Penn Treaty Could Be a Quick Gulp

Insurers have again become fashionable to own, with an industry consolidation raging. But Big Board-listed Penn Treaty American (PTA) has yet to get the Street's attention, although there are whispers that it may soon find itself in a buyout deal. It may be hard to believe, since the stock isn't behaving as if a deal is in the air. The shares, trading at 16, are off their 52-week high of 21. But some pros who have been accumulating shares note that Penn, with a market cap of only $131 million, would be a quick gulp for rivals such as AFLAC or New York Life Insurance. Penn is expected to earn $2.90 a share in 2001, up from an estimated $2.66 in 2000, figures Albert Rice of Merrill Lynch. The company, which provides long-term home-health-care insurance to people 65 and over, is controlled by Chairman Irving Levit, who owns 24%. Some pros surmise that, for family reasons, Levit may be ready to sell. Some institutions own big stakes, including Main Line Trust, with 12%; Goldman Sachs, with 9%; Bear Stearns Asset Management, nearly 8%; and Dimensional Fund Advisors, 7.8%. "We see a deal happening," says one investor, who figures the stock is worth 30 in a deal. Levit declined comment. By Gene G. Marcial

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