earning a lot more on their assets, if they can do that, then they can justify a ton of upside.

  2. they also have a fuckton of debt. so if there was ever a downside on their asset side. this is 1 fooked cookie!

  3. i also know they got the highest rates right now for cds or checking/savings. which makes sense since they are pretty close to junk status! i remember when wamu had the highest rates lol.

lastly ilove your name is it a reference to one of the greatest R&B singers of all time? and one of the funniest comedians as well that bagged a hot babe like mariah carey!

https://www.youtube.com/watch?v=ENDHD47-8-M

I’m a gigolo, always on the go Every time I turn around, I got another show In the club, wit about three in a row Drop in the Six, cause I love them (HO!)

#19

gigaloo, the S&P 500 is market cap weighted so the top heavy financial sector results in fewer financial stocks than say retail stocks relative to the sector’s % of the S&P.

clarifications on Ally, Ally IS junk rated. this is because ~70% of their assets consist of subprime and near subprime auto debt. this compares to 10%-20% for real banks. you want an example of the greatest single large stock at risk this cycle - Ally Financial. it holds the debt that investors are most concerned about, and rightfully so, and it IS the debt that investors are most concerned about, and rightfully so. talk about convexity risk. when investors start to demand a higher yield on subprime auto debt, they will also be demanding a much higher yield on high yield bonds, at which time you have a company this is taking large losses and cannot find financing in the public markets. also, their net liquid capital consists of not very sticky online deposits, a decent amount of which are above $250,000 in a single account so this poses bank run risk. did i mention that Ally has nearly failed twice, and this was outside of a subprime auto loan bubble.

#20

love my ALLY account.

charles schwab is a close second