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Herro and Nygren Comment on Bank of America

- By Holly LaFon

Bank of America (BAC), one of the biggest U.S. banks, was the largest contributor to performance for the quarter, returning 42%. Bank of America's share price reacted positively to third-quarter results that showed strong capital market performance and healthy loan and deposit growth. The election of Donald Trump further boosted Bank of America's stock price amid investors' expectations that a Trump administration would lead to less regulation. Additionally, the president-elect has promised to boost economic growth, which should allow for interest rates to return to more normalized levels and benefit companies in the financials sector. We believe an improving interest rate environment, along with additional expense reductions and continued share repurchases, will drive strong EPS growth over the next several years. At its current price, we believe Bank of America remains undervalued.

From David Herro (Trades, Portfolio) and Bill Nygren (Trades, Portfolio)'s Oakmark Global Select Fund fourth quarter 2016 commentary.
This article first appeared on GuruFocus.