The Web site of the Philadelphia Fund shows the city skyline in silhouette.

But this mutual fund has had little to do with its namesake for years. In 10 days, even the name will go away, spelling the end for a fund with roots pre-dating securities regulation.

Shareholders of this mutual fund with $54 million in assets as of Sept. 15 are being asked to approve a reorganization under which Dallas-based Westwood Holdings Group Inc. would absorb the assets into its WHG LargeCap Value Fund.

The reason for the deal? Boca Raton, Fla.-based Baxter Financial Corp. is getting out of the asset management business. Its president, Donald H. Baxter, has been the portfolio manager for the no-load fund since May 1987.

Another reason is that the Philadelphia Fund has been too small in terms of assets to generate “economies of scale,” Baxter writes in a letter to shareholders.

In Westwood, Baxter Financial found a firm with economies of scale. Westwood had assets under management of $8.2 billion as of June 30. Its WHG LargeCap fund had total net assets of $128 million as of Sept. 30.

Philadelphia has earned its place in mutual fund history, but it’s largely been written by the Vanguard Group, in Malvern, which manages about $1 trillion in assets.

The Philadelphia Fund never experienced much of a growth spurt, even though fund-tracker Lipper’s rankings show it has tended to perform pretty well compared to other funds with a large-capitalization value strategy.

Like nearly every stock fund, the Philadelphia Fund’s total return was negative for 2008 - down 24.5 percent. But its peer group was down 36 percent.

Today, there’s nothing Philadelphia-like about the fund’s portfolio, which had 24 big-name stocks, such as McDonald’s, Wal-Mart and Coca-Cola, at the end of August.

All that’s left is its history. A group of businessmen, led by Philadelphia banker W. Wallace Alexander, pooled about $200,000 to start the fund in 1923. According to Bloomberg News, its management was transferred to New York’s Fahnestock & Co. in 1952.

Baxter acquired control of the fund in 1989. Twenty years later, he’ll turn it over to Westwood, and one of the thousands of funds that overpopulate the mutual fund industry will be gone.
 

Expecting a tax-policy task force to recommend something other than cutting taxes would be like counting on the Pennsylvania Milk Marketing Board to champion orange juice.

On Friday, the Mayor’s Task Force on Tax Policy & Economic Competitiveness did recommend resuming wage and business privilege tax cuts in 2012. To close a widening budget gap, the Nutter administration halted scheduled reductions last fall.

To those in the business community, this is a no-brainer. Reduce the burden from some of the nation’s highest taxes and business is more likely to view Philadelphia as competitive.

But tax-cut opponents say that nearly 13 years of such trimming under the Rendell, Street and now Nutter administrations has not halted the job drain. Why, they wonder, would these cuts be any different?

They may not be, which no one wants to hear. But to raise business taxes or do nothing to improve the ’50s-era system we’re stuck with now is destined to accelerate job losses.

Cuts in the wage tax since 1996 saved the city 25,000 jobs, according to research by Wharton finance professor Robert Inman. Still, employment in the city had fallen to 633,461 by the end of 2008.

Chaired by PRWT Services Inc. CEO Harold T. Epps, the task force projects that the city would save 47,000 jobs and gain 23,000 more by 2025 if the city were to implement its suggestions. That would be a 180-degree turn for a city employment base that’s plunged steadily since 1970 when 920,400 labored here.

We’ve all heard these ugly statistics, and Center City Renaissance aside, we see the result every day in decaying industrial hulks and empty storefronts in fraying neighborhoods.

High taxes, while one of the biggest disincentives, is only one cracked piston in the city’s economic engine. There’s the unfairness of property assessment of the Board of Revision of Taxes. The technology used to ensure tax compliance and collection is obsolete. About 15 percent of the city’s taxable properties are tax delinquent - more than 80,000.

To its credit, this task force handed Mayor Nutter a to-do list of items that his administration could implement without the hurdle of needing City Council approval. The mayor promised a review of the report’s recommendations.

But as the private-sector members of the panel lined up for a photo with the mayor in City Hall on Friday, I couldn’t help feeling that this would be another report that will do a slow fade from memory as the Tax Reform Commission’s did in 2003.

“Thinking Beyond Today: A Path to Prosperity” is a nice enough title for a government-sponsored report. But it’s no call to action, and given the enormous budgetary pressures on the city, I’m afraid it will be easy for the political class to ignore it.

Knowing what needs to be done is important. Still, it’s only a bunch of words until Mayor Nutter actually demonstrates that Philadelphia is changing to become a fairer, clearer and more efficient place for business operate.

Read an executive summary of the task force's work here or the full report here.

Earnings

This week will see an avalanche of quarterly reports from area companies. You really will need a scorecard, so here it is:

Monday: Liberty Property Trust, Sunoco Logistics Partners, Triumph Group;

Tuesday: Ametek, Carpenter Technology, Cephalon, NutriSystem Inc., Quaker Chemical, Sun Bancorp, Teleflex, Vishay Intertechnology;

Wednesday: Auxilium Pharmaceuticals, Brandywine Realty Trust, FMC, GlaxoSmithKline, GSI Commerce, Harleysville Group, InterDigital, Lincoln National, Pennsylvania Real Estate Investment Trust, SAP, Unisys, ViroPharma;

Thursday: Adolor, Airgas, AstraZeneca, Bryn Mawr Bank, CDI, eResearchTechnology, Endo Pharmaceuticals, Harleysville National, ICT Group, National Penn Bancshares, PPL, TF Financial, Universal Health Services;

Friday: Abington Bancorp, Dollar Financial, Dorman Products, EnerSys, Quigley, Safeguard Scientifics.

As fun as it has been to follow the Philadelphia Phillies race to repeat as world champs, there’s one thing the team probably won’t duplicate: whopping merchandise sales.

Matt Powell, an analyst with SportsOneSource, which tracks the sporting goods industry, said sales of Phillies T-shirts, hats and other merchandise are “way off” from last year. But that’s a typical pattern for teams that produce multiple championships, he said.

While it’s too early for final figures, sales of Phillies merchandise for the last four weeks are down more than two-thirds versus last year, Powell said.

After all, how many Ryan Howard jerseys do you need?

Born in bad times

One of the counterintuitive factoids I’ve heard during this damaging downturn is that recessions are a great time to start a company.

To support the notion, some experts trot out Microsoft and Apple as examples of two that got their start during the malaise of the ’70s. However, not every small business becomes a household name with a market capitalization in the many billions of dollars.

I asked Dane Stangler, a senior analyst at the entrepreneurship think tank Ewing Marion Kauffman Foundation, about the unconventional wisdom. He said survival rates of companies born during the last four recessions are no different from those launched during economic expansions.

In fact, the United States pretty consistently creates about 500,000 new businesses every year, he said. Most of them don’t survive to see their fifth birthday, so the nation needs a steady rate of new-company formation.

This year is likely to be no different. Stangler projects that more than 500,000 people will plunge into the entrepreneurial soup in 2009.

Quotable

To me, Atlantic City is in a long-term death spiral. They just don’t have what they need to compete with the local-option slot machines that are cropping up all over the place.

Dennis I. Forst, gaming analyst at KeyBanc Capital Markets, in an interview Thursday about the casino industry on Bloomberg Radio.

Far from the debate over “too big to fail” plenty of small-business owners have grumbled that they must be “too small to matter.”

Every politician acknowledges how important the nation’s 29 million small businesses are to the economy. But their actions over the last year have been aimed at the big threats to the financial system.

Yesterday, President Obama announced new lending initiatives to help, he said, “the engine of job growth in America.” But before anyone grumbles over a new big-ticket bailout for Main Street, the first impression is what’s in the works is less than it might appear, and it’s not clear what this will cost.

First, the administration wants to increase the maximum size of Small Business Administration guaranteed loans, but it needs Congress to pass legislation to do so. The most popular loan, called the 7(a) loan, is used to buy machinery, equipment and buildings. Obama would like to see the limit rise from $2 million to $5 million.

Second, the Obama team wants to provide capital to small banks with less than $1 billion in assets, and community financial institutions. To get that capital, participating banks would have to submit quarterly small-business lending plans and pay a 3 percent annual dividend to the federal government.

Lynn Ozer, executive vice president at Susquehanna Bank, said increasing the cap on SBA loans would be “absolutely awesome” because it can cost much more than $2 million to buy a commercial building.

Susquehanna is an active SBA lender, having done 42 loans through the Philadelphia District Office alone valued at a total of $19.9 million in the federal fiscal year ended Sept. 30.

But she said raising the loan limit won’t mean much if the administration doesn’t also increase the guaranteed portion, which has been 75 percent, or a maximum of $1.5 million. If only $1.5 million of a $5 million loan is guaranteed and able to be sold in the secondary market, that won’t be a great incentive to lenders, Ozer said.

Ozer, who serves on the board of the National Association of Government Guaranteed Lenders, said what would help is to maintain the measures contained in the American Recovery & Reinvestment Act, including an increase in the guaranteed portion to 90 percent of a loan and the elimination of borrower fees.

With $375 million in new funding, the SBA said it was able to support more than $11.3 billion in lending through more than 30,000 SBA-backed loans since February.

Still there’s one thing that’s missing in these policy-driven fixes: Desire. There’s a lack of desire by businesses to borrow and a lack of desire by financial institutions to lend because the economy is still a hazy, scary question mark.

The “Beige Book” regional economic conditions released by the Federal Reserve yesterday noted that business lending has declined in the Philadelphia region. The National Federation of Independent Business says its members have postponed building inventories and gutted their capital spending plans. In its most recent survey, only 4 percent of owners reported “finance” as their No. 1 problem.

Tinker as policymakers may with loan programs, what will really help small business is a robust economic recovery.

Does anyone see it out there?

The parent company of the Super Fresh and Pathmark supermarket chains was blunt in what was expected to be a straightforward earnings report:

CEO Eric Claus is “leaving the Company effective immediately.”

Great Atlantic & Pacific Tea Co. Inc., of Montvale, N.J., said it would start looking for a successor. In the meantime, executive chairman Christian Haub will return to the CEO duties he held from 1998 until 2005. Great Atlantic didn’t elaborate on Claus’ departure, but Haub said in a statement that the “current challenging economy continues to impact our business.”

Given how the deep recession has affected corporate America, it’s only natural to expect a lot of CEO turnover. But that’s not happening.

Earlier this year, a Booz & Co. study of leadership change at the world’s largest 2,500 public companies found that CEO departures fell 0.5 percent in North America from 2007 to 2008. Of the 361 “succession events” globally in 2008, 180 were planned, 127 were forced and 54 were the result of mergers.

Leslie Gaines-Ross, chief reputation strategist for Weber Shandwick, said that corporate boards seem to be following the proverb “Better the devil you know than the devil you don’t.” With business weak and stock prices still below their peaks, boards don’t want to take a chance on replacing CEOs and make matters worse.

In fact, the tenure of CEOs in North America reached a median 7.9 years in 2008, up from 7.2 years over the 11 years that Booz, a management consulting firm, has analyzed turnover data.

Challenger, Gray & Christmas, a Chicago outplacement firm, says CEO turnover for the nine months ended Sept. 30 is down 17 percent.

In September, Challenger Gray counted 105 CEO departures, compared with 140 for the same month in 2008. A review of the data since the start of 2005 shows the largest number of departures was 152 in September 2006 while the smallest was 78 in April 2009.

Challenger Gray also groups leadership changes by the official reasons provided. In the first nine months of the year, 237 CEOs have resigned, 204 stepped down and 192 retired.

In fact, according to company press releases, more CEOs have apparently died (10) so far in 2009 than got fired (six).
 

The most recent recession hit the manufacturing sector hard. Still, within manufacturing, there have been pockets of strength, such as defense contracting.

Over the past 52 weeks, the 18-stock PHLX Defense Sector Index has risen 23 percent compared with a 17 percent increase for the Standard & Poor’s 500 Index.

While future U.S. defense budgets are likely to shrink, recent years have been good for anyone supplying the military. That’s why it was intriguing to see how negotiations over the new collective bargaining agreement at Boeing Co.’s Delaware County operations would play out.

A four-year contract between Boeing and Local 1069 of the United Aerospace Workers expired on Oct. 1, but the two sides kept talking, reaching a tentative agreement on Oct. 14. On Sunday, members voted 5-1 to ratify a five-year deal.

During a press briefing in September, company officials stressed that they were seeking cost certainty to show its customers that labor costs have stabilized and are competitive. On Monday, spokesman Andrew H. Lee said this deal does that. (A call and email to Local 1060’s headquarters was not returned.) Read more about the terms here.

At a time when wage cuts and benefit reductions are common, the 1,789 members of the UAW who make Boeing Chinook helicopters and the fuselage of the V-22 Osprey tiltrotor aircraft will enjoy increases.

Under the terms of the agreement, unionized workers will receive wage hikes in each year of the contract, starting with 3 percent in the first year.

The union also won improved pension benefits and maintained its health-care benefits at current contribution levels. Those are significant accomplishments in an era of pension dumping and cost-shifting on health care.

But I also view the contract as a sign of strength by an innovative area manufacturer that employs more than 5,400 people at its 355-acre complex in Ridley Township.

After all, labor peace there is also good for more than 830 Pennsylvania companies that depend on Boeing for their livelihood.
 

Was DuPont Co. interested in buying Rohm & Haas Co.?

It was at one time, according to an interview with former Rohm & Haas chairman and CEO Raj L. Gupta in the latest issue of Directors & Boards magazine.

Gupta told the Philadelphia-based trade publication that Dow Chemical Co., BASF and DuPont each had “told us over the past 10 years that they were doing their homework on us and would be ready if ever there was an opportunity.”

Gupta said he told the CEOs of all three chemical companies at an industry conference in California in June 2008 that Rohm & Haas’ board “might be interested in looking at options.”

BASF and Dow would go on to make bids, but not DuPont. “DuPont had begun moving in a different direction with its strategy,” Gupta said in the interview with the publication’s editor, James Kristie, and chairman, Robert Rock.

Dow outbid BASF with a $78 per share offer that was announced nearly a month later. Rohm & Haas shares were trading at $55. Then, the global economic slowdown walloped the chemical industry. By year’s end, that price looked too rich. Dow wanted out, but Rohm & Haas sought to force Dow to complete the deal.

After some legal jousting, the $15.3 billion deal closed on April 1. “Clearly it was a home run for the shareholders. From the point of view of the employees it’s obviously been painful,” Gupta said.

By that, he means the layoffs and plant closings announced by Dow, including its factory in Philadelphia’s Bridesburg section, where the last 25 employees will lose their jobs by mid-2010.

But in the interview, he makes it clear that cuts would have been inevitable - deal or no deal.

“Given the economic environment we were facing, we would have had to go through a major downsizing and restructuring on our own at Rohm & Haas,” he said.

Earnings

Tuesday: DuPont, Pfizer;

Wednesday: Air Products & Chemicals, Boeing, Exelon, SEI Investments;

Thursday: Hershey, Merck;

Friday: CSS Industries.

GlaxoSmithKline P.L.C. this morning said the U.S. Food and Drug Administration approved its Cervarix cervical cancer vaccine.

The pharmaceutical company, which has major operations in the Philadelphia area, said it will begin marketing and selling the vaccine in late 2009.

The decision was expected after an FDA advisory panel recommended approval in September. And it means that Merck & Co. Inc. now has some competition for its Gardasil vaccine, which also protects against two types of human papillomavirus. Merck's Gardasil had 2008 sales of $1.4 billion.

To read more about Cervarix, here's a link to a September story by the Inquirer's Marie McCullough.

Michael Milken sees the global financial crisis of the last two years with a historical perspective:

It was bad, but probably not as bad as the early ’70s. But as then, we will forget the lessons we said we’ve learned and make similar mistakes all over again.

Milken was back for a rare visit to the Philadelphia area for a fund-raising event for his prostate cancer foundation at the Ace Club in Lafayette Hill Thursday night. For nearly 90 minutes, he gave essentially a lecture on economic and human capital trends.

Dubbed the junk-bond king in the ’80s, he now sounds every bit the thought leader behind the economics institute that bears his name in Santa Monica, Calif.

To Milken, the latest crisis was a failure of credit ratings and a lack of real analysis by investors who took at face value “AAA” ratings that were far from it.

The real risk to the U.S. economy is not from the financial crisis, he said, but from an underinvestment in public education as much of Asia is investing greatly in their next generation.

But he said he has faith in U.S. innovation and strongly believes the United States must continue to welcome doctoral candidates and scientists from China, India and elsewhere to keep building firms that create wealth here.

Road weary

Talk about home field advantage. Los Angeles Dodgers fans hoping to nab hotel rooms in Philadelphia for National League Championship Series games Sunday and Monday could be out of luck. Or at least staying in Marlton or King of Prussia.

That’s because the Convention Center will be holding one of the biggest conventions of the year: The American College of Rheumatology’s meeting starts Saturday.

An estimated 13,000 professionals will fill rooms that have largely been booked since Labor Day.

Still, rooms are available. And somehow I don’t think sports fans willing to travel thousands of miles to see a game will mind renting a car to drive to the ballpark.