Hedge Funds Are Shorting This Classic Warren Buffett Stock. Should You Sell Shares Now?

Industry Overview - Healthcare provider stocks are experiencing a decline due to higher operating expenses and ongoing debates over patient subsidies, which are pressuring earnings across the sector [1] - Hedge funds have become aggressive sellers, particularly in U.S. healthcare providers, with short positions in dialysis and hospital operators outnumbering long positions by approximately eight to one [1] Company Focus: DaVita (DVA) - DaVita, a leading kidney care services provider, has seen its short interest rise to about 11.6% of its float by year-end, marking a 12% increase in just one month, making it one of the most shorted stocks in the S&P 500 [2] - The stock has shifted from being a favorite of Warren Buffett, with Berkshire Hathaway reducing its stake, and DaVita shares are now trading near one-year lows [3] - Despite recent innovations and leadership changes aimed at driving growth, DaVita's shares have not gained traction and have fallen sharply, down about 36% over the past 52 weeks from a record high of nearly $177 to around $105 [5][6] Valuation Metrics - DaVita's current price-to-sales (P/S) ratio of 0.69 is significantly lower than the sector median of 4.01, indicating that the stock is undervalued relative to its peers [7] - The company's price-to-earnings (P/E) ratio of 12 represents a 54% discount compared to the sector median of 26, further suggesting attractive valuations [7]