After a two-year slump and cyberattack headwinds, DVA ignited a rally on February 3rd, with a major Q4 earnings beat that crushed analyst estimates.

An 8-day winning streak and 35% surge have pushed the Squeeze Risk Score to 92, making a crowded short position a momentum-driven squeeze risk.

Hedge funds have been buying consistently throughout the stock’s decline, utilizing a reversal/valuation strategy as the P/E compressed with the stock.

DaVita Inc. (DVA) is a medical services company specializing in dialysis and other outpatient procedures.

The stock fell 25% last year as short interest tripled, a classic pattern of distressed stocks following a short momentum story. The stock had also declined 25% the previous year.

DVA suffered from a cyber-attack, declining patient volumes, and an earnings miss last year, driving negative sentiment.

Recently, the stock has rallied 35%, fueled by a 21% rise on February 3rd following a strong earnings report.

However, stripping out the earnings gap reveals a 14% organic rise, with the stock climbing for eight consecutive trading days

Short interest has declined as the stock has risen, signaling aggressive short covering consistent with momentum behavior.

Conceptually, S3’s short squeeze score is calculated using crowded shorts data plus an adjustment for mark-to-market losses due to recent rallies.

Institutional long holdings data reveals that Hedge Funds have been buying in a reversal/valuation strategy throughout the multi-year decline.

The stock was a battle-ground stock previously and the Long/Short Ratio is close to 1.3 now.

Want to know more? Access this data in real time using S3’s BLACK APP & BLACK MAP

The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC (“S3 Partners”) to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks, and merits, as well as the legal, tax, accounting, and investment consequences, of such decisions.