Tuesday, July 29, 2014
Inquirer Daily News

Archive: April, 2009

POSTED: Wednesday, April 29, 2009, 10:22 AM
"Berkshire shareholders aren’t used to a 40 percent decline," Morningstar analyst Bill Bergman tells Bloomberg LP here

Some 37,000 Berkshire Hathaway shareholders are expected in Omaha this weekend for the company's annual meeting.  
This may not be the happy party past Berkshire meetings have been. The stock is down from $147 last September, to $90 today (low was $70 on 5 March).
 
So Berkshire head Warren Buffett and vice chair Charles Munger have induced three journalists - from CNBC, Fortune and the New York Times - to screen investors' questions, instead of the usual open Q&A. Maybe they'll actually talk about Berkshire's real business -- insurance and financial deals -- instead of baseball, movie stars and the usual Berkshire public-meeting ramble.

UPDATE: Jeff Matthews, author of a Buffett book, asked readers for questions and forwarded them to NYT's Andrew Ross Sorkin in hopes he'll pick a couple to grill Buffett. Read them here.

Joseph N. DiStefano @ 10:22 AM  Permalink | 0
POSTED: Wednesday, April 29, 2009, 10:13 AM

More from U.S. Sen. Arlen Specter, newly D-Pa. - this from the White House reporting pool re his appearance with President Obama today:

“I was unwilling to subject my 29 year record in the United States Senate to the Pennsylvania Republican primary electorate. But I am pleased to run in the primary on the Democratic ticket. And I am ready, willing and anxious to take on all comers in the general election.”  Specter told reporters has “not represented the Republican Party,” but “the people of Pennsylvania.” 

“As I said yesterday, I will not be an automatic 60th vote" for the Democratic caucus. But he also told Obama, “You have projected an administration that I feel very comfortable with. … I think I can be of assistance to you, Mr. President, (with) my views of centrist government.” 

He listed issues he has “been deeply involved with,” including health care reform, global warming, immigration and funding for the National Institute of Health.
 
Specter says he's actually been working with Obama since last Spring's Pennsylvania presidential: "The president approached me when he was Sen. Obama, before the Democratic primary, and he said, ‘Tell me, if a Jewish kid from Kansas can carry Pennsylvania, how can a black kid from Kansas carry Pennsylvania?’ … I gave him some advice.” What'd he say?
Joseph N. DiStefano @ 10:13 AM  Permalink | 0
POSTED: Wednesday, April 29, 2009, 7:07 PM
LLR, the $1.4 billion Philadelphia private-equity fund founded by Seth Lehr, Ira Lubert and Howard Ross, will pay $23.3 million, or 43 cents a share, for I-many, a Nasdaq-traded business software firm in Edison, N.J. LLR also pays off I-many's $17 million in debt and obligations, and takes control of its $8 million in cash.
 
Expect more of these going-private transactions as cash-rich p.e. firms like LLR do the math on penny-stocks like I-many.
 
Joseph N. DiStefano @ 7:07 PM  Permalink | 0
POSTED: Wednesday, April 29, 2009, 6:55 PM
Bank of America shareholders voted to separate chief executive Ken Lewis from his second job as chairman of the board of the troubled giant bank and investment company. He's still CEO, but similar votes in the past have meant the end, for example, for Lewis' former rival, Kennedy Thompson of Wachovia Corp. Bloomberg story here.
Joseph N. DiStefano @ 6:55 PM  Permalink | 0
POSTED: Wednesday, April 29, 2009, 4:16 PM
A hundred days into his job, Pennsylvania state treasurer Rob McCord says he feels like the proverbial "dog that caught the car." Big problems:

1) Pennsylvania's Guaranteed Savings Program, for citizens who pre-pay their college tuition, is running a $300 million deficit. Savers paid in $1.3 billion, but under state management (and the stock market decline) it's only worth $1 billion. People will need that money as their kids start college in years to come.
 
To boost returns, McCord wants to invest more of the money in high-yield junk bonds -- and in federally-backed Term Asset-backed Loan Fund (TALF) securities, which include federal guarantees against large losses, modest face-value returns, and the prospect of "double-digit" returns as markets recover. (Pennsylvania's $500 million Section 529 college savings program, run by Vanguard Group, is also down, but that's savers' problem -- there's no state guarantee for 529.)
 
2) Treasury's check-payment and software system is "antiquated." McCord says he's had to ask for $30 million to prevent a collapse.

3) The State Employees' Retirement System (SERS) and Public School Employees' Retirement System (PSERS) still don't know whether the billions they pumped into "alternative assets" (the kind of stuff McCord managed in his previous profession) have lost more, or less, than stock investments. But SERS managers "erred" in leveraging past stock investments; at both funds, assets are down, and liabilities are surging as more teachers and workers retire at higher pay grades. Again, McCord wants to invest more in TALF. Still, "2009 is not going to be a good year at the pension funds."
 
This isn't why McCord ran for office -- he still has a long list of loan and education programs designed to benefit "Pennsylvanians who work hard but play by the rules" -- but crisis management is the priority for governments these days.
Joseph N. DiStefano @ 4:16 PM  Permalink | 0
POSTED: Wednesday, April 29, 2009, 3:46 PM

The giant 6.1% drop in U.S. Gross Domestic Product from the fourth quarter of 2008 to this year’s first quarter was driven partly by "a downturn in federal government spending."
 
How's that possible, with all the federal bailouts? My colleague Jeff Gelles asked economist Pamela Kelly, chief of the government division at the federal government’s Bureau of Economic Analysis.
 
First, said Kelly, the stimulus hasn't kicked in yet, Also, when BEA measures the GDP, it doesn't include the direct spending on unemployment compensation, Medicare, Medicaid, food stamps, TARP bank bailouts, or other payments which transfer money from taxpayers to other people or companies. Some of that eventually show up in GDP, as the unemployed spend their benefits, or TARP banks pay boss bonuses. But it doesn’t boost the economy, as BEA counts it.
 
Instead, BEA measures "real federal government consumption expenditures and gross investment” – including items like federal workers' pay, government purchases, buildings and software. That dropped 4 percent in the quarter that ended March 31. "Real state and local government" spending also dropped nearly 4 percent as California and other states laid off workers.
 
In total, real government spending dropped $21 billion during the quarter. That equaled less than 1 percentage point out of a total drop of about 6 percentage points, so the loss "wasn't a huge contributor" to the downturn, Kelly says. But it sure didn't help.

Joseph N. DiStefano @ 3:46 PM  Permalink | 0
POSTED: Tuesday, April 28, 2009, 1:45 PM
Went to City Hall at noon to watch Mayor Nutter give away money. (We'll post today's recipient list later.) Got there just in time for the Blackberry users in the crowd to get the Inquirer/philly.com announcement, then the CNN headline, that Sen. Arlen Specter's now a Democrat.
 
Immediately city officials began speculating that Gov. Rendell ally and past National Constitution Center chief Joe Torsella will drop out of the Democratic primary to accept the post of president and chief executive officer of the Chamber of Commerce of Greater Philadelphia. We heard more of the same from one of the (now disappointed) front-runners for the Chamber job, which goes vacant when former PA Gov. Mark Schweiker leaves later this year.
 
Chamber chairman and Comcast executive David L. Cohen has been a supporter of both Rendell and Torsella in their past campaigns. The Chamber job pays more than double what a Senator earns.

"Joe's still in the race" for Senate, said Mark Nevins, spokesman for Torsella. After all, the candidate added in a statement, the election's "still a full year away." 
Joseph N. DiStefano @ 1:45 PM  Permalink | 0
POSTED: Tuesday, April 28, 2009, 12:04 PM
As PhillyDeals reported yesterday, nonprofit PhillyCarShare has implemented a monthly $15 fee, while cutting hourly rates.
 
That's what retail companies typically do when they're trying to gain repeat users and maybe drive off casual users. Massar says PhillyCarShare is moving toward an industry pricing model that's "long-term" competitive: "For those who realize $15 a month to rent a car 24 hours, 7 days a week, within a block of their home, is a good value proposition, they'll stay. For those folks for whom it's not a good value proposition, they will leave. We expect the number would be very small." PhillyCarShare claims over 30,000 members.  Growth has slowed with the recession, but "we won't know the impact" of the monthly fee "for another month or so."
 
Massar says PhillyCarShare is a better value than for-profit competitor Zipcar for the many people who take lots of grocery and other neighborhood trips. "We offer the lowest carshare pricing in the nation, particularly for relatively short trips which are the most common trips in Phila. Our local competitior is pricing their Phila line 30% lower than their nearest city." I have a call into Zipcar on that one.
 
The two companies "occupy two different business model niches here in Philly," Massar concluded. "We think the better long-term business model is to focus on the short trips that dominate most peoples’ lives. Their pricing is focused on longer trips. Philadelphians are lucky they have a competitive market for carsharing."
Joseph N. DiStefano @ 12:04 PM  Permalink | 0
About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

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