🗞 Trading Outside The Box

WHILE YOU POUR THE JOE… ☕️

When technical analysis fails you, as it has thousands of other retail traders…

It’s time to erase the board completely and get realistic with yourself and your goals, which could be as simple as asking:

“Who are the best in trading, and how can I emulate them?”

You wouldn’t set out to become a professional boxer without studying how Mike Tyson trained, fought, and prepared for each fight.

It just makes common business sense to study the industry. 👀 

In 2025, it’s pretty clear who beat the market and led in the hedge fund / investment management industry.

• It wasn’t the long/only funds

• It wasn’t the ETF pickers

• And it certainly wasn’t a “technical” driven fund

What you will see is that the top hedge funds drove home billions in gains through two main strategies:

• Macro

• Long/Short Equity (which is part of macro)

So, in today’s newsletter, we’ll go over two Long/Short equity trades that ended up deep in the green for the past quarter. 📈 

I’m excited to see you here.

Speaking of A.I. opportunities, let’s get on with today’s email 📧…

ONE STEP AT A TIME
A New Paradigm

Remember this post?

I had grown an interest in the transportation industry, telling you the $FTXR was headed higher due to one simple reason:

• The PMI trends were flashing green for the industry

That’s enough for a trader to justify digging through potential winners in the space, in other words, the beginning of a trade idea. 💡 

Specifically, I noted a significant divergence in ETF holdings: overweight in airline stocks and underweight in trucking and logistics names.

This is what the comps spread looked like back then:

While airlines were expecting to see 45% EPS growth versus trucking’s 31%, the latter commanded a forward P/E premium of 23.4x.

Going back to fundamentals, the premium was more than justified given the rise in trucking spot rates for most of 2025.

However,

The Services PMI Prices index was still red-hot, indicating lower margins for asset-heavy companies such as Canadian National Railway (CNI) and others.

That also meant margin expansion for asset-light names with a sweet kicker in logistics software as an add-on segment.

Like Landstar (LSTR).

Knowing this is where the industry was headed, it made complete sense to see specific stocks trade the way they did:

Notice how Landstar traded at a premium to peers at 21.2x forward P/E with a forward EPS growth rate of 29.5%.

On the other hand,

Canadian National Railway fell to a 15.1x discount driven by a forward EPS growth rate of 4.1%.

After running the numbers on this trade, I found out the spread between the two showed strong mean-reversion characteristics.

In English: We could buy LSTR and short CNI, closing the spread for a profit.

A spread that traded at roughly $70 when I pitched it to you ⬇️ 

A few catalysts, like earnings and further PMI reports, came in to prove my thesis right for this trade.

This sent the spread to just over $100 as our best exit price target (~42% profit). 🔥 

Relatively risk-free, and more importantly, stress-free.

Enough is Enough

After dozens of free long/short trade ideas, and several thousand dollars in profits generated for myself and my subscribers.

I decided these ideas don’t deserve to reach a crowd that won’t see their value.

So I closed this strategy off to the masses and kept it for a niche of traders who are aware of where the industry is headed.

In short, Technical analysis is dead because everyone is using it, and you MUST pivot.

In this Deal Room post, I pitched another A+ setup in an L/S strategy.

You can access it in your 7 Day Free Trial, financial/valuation models included. ✅ 

Without spilling the beans too much, there were several reasons why I wanted to buy Dutch Bros (BROS).

But,

As every professional trader does, I thought more about what happens if I’m wrong rather than how much money I stand to make if I’m right. 🧠 

Which is why you should ALWAYS hedge your trades.

Restaurant Brands (QSR) turned out to be the perfect hedge for Dutch Bros in this case.

Just like in our trucking example, both CAVA and Dutch Bros were the obvious long candidates.

Why?

• Forward P/E Premiums

• Justified by above-average EPS growth

That’s it. Once you train yourself to spot these sorts of outliers, and know how to work to justify their premiums in company-specific developments, you can make a lot of money in this business.

This is exactly how these hedge funds can continue outperforming and generate billions in gains.

Bonus Mentions

A month ago, I posted another A+ setup in my Deal Room.

This one was in the financial sector, with a special focus on the transaction platforms industry.

100% driven by the same PMI trends that always get us to the winners and losers:

From October through December 2025, the finance and insurance industry posted accelerating growth trends.

Leading me directly to a proper dig through in the space for top ideas.

And that’s how I landed on Wise PLC (WIZEY) as my winner.

Hedged by Synchrony Financial (SYF).

Now, with Trump’s announcement of a 10% cap on credit card interest rates, companies like Synchrony will suffer the most (it fell 10% overnight). 📉 

On the other hand, a payments platform like Wise doesn’t really see the negative effects of this interest income disappearing.

This is not uncommon, as premiums and discounts are always explained after the fact.

Remember the old saying?

If it’s in the news, then it’s already too late.

We were positioned long Wise / short Synchrony long before Trump made the announcement.

Now we profit from it. 💰️ 

I hope this issue was useful and helped you see the realities of trading today.

When technical analysis fails you, as it has failed thousands of others, come back to this email and compare the different idea-generation steps that have been made.

Go back and take our free long/short equity crash course.

And,

When you’re serious about your financial future…

Come join us in the Deal Room.

Or better yet:

• Become a part of our trader network by taking The Sovereign Trader Program.

To your success,

G 🫰