Capital One Financial (NYSE:COF) was the top contributor in the financial sector, up more than 18% after posting better-than-expected earnings and launching plans to shutter the ultra-competitive mortgage and home equity operations. In late December, Capital One halved its share buyback program to mitigate the impact of a $1.9 billion charge, effectively lowering its deferred tax assets in conformance with the new tax reform bill. Many other large financial institutions have instituted similar capital plans. Ultimately, this tax reform is expected to benefit banks, as the corporate tax rate drops from 35% to 21%, potentially increasing dividends, stock repurchases and acquisition deals at hefty premiums.
From the Polaris Global Value Fund fourth quarter 2017 shareholder letter.
