58.02 -1.35 (-2.32%) Sell

DVA is a falling knife, continues to bleed every investor trying to catch it

13 min read

DAVITA INC. significantly underperformed on Friday. It returned -2.32% to close at 58.02. It is currently trading -27% below it's 52 week high of 80.03.

[Themes containing DVA]

DVA is currently in a down trend. Over the last three months 4 bearish signals have generated a profit of +15.16% for investors.


DVA has been underperforming the SP500 index in recent time, after having outperformed till 19 May, 2016. Over the last 2 years 11 months and 10 days, DVA underperformed the SP500 index on 47% days. Which indicates that on days DVA underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months DVA delivered profits on 52% days. However, it still managed to end this period in a loss. It's best return during this period (of +9.86%) was on Wednesday, 7 Nov, 2018. While it's worst loss in the same period (of -7.79%) was on Thursday, 8 Nov, 2018. There was initially a bearish trend during this period which started on 8 Nov, 2018 and went on till 14 Nov, 2018. The trend delivered -16.24% losses to investors. This was followed by a bullish trend that started on 21 Nov, 2018 and ended on 3 Dec, 2018. This bullish trend delivered +12.5% to investors.

On monthly basis, DVA delivered losses in more months over the last year, than profits. DVA delivered profits less regularly than SP500 index. DVA was also a more risky investment than SP500 index as it's worst month in the last year, Dec 2018, returned -12.17% compared to -7.28% returned by SP500 index in Oct 2018. DVA had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year. It is interesting to note that both DVA and SP500 index significantly outperform during months when quarterly/annual results are announced.

The individual investor should act consistently as an investor and not as a speculator.
-- Ben Graham

DVA is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in DVA's volatility from 20 Sep, 2018 to 13 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that DVA has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.

SP500 index has more chance of extreme outcomes than DVA. Therefore, SP500 must receive a lower allocation than DVA in your portfolio. SP500 index usually has shorter drawdown period than DVA.

On a general note (since you are interested in DVA), EHC is a small cap that deserves to be closely tracked for investment opportunities.

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