The winds of change headed to Washington, says UBS, and trades could quickly unwind.
Searching for stocks in the Trump rally that might be getting a little frothy, analysts at UBS found the opposite of a bubble in Apple. Among the actively traded, the world’s most valuable company turns out to be the most underweight.
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With the winds of change headed to Washington, deeply underweight (relative to what the models suggest) is not necessarily a bad place for a stock to be. The high flyers, UBS points out, have further to fall:
“Once these trades reach their critical value, or an exogenous shock occurs, we expect a sharp price reversal as investors unwind their exposure in tandem.”
Reformatted chart from UBS via Bloomberg.