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Banks

Activist hedge fund seeks more talks with U.S. auto loan firm Ally

(Reuters) - The hedge fund pushing for changes at Ally Financial ALLY.N said on Wednesday it wants to work closely with the U.S. auto loan company's management team but is disappointed with its initial response.

Lion Point Capital, responding to Ally’s press release on Monday, said in its own release that it wanted Ally to extend its director nomination deadline in order to consider two of the hedge fund’s nominees.

Lion Point, co-founded in 2014 by former portfolio managers from Elliott Management and Perry Capital, said Ally ignored this request and also chose to make their private discussion public via its release on Monday.

The back-and-forth is another example of how shareholder activists, after a blockbuster year in 2015, have become increasingly bold. Lion Point is targeting a $9 billion company in its first such campaign while holding less than 1 percent of Ally’s stock.

Ally, the largest auto loan company in the United States, was formerly GMAC, the financing arm of General Motors GM.N, which was bailed out by the U.S. government during the 2008 financial crisis after making a string of bad home loans.

The company was spun out in an April 2014 IPO, with Ally shares currently trading about 25 percent below their listing price.

The company has been trying to boost its market share by financing cars made by Ford Motor Co F.N and Nissan Motor Co Ltd 7201.T after GM replaced Ally as the exclusive lessor for Buick, GMC and Cadillac vehicles last February.

But Ally still managed to exceed its auto origination target last year and has added relationships that include McLaren, Aston Martin, Mitsubishi and online retailer Beepi.

In its press release on Monday, Ally said it would consider Lion Point’s directors but resisted the fund’s suggestion of exploring a sale.

Lion Point, which regulatory filings show has $950 million under management, said on Wednesday that extending the director nomination deadline would allow more time for the two sides to discuss the candidates. Companies rarely extend such deadlines.

Neither Lion Point nor Ally has disclosed the names of the directors the hedge fund is backing.

Lion Point also said its suggestion of exploring strategic alternatives came with the caveat that such a review occur only if the company’s stock was below adjusted tangible book value and had traded at a discount for a year.

Ally’s largest shareholder is private equity firm Cerberus Capital Management, which has an 8.6 percent stake. Perry Capital is the third largest, with 4.7 percent, according to Thomson Reuters data.

Additional reporting by Sruthi Shankar in Bengaluru; Editing by Paul Simao

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