Friday, March 6, 2015

POSTED: Tuesday, February 24, 2015, 4:12 PM

Quattro, a marketing and advertising agency based in Berwyn that counts Comcast, New Penn Financial and Ditech as clients, says it has acquired Downingtown-based Fwd Direct and renamed the six-person business, headed by Fwd co-founder Tom Pitcherella, as Quattro Healthcare Marketing.

Quattro clients includie Blue Cross insurers in Harrisburg, Arkansas and Nebraska, among others. Terms were not disclosed. The deal brings total Quattro employment to 51, up from around 20 a year ago. 

POSTED: Tuesday, February 24, 2015, 3:20 PM

I'll call him the Boiler Man, a Philadelphia master tradesman whose mechanical work maintains indoor equilibria for some of the Philadelphia area's most successful professionals and the places they hang out. He tells me he has seen the future of his business, and many others, in the three Western states that have legalized recreational drug use (Washington DC plans to follow tonight; N.J. and Del. have limited medicinal-marijuana laws).

Boiler Man has serviced his first three marijuana-industrial clients west of the Rockies, and returned, inspired, to his outwardly-modest but inwardly-Wonka-rich warehouse just outside Philadelphia, as an eager believer in the proliferation of both medicinal (THC) and recreational (cannibinol) marijuana extracts and the many business opportunities to follow. Be at ease, he told me: "It's not like everyone is walking down the street smoking pot" in newly-legal territory. Indeed, in pot-friendly towns like Boulder, smoking anything in public is illegal most places. State law on driving while high is also pretty strict. The emphasis really is on therapy and recreation...

"I can't wait for this to be legal in Pennsylvania," the Boiler Man told me, over seafood scraps and browned starches at Jones near our newsroom. "I think it will, and sooner than you think. Gov. Wolf wants it." But will the more conservative General Assembly go along? "You got gay marriage already," he told me. "That's a sign of the direction Pennsylvania is headed." Plus, money! He's heard talk of a trade-off: in exchange for privatizing some aspect of the State Stores, the Liquor Control Board will get marijuana-surveillance powers. "They're perfectly set up to do that job." All that licensing experience.

POSTED: Tuesday, February 24, 2015, 2:13 PM

Philadelphia investment banker Andrew T. Greenberg, the Fairmount Partners managing director who was Pennsylvania Gov. Robert P. Casey's whiz-kid Commerce Secretary way back at the start of the 1990s, sheds light on Florida Gov. Rick Scott's shaky claims that his state is a comparative tax haven:

"Pennsylvania taxes are lower for S-corporations, limited-liability companies, and other entities whose profits flow through to the owners and are then taxed at the individual rate" -- in short, for small firms, professional-service firms and the great majority of businesses, which Florida more often treats like corporations and taxes at the higher corporate rate. Pennsylvania charges its usual 3.09% individual tax on personal profits from these companies -- a fraction of its nearly 10% corporate tax rate (down from a peak of 12.25%).

Sounds good? But this exemption for most small businesses is part of the reason that Pennsylvania "actually gets the worst of two worlds: lower revenues from business, as your article notes," compared to Florida; plus, "a reputation for being a higher-tax environment, based on the corporate net income tax base rate," which most businesses don't actually pay, Greenberg added. 

POSTED: Tuesday, February 24, 2015, 1:27 PM

The Internal Revenue Service and the Securities and Exchange Commission are still reviewing allegations that Vanguard Group Inc.’s unusual business structure operates in violation of federal tax law, according to attorneys for former Vanguard tax lawyer David Danon, who brought the allegations to the agencies’ attention in 2013. See also my column in the Sunday Inquirer.

The IRS and SEC have not announced complaints against Malvern-based Vanguard and don’t comment on possible ongoing investigations. Vanguard spokesman John Woerth declined to comment.

“The IRS has confirmed that Mr. Danon’s submission remains open after two years. We believe that the IRS will be issuing a Notice of Proposed Adjustment to reflect this, if it has not done so already,” Stephen Sorensen , a Los Angeles lawyer representing Danon in his IRS and SEC complaints alongside Milwaukee-based Brian Mahany , wrote in a recent letter to the SEC. Sorensen estimated the IRS tax adjustment Vanguard will have to pay will total more than $1.7 billion, which would require the company to “to take money from its mutual funds to pay the past due taxes and penalties.”

POSTED: Tuesday, February 24, 2015, 9:01 AM

Wawa CEO Chris Gheysens says he's pleasantly surprised by how easy it has been to open Wawa hoagie-smokes-Cokes-gasoline stores in the Tampa and Orlando areas of Florida. He credits county-level planning and growth-starved local officials eager to see development. This has helped Wawa open 61 Sunshine State stores employing 2,000 in two years-- ahead of the 40 planned. Gheysens also says he expects expansion will be more challenging as he adds stores in more-congested Palm Beach, Broward and Dade Counties.

At a Wawa-hosted pep rally at Philadelphia's Four Seasons last night, Florida Gov. Rick Scott cited Wawa as an example for other Pennsylvania companies he wants to lure South, where he says they'll escape threatened Pa. tax increases as Gov Tom Wolf and the General Assembly struggle to fund schools, roads and pensions. Scott is in Philly for a second day, meeting with companies he won't name and offering them cash to relocate.

Gheysens said Wawa is turning down the kind invitation to move his offices to Florida (where Wawa hoagie rolls are baked locally under a deal with Amoroso's), and will instead spend $75 million to add offices, research and testing kitchens at its Chester Heights, Delaware County campus. Wawa has added Cuban hoagies (with pickles and mustard), burritos and other items to its Florida menu; they may come North as the chain plans to redesign its hometown Philly-area stores, to possibly include outdoor seating as they do down South (and at my local Wawa on U.S. 202). More in my story in today's Inquirer here.

POSTED: Monday, February 23, 2015, 1:02 PM

Key Northeast markets are "oversupplied" with natural gas, so the number of gas drilling rigs in Pennsylvania's prime Marcellus Shale counties (Bradford, Sullivan and five others) is expected to drop until at least 2017. Gas shipments from existing wells and wells in process will still grow by around 15% a year over the next couple of years, through existing and expected new pipelines shipping Pennsylvania gas to New England and other markets, writes analyst Karl Chalabala this morning, in a report to clients of Canadian investment bank Canaccord Genuity Group Inc.

"Potential for price-reactive production curtailments" is delaying new drilling projects at both of the region's largest producers -- Chesapeake Appalachia LLC and Cabot Oil & Gas Corp. -- according to Canaccord. Chesapeake produced over 2 billion cubic feet/day from Northeast Pennsylvania, with Cabot adding more than 1.6 billion, Cannacord reported, citing state data. Together that's 48% of total production in the zone.

The number of drilling rigs has dropped from more than 60 in 2011 to fewer than 20 in 2013, and is not expected to rise above 20 until projects scheduled for 2017 pick up. 

POSTED: Monday, February 23, 2015, 12:30 PM

Stronger ties between the U.S. and the new government of India Prime Minister Narendra Modi's Bharatiya Janata (Indian People's) party "will only flourish if engagements are happening, business-to-business," college-to-college, group-to-group, in addition to closer government ties, says U.S. Rep. Tulsi Gabbard, D-Hawaii, the first practicing Hindu elected to Congress, on her visit to Philadelphia Saturday for this year' student-run Wharton India Economic Forum.

Gabbard met with Prime Minister Modi on his landmark visit to New York last year; she has since been building ties both in India and among the U.S. India diaspora at events like the Wharton conference. Modi "has got a very strong vision for India. It's an aggresive one that won't be easier to accomplish: a vision that has clear goals of growing India's economy and capitalizing on the potential in India's people, the hard work ethic and creativity, and the spirit. This has also been key to the success of Indian Americans in this country," Gabbard told me.

Gabbard praised the Wharton students -- Indian Americans, Indian nationals and "those who have an interest in India" --  as "very engaged and excited abou tthe attention that is beign given right now to the increased U.S.-India friendship and partnership. They feel like a part of it now." In this and other visits to Hindu and Indian communties, Gabbard feels "great excitement for these bridges to be built at every level -- between large corporations, small to medium sized businsses, entrepreneurs."    

POSTED: Friday, February 20, 2015, 3:33 PM

Philadelphia's defining adjective is "cynical," writes Bloomberg's Michael P. Regan, in this story about a poorly-performing, "fraud"-exploiting investment by the city's woefully underfunded Board of City Pensions in short-seller James Chanos' Kynikos hedge fund. Highlights:

"Philadelphia’s pension board hired Chanos’s firm in 2011 and put some money into the Kynikos Opportunity Fund. Yet the fund’s returns were 'challenged,' leading to a performance review questioning the wisdom of the investment, according to minutes of a committee meeting last year that went largely unnoticed...

"The pension’s ($25 million) investment in the Kynikos Opportunity Fund was down almost 1 percent in the 12 months through December," though that's less than some other shorts that lost bigger against last year's stock market rally, Regan added.

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 or 215 854 5194.

Joseph N. DiStefano
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