1. Zombie Company’s Grew During Covid.

Barrons

How do you identify a zombie firm? Principal Global offers a guide: companies that can’t cover interest costs twice with the previous year’s pretax earnings; whose spread between return on equity and cost of equity is less than four percentage points; whose one-year and average three-year sales growth is less than 3%; and whose Altman Z-Score—a measure of liquidity, solvency, and profitability sometimes used to predict bankruptcy—is below 1.8.

The Pandemic Has Swelled the Ranks of Zombie Companies. Here’s How to Recognize Them.

1. Insider Selling Fastest Pace Since 2012

INSIDERS SELL– S&P 500 execs sold shares of their own firms at a rapid pace in the last month. The selling picked up so much versus buying that a measure of insider velocity tracked by Sundial Capital showed the fastest exit since 2012. About $975 million of stock was dumped last week, more than twice the prior week, SEC data compiled by Bloomberg show.  Their purchases increased by roughly 10% to $11 million.

1. Small Caps Lag In 4^th Quarter

Now is not a good time to be actively investing in small-cap U.S. stocks. That’s because small-caps typically lag their larger counterparts during the fourth quarter. 

Take a look at the accompanying chart, which plots the average monthly return advantage that the smallest stocks have over the largest. (The exact definitions of these two hypothetical portfolios are provided on the website maintained by Dartmouth College professor Ken French.)

1. Carvana Used Cars….Covid Low $20……$226 Last.

CVNA Chart

1. Speculators/Traders Are Most Bearish on Nasdaq 100 in 12 Years.