False Spring
There’s an English name for the frost that kills things in April. They call it blackthorn winter, after the hedge that flowers early and then gets caught out when the cold comes back.
Farmers have a whole vocabulary for this, which tells you how often it happens and what it costs them. And the dangerous part of a false spring was never the frost.
It’s the warm week beforehand.
A run of mild days arrives, the sap starts moving, the buds open on trust, and then the temperature drops and an orchard loses a season to a fortnight of optimism. Nothing about it looks like a warning while it’s going on. That’s the whole problem with it. The thing that hurts you is disguised as the thing you were hoping for.
We’ve just had one of those weeks on the screens.
On the face of it, better than the last few. More stocks pushed higher, the breadth count improved, and if you’d only counted how many things closed green you’d have written a fairly cheerful paragraph about the market broadening out.
Then look at what was standing behind the advance. The participation thinned out as the week went on, and by Friday there was very little volume left underneath the buying. Plenty of buds, no real warmth. You can see it clearly in the second chart below, and it’s the single most useful thing the week produced.
Everything else is where we left it. The quality read on TradeDeck hasn't moved off weak.
The indices are sitting almost exactly where they were seven days ago.
The chop is intact and we’re now far enough into it that people have stopped asking when it ends.
So no, we don’t read this as the turn. We read it as a market that widened out, had a look around, and couldn’t find enough buyers to commit to anything.
That doesn’t mean you stand there and see nothing.
The useful thing about a false spring is that it shows you which trees have the deepest roots. Two of them budded properly this week and we bought both.
Cerebras (CBRS) went in first. The AI trade collected a lot of obituaries over the summer, and the coverage turned again over the past few days, which matters less to us than the structural point: CBRS sits inside that theme rather than somewhere near it. If the trend is alive, it’s alive there.
The second is Bitdeer (BTDR). We’ve been watching the crypto complex for a couple of weeks now waiting for something we wouldn’t have to argue ourselves into, and BTDR gave it to us. A first flag after the initial push, which is exactly the setup we wanted rather than the one we settled for.
We’ll be straight about the name itself. It isn’t the leader of that group, and we’re not going to sell it to you as one. It was calmer than the other candidates we were tracking, which in this tape counts for a great deal, and it had the best structure on the board. Given the choice between a louder stock with a messy chart and a quieter one with a clean chart, we take the clean chart every time. That’s the entire reasoning and there’s nothing cleverer hiding behind it.
Both positions are working. Both are deliberately small.
And honestly, the entries aren’t the part we’re pleased about. What we’re pleased about is that in a market this poor we found two worth having and didn’t talk ourselves into a third. Selectivity isn’t a virtue you can practise when everything is working. It only exists on weeks like this one, when the screen is offering you a dozen things that look almost right.
We think the market gives us its answer in the next few weeks.
Themes are still alive under there, which is more than we could have said in August, and when the volume finally shows up behind one of them we’d like to already own the right names rather than be shopping.
Until then the book stays light and the positions stay small.
We’re not planting the field on a warm week, just noting which trees moved first!
Here’s a look at this week’s market health, with a breakdown of index and sector performance.
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📈 Free Setup: Make It Count
ALHC: Alignment Healthcare Inc ⚠️
What they do: A technology-driven Medicare Advantage health plan operator
Why watch? A company surpassed the high end of its guidance across every key metric, raised its full-year outlook, and lost more than 30% of its value in a single session.
That happened at the end of July, immediately after the second quarter release. The results themselves were not the problem. Total revenue reached $1.3 billion, up 31.6% year over year. Medicare Advantage membership grew 31.5% to approximately 294,100. Adjusted EBITDA came in at $68 million, up 48%. Net income more than doubled against the prior-year quarter. The company raised the midpoint of every full-year guidance metric it publishes, covering membership, revenue, adjusted gross profit, and adjusted EBITDA. This was a beat and raise in the most literal sense available.
What broke the stock was the collision between where the multiple had travelled and what management said about the back half of the year. Alignment carried a substantial premium into the print, and a premium is only ever as durable as the shape of the next two quarters. Management guided to roughly 30% of full-year adjusted EBITDA landing in the second half against about 40% in the prior year, because it intends to reinvest the outperformance into clinical hiring, back-office automation, and preparation for entering new markets in 2027 and 2028. A company spending its own beat is doing the right thing for the business and the wrong thing for a stock priced on near-term earnings acceleration. The market repriced accordingly, from recent highs near $25.00 down toward $13.00, close to a 50% haircut, and almost none of it had anything to do with the quality of the company.
The bear case on any Medicare Advantage insurer right now is medical costs. Medicare Advantage is the privatized version of Medicare, where the government pays a private insurer a fixed amount per member per month and the insurer keeps whatever it does not spend delivering care. The metric that governs the entire economics is the medical benefit ratio, the share of premium revenue consumed by medical claims. A higher ratio leaves less behind, and the fear running through the whole sector is that rising utilization combined with reimbursement pressure will blow that ratio out and crush margins across the industry. Alignment’s second quarter proved those fears false for this specific company. Its adjusted medical benefit ratio came in at 86.3%, an improvement of roughly 40 basis points year over year and the lowest level the company has reported since going public.
The bull thesis follows directly. This is a structurally advantaged, technology-driven Medicare Advantage operator compounding revenue and membership above 30%, running a best-in-class medical benefit ratio, and generating real and growing cash. The company kept delivering operationally straight through the multiple compression, which is precisely the sequence that creates opportunity in a name like this. An investor stepping in today faces a better business at a materially lower price than an investor who was looking at it two months ago.
Technical Outlook: The stock sits in an interesting spot at the $13.00 level. That number is significant on the weekly chart for a specific reason: it is where buyers came in during June and saved the stock, and it is more or less the same spot where buyers stepped in during 2025. Whether the third occurrence resolves like the first two is the open question. So far the stock has failed to break down and is hovering right at the level, which of course can also read as a bearish signal preceding further downside, because a level tested repeatedly is a level that eventually breaks. But if it refuses to break down and instead starts to break out, pay close attention, because moves in the opposite direction from a spot like this arrive very fast when the positioning is all sitting on one side. This is not our usual setup and we are not going to pretend otherwise. The company is good enough that we wanted every one of you to know the opportunity exists.
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