Angler,
Here are the news you mentioned. As for the chart, it seems to be showing some "bottoming", it appears that all bad news have been discounted, given the recent price action.
Price is above its 90 day moving average, and it seems to be rebounding off of that average.
I believe that it remains highly volatile, but price action seems to be suggesting a rebound and even some accumulation since the beginning of 1998, with some acceleration since March... All this, in spite of recent bad news...
The potential for upside (reward), may be justifying the seemingly, limited risk.
In addition Worden Bros, (of TC 2000 charts fame), has featured this stock in their daily reports (required paid subscription to access them), of March 18, and April 9, suggesting growing support for this stock.
worden.com
A good opportunity ??
Z.
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On March 18, 1998, Worden Bros. daily report wrote:
Company Profile
Provident American Corporation through its two subsidiaries, Provident Indemnity Life Insurance Co. and Provident American Life and
Health Insurance Company underwrite and sell life and health insurance under ordinary and group plans.
As of 3-18-98:
Chart Observations:
Over the past several sessions, PAMC has rallied sharply to the upside on a big surge in trading volume. The stock
has formed what appears to be a reverse head-and-shoulders bottom, with the neckline having been penetrated to the upside. This recent price action clearly constitutes an upside breakout.
The stock completed a positive crossover of its 90-day moving average
(magenta) earlier this year and successfully survived a test of that same moving average last month. The Time Segmented Volume (TSV)
indicator at the bottom of the chart, which turned negative during the first quarter of '97, has displayed continuous accumulation since
the beginning of 1998. After starting out today's session with a continuation of the current rally, PAMC ended up closing near its session lows. With this in mind, the stock may go through some additional backing-and-filling over the next day or two, which will likely provide a good opportunity for establishing long positions. PAMC is a very low-cap stock with a total market capitalization of about $50 million and therefore should be considered somewhat speculative in nature.
Then on April 9 WB wrote:
On March 18, we featured Buy Candidate, Provident American Corp. (PAMCE) at a price of 4.94 a share. In the days following our
report, the stock rallied to an intraday high of 6.94. However, on March 26, the first of two unfavorable news items hit the street,
negatively impacting shares of Provident American. The second bit of bad news coming one week ago today, on April 2, caused a temporary acceleration of selling, sending shares of the stock to an intraday low of 3.31. We say, 'temporary', because PAMCE has since rebounded sharply, closing today at 5.63. This represents a gain on the session of better than 21%.
Chart Observations: As of 4-9-98
Provident American may be facing a delisting from Nasdaq, but the stock appears well on its way to resuming its
short-term uptrend. The share price has risen slightly more than 40% over the past four sessions. Incidentally, in case you haven't
noticed, due to the possible delisting, the ticker symbol for Provident American has been changed, at least temporarily, from PAMC to PAMCE.
After rallying impressively at the end of the first quarter, Provident's stock dropped sharply in response to the negative news events mentioned earlier. Price pulled back to its 80-day moving average (shown here), before finding support and bouncing back with a
vengeance.
The TSV moving average (yellow) showed clear signs of a character change during the formation of the '96/97 top. Further, the
indicator stayed predominantly negative for the majority of the decline. The TSV moving average turned decidedly positive in 1998
after a positive trend reversal in the third quarter of '97. The contrasting slopes of the linear regression lines suggests buying pressure is building faster than price is rising.
PAMCE is speculative and volatile...and that might even be an understatement to some. None-the-less, if you're currently holding the stock, we see no technical reason to sell it.
Recent Company News
Provident American to Delay Filing of Annual Report on Form 10-K
March 26, 1998 - Provident American Corporation, an insurance holding company specializing in the marketing of managed-care health
insurance to individuals and small businesses, today announced that its Annual Report on Form 10-K, for the year ended December 31,
1997, would not be filed by March 31, 1998.
The Company's independent auditors, Coopers & Lybrand, LLP resigned in late December 1997. Thereafter, the Company interviewed
auditing firms, and, effective February 23, 1998, selected BDO Seidman, LLP as the Company's new auditors. In addition, the Company's
actuarial consultant Milliman & Robertson will provide assistance in various areas relating to the audit.
In light of the untimely resignation of Coopers & Lybrand, LLP and the time required for new auditors to complete the work associated
with the audit of the year end financial statements, it is not expected that the Company will be in a position to release its 1997 year end financial results or file its Annual Report on Form 10-K until June 1998.
However, it is anticipated that the Company will report a fourth quarter 1997 operating loss. In addition, the Company, is reviewing
the potential write-down of deferred policy acquisition costs relating to its health insurance business. Restructuring charges will also be
incurred as a result of the outsourcing of various insurance administrative functions to HealthPlan Services Corporation. These potential write-downs would result in a significant reduction of intangible assets.
While the Company has just recently begun its year end audit process, and any actual adjustments or write-downs will be subject to a
comprehensive examination and analysis, the Company estimates that it may incur a net loss after special charges in the range of $12-15
million for the fourth quarter of 1997, as compared with net income of $1 million for the fourth quarter of 1996. For the year ended
December 31, 1997, the Company estimates that it may incur a net loss in excess of $20 million, as compared with net income of $16
million for the year ended December 31, 1996.
In response to these events and circumstances and the increasingly competitive nature of the health insurance business, Provident
American has implemented several managed care initiatives which the Company expects will improve its loss ratio and return it to
profitability. These initiatives include an increase in premium rates, more stringent front-end underwriting standards, greater penalties
for out-of-network usage, and administrative changes to increase policyholder persistency. Effective January 1, 1998, Provident
American also began outsourcing all its current health insurance, policy issuance, billing and claims to HealthPlan Services Corporation.
The outsourcing agreement has enabled the Company to concentrate its efforts on sales, marketing, and product design.
Nasdaq Informs Provident American of its Intention to Delist
April 2, 1998 - The Provident American Corporation, reported today that Nasdaq has notified the company of its intention to delist
Provident American's common stock from the Nasdaq National Market, effective April 8, 1998. Provident American intends to appeal the
staff's decision and during the appeal process the delisting will be stayed.
This action has been precipitated by the resignation of Provident's former auditor Coopers & Lybrand, LLP, which in turn resulted in
Provident's inability to file its 1997 Form 10-K by March 31, 1998. As previously announced, the company selected BDO Seidman LLP as
the company's new auditors effective Feb. 23, 1998.
The Provident American is an insurance company specializing in the marketing of managed-care health insurance through the
underwriting of unique, affordable health care and life policies to individuals and small businesses, a $300 billion annual premium
market.
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