Sunday, March 29, 2015

POSTED: Monday, March 23, 2015, 1:28 PM

When anyone (like DreamIt-backed, latest-big-thing Meerkat, or Twitter's newly-acquired Periscope) can produce and distribute smartphone video, pushing it out free to vast audiences, what does that do to Comcast and Verizon and HBO, TV networks and pay video providers and advertisers?

"It's good buzz, but it's incremental," says Jeff Dittus, chairman of Audience Partners, a 62-person electronic ad platform with offices in Fort Washington and Washington that specializes in targeting voters for political campaigns. "The big thing coming down the road is four-screen accessibility," the art of pumping messages, not just through TV, but also through "computers, mobile phones, tablets, and gaming systems," he told me.

Video live-streaming services like Meerkat may prove well-suited for reaching people in their 20s raised on smartphones, he added.  But reaching the mass of Americans now means surrounding them on all screens. And  advertisers, retailers, pro sports, video makers, and the operatives organizing the 2016 Presidential campaigns are already hard at work making it happen. (More in my column in today's Philadelphia Inquirer here)


POSTED: Monday, March 23, 2015, 1:18 PM

My much-commented-on Sunday Inquirer column about active stock-picking and private investment management funds vs. passive index-fund investing at Pennsylvania's public pension systems brought this comment from reader and investment pro Lou Mosca: "You want to bet the pension plans switch to more-passive, just when active goes through a period of outperformance? This is always the case with investors, big and small: You zig when you should zag."

Mosca's not wrong, so far. Consider:
- In the 1960s the U.S. stock market shot up. In the 70s, state pension plans, which used to focus on tax-exempt bonds, got permission to buy stocks -- which promptly tanked.
- In the 1970s real estate outperformed. In the 80s state and big city pension plans bought real estate -- and got clobbered in the S&L blow-up.
- In the 1980s venture capital made Ivy League endowments (except Penn's) rich. In the 90s, state and big city pension plans bought v.c. (Philly with borrowed money), jammed $100 billion into a sub-$10-billion/year tech venture market -- and got killed in the dot.com blow-up.
- In the 1990s private equity enriched cutting-edge endowment funds and private investors. In the 2000s state and big city pension funds bought private equity -- which stalled when the stock market dried up.
- In the early 2000s, hedge funds outperformed, and everyone in finance wanted to be a hedge fund manager. State and city pension funds started loading up on hedge funds -- which failed to resist the 2008 financial crisis and have since underperformed.

…By this meta-quant-cycle, passive indexed funds would be due to underperform, no? Philadelphia money manager Ted Aronson last winter sent his mailing list a provocative correspondence between investor Jim Grant of Grant's Interest Rate Observer, who predicted index funds generally and especially bond index funds (which, he notes, only sample the all-too-varied bonds available, unlike stock indexes which can own all indexed stocks) are overbought and likely to underperform; with sharp replies from Vanguard Group founder Jack Bogle, who popularized indexing and continues to defend the practice as safest, longest, for most. The two will debate at Grant's investor conference in New York next month.

POSTED: Monday, March 23, 2015, 7:45 AM

UPDATED: After failing to cut a deal with billionaire activist Nelson Peltz in two years of negotiations, DuPont Co. boss Ellen Kullman has set May 13 as the date for the Wilmington bio/chemical/materials giant's annual meeting and vote-count for the 12-member board. The company invited investors who held shares at March 17 to assemble at 8:30 a.m. at its newly-relocated headquarters complex, at Chestnut Run Plaza, Building 730, Centre Road (Delaware 141), outside Wilmington, Del. DuPont statement here, links to four DuPont SEC filings today and one by Peltz's Trian here.

Kullman is one of ten incumbent directors, plus two newcomers including James Gallogly, who takes credit for reorganizing chemical maker LyondellBasell, and Ed Breen, the former Tyco boss, corporate spin-off artist, Stone Harbor hotel owner and Comcast director. Against them Peltz has said he will run himself with three allies who have long corporate experience. Shareholders, who have been showered with propaganda by both sides disputing whether DuPont under Kullman has done enough to sell or spin off low-growth businesses, cut costs and boost sales, may choose between DuPont's slate on a white postcard, or Peltz's Trian fund candidates on gold. More on Peltz, DuPont and the Mondelez-Kraft-Nabisco plant closing in Northeast Philly here.

DuPont shares, after rising on Kullman's watch and since disclosure of Peltz's activist campaign, hit a 22-year high of $80.50 on March 13, but have since fallen to $74.34. That day, DuPont again rejected Peltz's program, which it says will "destroy" value instead of creating it.  In a March 16 report, Bank of America analyst Kevin McCarthy called Peltz's investment and the prospect he will succeed at imposing excessive cost cuts and forcing a break-up of the company's remaining businesses the biggest risk facing DuPont. Credit analysts at S&P and Gimme Credit have warned that Peltz's program would likely balloon DuPont's debt, reversing Kullman's goal of reducing it while rates are low.

POSTED: Friday, March 20, 2015, 3:18 PM
Rowan President Ali A. Houshmand. (RON TARVER / Staff Photographer)

Standard & Poor's Ratings Services on Thursday cut the credit rating for Rowan University, Glassboro, N.J., by a notch, to A from A+, citing "weakened financial performance" and "a significant increase in debt" as the school expands its college and medical schools, according to a report by S&P analyst Ken Rodgers. 

"We were expecting this," Rowan spokesman Joe Cardona told me. Rowan is working to expand total enrollment to 25,000 by 2023, from the current 15,000, and growth is costly, Cardona said. While Rodgers wrote that New Jersey taxpayer fund "about a third of revenue," Cardona said total state aid for all of Rowan this year is $89 million, about 20% of Rowan's $450 million yearly budget. Since Moody's Investors Service has cut New Jersey's state credit rating to the second-lowest of U.S. states (only Illinois is worse), analysts worry state college subsidies will get cut, too.

Also Thursday, Moody's Investors Service analyst Diane F. Viacava told clients that Moody's might also cut Rowan's credit rating, from its current A2, because the school needs to "grow operating cash flow through growing tuition revenues and expense control" as it prepares to open a 1,400-bed student housing complex next year.  

POSTED: Thursday, March 19, 2015, 5:41 PM

Clive G. Mendelow has departed his post as vice chairman of Philadelphia's venerable Binswanger commercial real estate borkerage and joined Philadelphia-based Colliers International as Senior Managing Director-Corporate Solutions, Doug Sayer, chief executive at Colliers, said in a statement.

Sayer called Mendelow, a graduate of South Africa's Witwatersrand university, a seasoned adviser who has aided Shell, St. Gobain, Johnson & Johnson, Motorola, Penn, Drexel and other big instutitions in managing large real estate portfolios. He said Mendelow will help Colliers in "marrying intellectual capital with innovation and technology."  Mendleow is a fellow of the Royal Institute of Chartered Surveyors and served as an attorney in South Africa's Supreme Court.  

In his departure statement, Mendelow praised Binswanger's "talented real estate professionals" and wished them success. 

POSTED: Thursday, March 19, 2015, 12:55 PM

Det Ansinn wants a piece of the rising China and India markets for his Doylestown-based, 13-year-old, 30-employee  "Internet of Things" software applications development firm, BrickSimple. So Ansinn -- who is also the Council President of Doylestown borough, and a Democrat -- went to Washington on Wednesday, invited by the corporate-backed D.C. group Business Forward, which brings small-business owners together with officials of federal programs that are supposed to boost business and trade.

"We are facing a level of digital protectionism," both from other countries -- and inside the U.S., Ansinn told me. "There are countries, there are industries, where they want you to host your service and your data in those countries. It's like the issue of Net neutrality in the United States: We want access to those markets, on digital trade routes, which we need to maintain."

BrickSimple has built and sold a Web applications platform (2008) and an Xbox live-gamers app (2011, to Galaxy for Gamers.) Now the firm, with satellite offices in San Francisco and Myrtle Beach, is building apps for smartphones, smartwatches, Google Glass, with applications for smart consumer and industrial devices (the Internet of Things). "We have done work abroad, exporting services and projects. We are getting a lot of enquiries from abroad." 

POSTED: Thursday, March 19, 2015, 12:15 PM

Tighter pension accounting standards imposed this year by the Government Accounting Standards Board (GASB) will make it more obvious how far public pensions in New Jersey, Pennsylvania and other states are underfunded, compared to the promises the states have made to workers and retirees, Governing magazine reports here.

GASB rule 67 will make both states' pension savings look smaller -- and, perhaps, more realistic --  relative to what they will have to raise to keep checks coming without paying in billions in increased "employer contributions" in future years. "Best case, GASB rules will help accelerate the funding schedule," says Matt Fabian, partner at Municipal Market Advisors, a bond advisory fund in Concord, Mass.  

But the rules don't actually obligate states to put across any more cash. "GASB created a different set of standards for accounting only. Our actuarial funding methodology and the process for establishing the employer contribution rate are unchanged. The GASB standards do not impact the PSERS funding or contribution rates," says Evelyn Williams, spokeswoman for Pennsylvania's school employee retirement system (PSERS). 

POSTED: Thursday, March 19, 2015, 10:19 AM

(Adds comments from CEO Brassington) LiquidHub, the Wayne-based "digital integrator" and IT outsourcing firm that has counted Novartis, SEI, Independence Blue Cross,Comcast, Vanguard and Subaru among its clients, has purchased New York-based Redkite, a cloud-consulting firm that specializes in fitting Salesforce.com software to corporate software users "through a proprietary client-focused approach." Terms not disclosed. 

Redkite employs 50 at its New York headquarters and offices in Atlanta, Denver, Minneapolis and Phoenix, bringing LiquidHub's total to around 1,600. Founders Brennan Burkhart and Kenny McColl will also join LiquidHub.

It's the third Salesforce consultant LiquidHub has bought this year: other acquisitions include Harvest Solutions (Albequerque, NM) and ClosedWon (Boston, San Francisco). LiquidHub raised $53 million last year from ChrysCapital and other investors, who also promised to back acquisitions with up to $100 million as LiquidHub founder Jonathan Brassington builds a multinational network.

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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