It’s been a banner year for US bank stocks by almost any measure. For many of the sector’s most respected observers, the best is yet to come.

Hedge funds piled into shares of financial firms in the third quarter, boosting their exposure to more than $340 billion, a 50% increase from just three months earlier, according to 13F data compiled by Bloomberg. Meanwhile, market watchers expect much of what fueled the more than 33% surge in bank shares this year — topping both the S&P 500 and tech heavy Nasdaq 100 — will continue to be a tailwind in the months to come. That includes a pick up in capital markets activity and loan growth.

Should expectations for a wave of deregulation and lower taxes under the incoming Trump administration come to fruition, many say bank stocks have plenty more room to run — even if the Federal Reserve keeps interest rates higher for longer than had been expected.

bloomberg.com - Bank bull run seen thundering onward with hedge funds loaded up

Interesting that hedge funds loaded up just when Buffett was selling Bank of America. Will be interesting to see how this turns out.