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Cash-Rich Over Debt-Heavy: A Theme Taking Shape
A potential new theme is taking shape in this market, and it comes down to cash-rich companies winning while debt-heavy ones get punished. The chart below represents quality versus the most shorted names splitting into a Y, with the market piling into healthy balance sheets and dumping anything carrying a lot of debt. In a world of higher rates, that has always made sense in the past, like the year 2022, which is why names like Apple, AbbVie, and Berkshire may hold up while a debt-structured company like TransDigm gets hit. It's a similar 'flight to safety' into big-cap tech I keep pointing…
The skinny
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