Divergent Capital
Private Investor & Writer, Capital-Light Businesses & Special Situations
Elevance Health offers deeper value and better growth than UnitedHealth, Centene and similar insurers, trading at about half UnitedHealth's P/E. It is not a sexy trade. MarketSurge picked up a cup breakout with 28% depth, giving a target of 490-500. x.comÂ
Managed-care insurance cash flows usually care less about AI bond yields than leveraged hyperscaler debt, making a managed-care sleeve preferable to chasing an AI bounce. UnitedHealth rose about 2.8% alongside Eli Lilly and Walmart after Deutsche Bank upgrades, while semiconductors weakened. x.comÂ
The market rally is shifting from AI suppliers to AI users, as companies broadly report significant AI-driven cost reductions, a trend since 2025. Retail, healthcare and fintech stocks saw the biggest revenue increases and expense reductions, and small caps are part of this "productivity melt-up." Rising token usage has offset some of the benefit as AI agents cost more to run, and with a stock picker's market on both ends, screening at the ETF level may be less useful. x.com x.com x.com x.com … Show more
Companies using AI to cut costs and expand margins are underpriced, and that efficiency trade is the same as the buildout trade because they all buy compute. AI margin gains show up in gross margin and headcount first. ServiceNow runs agentic AI internally, Salesforce grows revenue without headcount, Amazon sells compute and runs logistics with it, Alphabet cuts internal costs while owning the model and cloud, and Meta pairs flat headcount and rising margins with its own silicon. x.comÂ
UnitedHealth collects ever-rising US healthcare spending, and its stock has stopped falling. Family plan costs rose 249% in two decades toward $24,000, US spending nears $10,000 a person, and the over-65 population is set to double to two billion by 2050. After earnings fell 59% and 69% in back-to-back quarters and the stock dropped from 606 to 248, it based near 250 for a year, a Weinstein Stage 1, then reclaimed its moving average and pushed above 400. x.com x.com x.com x.comÂ
Alignment Healthcare's 25x multiple is nothing for a company growing its top line 20%+, with just 1% market share and a better model. @JasperRidley counters that few health insurers trade at 25x EBITDA. x.comÂ
UnitedHealth is exposed as health insurance costs become unaffordable for employers: an industry that lives by price gouging will die by it. US employers face the largest health insurance cost hike since the Affordable Care Act began, with a 25% rise expected in 2027 after a massive drop in exchange enrollment. Employer-based health plans now look set to go the way of pensions and become extinct. x.comÂ
UnitedHealth's collapse was driven more by fear than fundamentals, making it one of the biggest opportunities in years, reminiscent of Meta in 2022. Fraud accusations led nowhere as the DOJ dropped its investigation, and peers Humana and CVS recovered from the same cost underestimation and beat later. With over $420B in revenue and deep ties to US employers, UnitedHealth is too big to fail and could survive even a fine. That same logic pointed to Berkshire being the undisclosed buyer. x.comÂ
Oscar Health is shifting from story stock to genuine profitability as membership growth drives operating leverage. Its SG&A ratio fell from 15.8% to 15.2%, and CMS cut ACA exchange user fees, easing costs for an insurer reliant on that market. CEO Mark Bertolini bought 1 million shares for $11.92M in April, signaling confidence in a profitability inflection. ICHRA, where employers fund employees' own coverage, is a large untapped market, and its new Lucie shopping platform deepens its moat. … Show more
Clover Health's court win removes the biggest policy overhang on its profitability: on June 1, 2026, a federal court ordered CMS to recalculate Clover's 2026 Medicare Star Rating, which CMS algorithm changes had hurt, risking tens of millions in quality bonuses. Its Counterpart AI drives a flywheel of better predictions, fewer admissions, a lower benefit expense ratio and higher margins, as Q1 showed. At about 0.5x 2026 sales guidance versus 2-5x for peers, a re-rating looks inevitable. x.comÂ