Kapitall reported cash-rich companies had a worse performance than those that paid out dividends in 2011, but some investors are unsure if that trend will continue.

The reasons for hoarding cash -- an uncertain future agitated by troubles in Europe, China, and the U.S. -- have not disappeared. If economic conditions worsen, then it's possible this strategy will benefit companies in the long run.

The list
With this in mind we created a universe of companies with large cash cushions. So large, in fact, that the companies in question could run operations (on average) for more than four quarters without earning a single penny in profit.

… [A] company's cash cushion speaks volumes about its ability to weather tougher economic times, at least in the near term. Large cash holdings also suggest a company has the ability to buy up new companies and expand operations.

To refine the quality of our list we searched for the stocks with an increase of short covering. Short-sellers are investors that benefit from falling stock prices. If they are covering their short positions on these cash-rich names it's a signal that they are becoming less pessimistic about their short-term performance.

Short-sellers seem to think these cash-rich companies have more upside than downside -- do you agree? (Click here to access free, interactive tools to analyze these ideas.)

1. GAIN Capital Holdings (Nasdaq: GCAP): Operates as an online provider of retail and institutional foreign exchange trading and related services. Average quarterly operating expense over the last five quarters at $49.54M, vs. most recent cash and short-term investments at $371.22M, implies a Cash / Avg. Operating Expense ratio at 7.49. Shares shorted have decreased from 807.19K to 580.32K over the last month, a decrease which represents about 5.79% of the company's float of 3.92M shares.

2. Pharmasset (Nasdaq: VRUS): Focuses on discovering, developing, and commercializing novel drugs to treat viral infections. Average quarterly operating expense over the last five quarters at $22.48M, vs. most recent cash and short term investments at $166.46M, implies a Cash / Avg. Operating Expense ratio at 7.4. Shares shorted have decreased from 4.91M to 3.29M over the last month, a decrease which represents about 2.42% of the company's float of 66.93M shares.

3. Alimera Sciences (Nasdaq: ALIM): Engages in the research, development, and commercialization of prescription ophthalmic pharmaceuticals. Average quarterly operating expense over the last five quarters at $5.55M, vs. most recent cash and short-term investments at $38.61M, implies a Cash / Avg. Operating Expense ratio at 6.95. Shares shorted have decreased from 1.33M to 924.20K over the last month, a decrease which represents about 5.45% of the company's float of 7.45M shares.

4. TowerStream Corp. (Nasdaq: TWER): TowerStream, a 4G service provider, delivers high-speed wireless Internet access to businesses in the United States. Average quarterly operating expense over the last five quarters at $7.62M, vs. most recent cash and short-term investments at $51.59M, implies a Cash / Avg. Operating Expense ratio at 6.77. Shares shorted have decreased from 3.74M to 3.25M over the last month, a decrease which represents about 1.23% of the company's float of 39.72M shares.

5. Geron Corp. (Nasdaq: GERN): Develops biopharmaceuticals for the treatment of cancer and chronic degenerative diseases, including spinal cord injury, heart failure, and diabetes. Average quarterly operating expense over the last five quarters at $29.47M, vs. most recent cash and short-term investments at $142.1M, implies a Cash / Avg. Operating Expense ratio at 4.82. Shares shorted have decreased from 13.42M to 11.04M over the last month, a decrease which represents about 1.89% of the company's float of 126.00M shares.

6. Keynote Systems (Nasdaq: KEYN): Provides Internet and mobile cloud monitoring solutions worldwide. Average quarterly operating expense over the last five quarters at $21.47M, vs. most recent cash and short-term investments at $101.55M, implies a Cash / Avg. Operating Expense ratio at 4.73. Shares shorted have decreased from 1.01M to 862.83K over the last month, a decrease which represents about 1.13% of the company's float of 13.01M shares.

7. Delcath Systems (Nasdaq: DCTH): Operates as a specialty pharmaceutical and medical device company. Average quarterly operating expense over the last five quarters at $9.49M, vs. most recent cash and short-term investments at $44.7M, implies a Cash / Avg. Operating Expense ratio at 4.71. Shares shorted have decreased from 8.09M to 7.60M over the last month, a decrease which represents about 1.04% of the company's float of 47.24M shares.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research. List compiled by Eben Esterhuizen, CFA.

Kapitall's Eben Esterhuizen and Rebecca Lipman do not own any of the shares mentioned above. Short data sourced from Yahoo! Finance, accounting data sourced from Google Finance.