PhillyInc

(For the record, other stocks Turner likes include hip apparel firms Coach Industries Inc., Under Armour Inc., and tech firm F 5 Networks Inc. He isn't a fan of Comcast Corp. because of what he calls increased competition from the likes of AT&T Inc. and Verizon Communications Inc.)

PhillyInc: Are there any advantages to being located in the Delaware Valley, which isn't well-known as a hub of investing?
Turner: "Obviously New York is much, much bigger. I don't know if Boston has much going over us. We have Vanguard. They have Fidelity. Is there an advantage (here)? I think so. ... A lot of our employees live within five to 10 miles of the office. … There is less competition from people trying to convince our employees that they should go elsewhere."

Q: What's your investing approach?
A: "If a company is going to miss their earnings, you have got to get out of their way. (I believe in) letting the winners run. Google is up about, probably, 450 to 500 percent. Can it go up another 500?"

Q: What do the continual gains of the Dow and S&P 500 say about the overall state of the economy?
A: "It doesn't influence how we buy or sell stocks. They are going particularly well from a global perspective. This is a global boon. You have China growing GDP at 10 percent. India is growing. The market rally has climbed that war of worry. Obviously it was vastly overvalued in mid-2000. It's nicely undervalued now."

Q: Even Google and Apple (which Turner owns)?
A: "Google is very reasonably priced to its growth rate. We bought it at the offering price. We were very adamant. … When we first bought Apple, it was a one-product story. .. (The new iPhone) will get tremendous traction."

Q: Why are you so optimistic?
A: "Technology has underperformed the market for six out of the past seven years. This spending on technology is projected to grow two-to-three times the economy overall."

- Jonathan Berr

Like many value investors, Brandywine Global Asset Management's Scott Kuensell is a glass is half-full sort of person. After all, the 53-year-old Philadelphia native makes his living seeing hope in companies that other investors consider hopeless. That strategy has paid off with picks like McDonald's Corp., which Brandywine recently sold at a tidy profit. The company now is betting that good times will come to companies that have been stuck in Wall Street's doghouse: Dell Inc., Wal-Mart Stores Inc. and Comcast Corp. Recently relocated from Wilmington to Philadelphia, Brandywine manages $42 billion and is a unit of Wall Street behemoth Legg Mason Inc. Kuensell took time out this week to speak with PhillyInc:

PhillyInc: Are there still bargains to be had at a time when the markets keep breaking records? Kuensell: "The valuations are nowhere near an all-time high. As a matter of fact, we think stocks are quite reasonably priced."

Q: Even in the tech sector?
A: "Tech stocks in our opinion are the most attractive. As value investors, often times we gravitate to stocks that have hit bumps in the road." (such as Dell Inc. and Intel Corp.)

Q: Will Dell, which recently reported better-than-expected results, improve now that founder Michael Dell has returned as CEO?
A: "Nothing is perfectly analogous, but when Steven Jobs returned to Apple, good things happened."

Q: Isn't competition with Advanced Micro Devices still hurting Intel?
A: "It looks like the price war is subsiding. (Competition) is not nearly as cutthroat as it was 15, 18 months ago. When we bought Intel, the crowd was proclaiming AMD as the new king." [Editor: Intel shares are up 11% this year while AMD has plunged almost 30 percent.]

Q: Have any of your picks turned out especially well?
A: "When we bought McDonald's, the news couldn't have been more negative -- mad cow disease, the super-size movie, CEOs dying in office. … There was a host of things. The company was expanding at too fast a rate. (Since then) they terminated relationship with franchisees who didn't know how to use a mop."

Q: What about Wal-Mart?
A: "That's one of our largest holdings. Most of the press is negative about Wal-Mart at an array of subjects. ... The opportunity for Wal-Mart is that (higher-income shoppers) only buy soap and paper towels and garden houses. They are not buying furnishings and apparel."

Q: Do you agree with Wall Street's negative view of Comcast?
A: "In our opinion, Comcast had a entered sweet spot where cash generation is going to grow significantly. … We're particularly excited about the opportunity that the company has in the small and mid-size businesses. They haven't even scratched the surface."

- Jonathan Berr

Stephen Harmelin, newly appointed receiver ad litem of Philadelphia Alternative Asset Management, wants to settle the long drawn out litigation against Man Financial as soon as possible. The PAAM hedge fund collapsed because of fraud. Harmelin's predecessor C. Clark Hodgson Jr. had been trying to recover a sizable amount of the hedge fund's losses from Man Financial, PAAM’s broker. A potential settlement of the case may have encouraged Man Group to announce its proposed initial public offering of Man Financial for the third quarter.

Earlier this month, Judge Michael Baylson appointed Stephen Harmelin, managing partner of Philadelphia-based Dilworth Paxson, as receiver ad litem to cover specific aspects of the complex PAAM case. Harmelin's role involves litigation against Man.

Judge Baylson removed Hodgson as receiver on the grounds of alleged conflict of interest. This conflict relates to Hodgson's previous work for UBS, the parent company of PAAM's administrator UBS Fund Services (Caymans) Ltd. The decision arose as Man's lawyers pulled in UBS as a co-defendant alongside Man in the battle against the receiver.

The judge ruled that potential conflict of interest could place Man at an unfair disadvantage in the case and delay proceedings. Hodgson can continue to act as receiver in other matters regarding PAAM. But since he is no longer involved in the Man and UBS litigation, the judge is now hoping that the lengthy case will be settled swiftly.

As a first step, parties in the civil action, Stephen J Harmelin Receiver Ad Litem versus Man Financial, will hold a series of conferences in late June to advance the settlement process. The court will meet with the receiver on June 25, UBS on June 28, Man Financial and Thomas Gilmartin (the senior employee directly responsible for PAAM) on June 29, and other defendants on July 2. The parties will submit memoranda. The trial is booked for September 17.

Background: MF Global's subsidiary, Man Financial, and seven of the company's employees are accused of aiding Philadelphia Alternative principal's Paul Eustace's in failing to disclose trading losses and artificially inflated the fund's value.

In its SEC filing, MF Global said the receiver of Philadelphia Alternative Asset Management is seeking damages of at least $175 million. The Commodity Futures Trading Commission (CFTC) shut Philadelphia Alternative Asset Management in 2005. Man said it expects that it will be fined by the CFTC in connection with the case.

- Jonathan Berr

The native of Philadelphia, 60, attended Abington Senior High School in the mid-1960s, then went on to Yale and Harvard. Abington opened its new Stephan A. Schwarzman Stadium in 2005. Not clear how much Steve donated toward the project. (The school's Alumni Association doesn't collect enough even to file a 990). But the same year, Abington H.S. inducted Steve into its Alumni Hall of Fame, which already has some not-so-shabby honorees. Anybody have an Abington H.S. yearbook from the mid-1960s? The Wall Street Journal's richly detailed story yesterday about Schwarzman has these few tidbits about his background:

The seeds of Mr. Schwarzman's approach to business were sown in Philadelphia. There, as a 15-year-old, he worked weekends in his family's store, called Schwarzman's. He says he urged his father to open more stores, and grew frustrated when his dad, content with their middle-class lifestyle, refused. His grandfather, who opened the business, "said I should keep folding towels and handkerchiefs and stand up straight and protect the good name of Schwarzman's," he recalls. "I didn't want to be a retailer. I hated to wait on people."

Can anybody recall a store called "Schwarzman's" in Philadelphia or the Main Line? The Washington Post reported a few years ago that it was a "draperies-and-linens" store in Philadelphia. Fortune had a similar line in this 2003 profile. His entry at Wikipedia is no help. Neither is his bio at Blackstone. Phillyinc dug into the Pennsylvania corporate database and found several corporations under the name Schwarzman during the period but only one that appeared to operate a retail business under the name "Schwarzman's" - a fashion store on Frankford Avenue. Not apparently it.

If we're still obsessed by the time Blackstone goes public, we may put in calls to Blackstone and others to get these answers. One trivial question: Does his company name, Blackstone, come from his own name Schwarzman, which derives from the Yiddish-German word schvartz, or black? Oh, in case you were wondering, Blackstone does own at least one Philly-area firm, SunGard Data Systems, of Wayne.

- Thomas Ginsberg and Jane M. Von Bergen

"For the second year in a row, Mace has experienced weakness in its internal controls and errors in financial reporting that have not only delayed its SEC filings to the point of a threatened delisting of its stock but have also forced Mace to incur substantial (but) undisclosed costs. ... We believe that the company has incurred millions of dollars in investigative and legal expense as the result of these matters and that these costs do not include the disruption to the company's business and harm to its brand and reputation. There is simply no excuse for such poor board oversight at a public company in today's governance environment."

PhillyInc put in a call today to Mace, but no answer yet. Lawndale hit a chord on Wall Street: News of its demands today sent Mace's shares up more than 5 percent, to $2.57 from $2.44.

In January, Kelly Capital, another investor, offered $45.8 million for the company. That bid, which equaled $3 per share, was rejected as too low. Mace then asked Kelly if it would consider raising its bid, but it declined. Kelly Capital's senior vice president, Joe Altman, told PhillyInc he is still prohibited by a confidentiality agreement from discussing details of his company's discussions with Mace. His company no longer owns Mace shares.

Mace's shares have rebounded slightly this year, up about 2 percent, as the company continued selling off a national car-wash chain which Paolino tried to build up. But Shapiro insists the stock price doesn't adequately reflect the value of the company. As if putting his money where his mouth is, Shapiro has now increased Lawndale's stake in Mace to 9.3 percent from 7.5 percent in December.

Shapiro isn't alone in his criticism of Mace's management. Proxy advisers Glass Lewis & Co. L.L.C. and Institutional Shareholder Services criticized the company's compensation committee for negotiating a three-year deal with Paolino that gave him stock options that vested immediately instead of over several years, which is more typical. Paolino also can receive bonuses for both buying and selling businesses, which shareholders argued encouraged him to do deals that were not in the best interest of shareholders, a criticism rejected by Mace.

At the company's shareholder meeting in December, Lawndale and No. 2 shareholder Ancora Capital withheld their votes from the incumbent directors, including Drexel University President Constantine Papadakis. The directors were approved by 71 percent of the shareholders. Directors typically receive more than 90 percent in these types of votes.

Lawndale's candidates for its proposed three new board seats are: Eugene I. Davis, chief executive of Pirinate Consulting Group, L.L.C., which among other things specializes in restructuring companies (Davis also happens to sit on the board of Foamex L.P. in Linwood, Pa.); JL Development Co.'s chief executive Gerald T. LaFlamme, who oversees a real estate development and consulting firm; and Donald R. Raefied of Edge Integration Systems Inc., who Lawndale says has more than 25 years experience in the security industry. As for Shapiro's own ties with his candidates, he told PhillyInc in an interview that he serves on a board with LaFlamme but has no business connections with Davis or Raefield. Lawndale is based in Mill Valley, Calif.

- Jonathan Berr

"I kept my stock because, I don’t know, I had a lot of stockholders and I decided that I thought this was a great investment. I still do. And by the way I’ve done very well with it. I’m proud to be a stockholder."

And later during the conference:

"No, I’m not ready to sell. I think it’s going to go up. How about that?"

Since then, on June 5, the company announced Hedrick was stepping down as CEO and being replaced by Raymond Wilson. Hedrick remains chairman. And now today, Innovative says in a SEC filing that Hedrick is selling some of that stock, after all. It says he sold 47,810 shares at $25.03, worth just under $1.2 million, on June 15. He still owns more than 3.9 million shares. Sure, maybe in the ensuring weeks he decided the stock was ripe for selling -- except that $25.03 is at least a buck below its price when made that "proud" statement.

This time, no comment from Hedrick, says a company spokeswoman.

- Jonathan Berr and Thomas Ginsberg

Bruce E. Toll, vice chairman of Toll Bros. Inc. (NYSE: TOL) and chairman of Philadelphia Media Holdings L.L.C., which owns The Inquirer and this blog, reported to the SEC yesterday that he had exercised sale options on 1.2 million shares Monday and Tuesday and netted $23.4 million. Hardly a great moment to sell, given TOL is down about 25 percent this week from its 52-week high. Phillyinc reached Toll by phone, and he said he faced a 10-year expiration this year on the options and grudgingly unloaded the shares now because he is only allowed certain periods to make transactions. "I hated to do it," he said of the sale. No worries, Toll still has several million more shares.
- Thomas Ginsberg

Mace Security International Inc. (Nasdaq: MACE), the Mt. Laurel-based marketer of the famous security spray by the same name and even a few car washes from an abortive side business, is giving at least one employee extra incentive to stick around in the face of California investment firm’s effort to shake up the board. (See previous post). Mace said in an SEC filing today that chief accountant Ronald Pirollo of Langhorne, Pa., will get a lump-sum “retention payment” equal to his current salary of $180,000 if CEO/Chairman Louis Paolino Jr. no longer serves and control of the company changes hands. It may not seem like a lot. But then again, MACE's share price has been stuck below $3 for a couple years. Keep an eye on those filings.
- Thomas Ginsberg

Not much publicity of this SEC "service" that we saw. We caught wind of it from Michelle Leder at Footnoted, who wonders "how useful this sort of thing will really be to the typical investor. It’s interesting, but how many people are really making an investment decision based on HSBC having an office in Tehran?" Forget whether restricting the supply of Nexium in Havana, for example, might really prevent the next terror attack in the U.S. Perhaps another reason is hinted in the last line of the press release, which says the SEC undertook the initiative to comply with a provision of the recent supplemental Appropriations Act (Public Law 110-28) requiring the SEC to help trace businesses engaged in mining or oil-drilling in Sudan, which indeed is one of five countries the SEC lists in its new database. The core question, of course, is less about serving investors, and more about engaging vs. isolating countries in the war on terrorism. We'll leave it at that.
- Thomas Ginsberg

Brent Archer, an options analyst and writer at Investors Observer, writes on Toll Bros. at AOL Bloggingstocks that he's holding firm on TOL given the fed's latest decision to hold interest rates steady.

On the same day that takeover honcho Warren Lichtenstein suggested that IKON Office Solutions Inc. (NYSE: IKN) buy back its own stock for $17.50 a share or prepare to sell the company, two senior executives acquired and sold more than 12,000 shares each. In SEC filings, the Malvern-based document management and copy machine company said that Beth Sexton, senior vice president of human resources, and sales senior veep Brian D. Edwards - per their executive comp packages - each acquired shares for $10.79 to $10.83 a share as part of a non-qualified stock option and sold them for $16 or $16.05 on Friday. Sexton netted around $64,000 and Edwards around $74,000. Ikon spokesman Daniel Murphy said the sales and Lichtenstein's comments on the same day were coincidental. He said the executives previously had built in triggers points to start the sale process.

- Jane M. Von Bergen

In May, the company had disclosed what it called its own discovery in April of an internal embezzlement scheme by a former employee. In an SEC filing late yesterday, it blamed the former "divisional controller" of its Florida Security division, whom it didn't name. The company said it had undertaken an internal company probe. It also underwent an independent forensic investigation, which it said found that during fiscal 2006, the individual allegedly took about $240,000 and another $99,000 during the first fiscal quarter of 2007. Its filing says this:

"The embezzlement occurred from a local petty cash checking account and from diversion of customer cash payments at the Florida Security division. ... Additionally, the investigation uncovered an unexplained inventory shortage in 2006 in the Florida Security division of approximately $350,000."

It's unclear whether Mace is pressing criminal charges. Its civil lawsuit comes at a tense moment. Last month, Lawndale Capital Management head Andrew Shapiro, Mace's largest shareholder and a vocal critic of the company, publicly demanded that Paolino's brother Matthew step down from the board (he is also a vice president) and to increase the size of the board to five seven members from three five. Shapiro also acquired more shares in Mace to further pressure the company to change. In an email to phillyinc, Shapiro said he was disturbed by the theft. He also noted the "ongoing deterioration in operating business lines with both car wash and security divisions suffering revenue and profitability erosion."

Mace spokesman Eduardo Nieves declined to say anything beyond the company's statements.

Shares of Mace are down about 2 percent for the year and fell 13 cents, or 5 percent, to $2.50 today in light pre-holiday trading. The company faces possible delisting from the Nasdaq for failing to file its paperwork with the SEC on time. The filing yesterday of fourth-quarter results showed Mace's net loss narrowed to $1.67 million, or 11 cents, compared with $4.34 million, or 28 cents a year earlier. Revenue fell 6.8 percent to $49.2 million amid a decline in the company's security business and the continued sell off a national car wash chain which is funding acquisitions of other companies. Though the company had positive working capital of $26.6 million as of December 31, Mace noted in the filing that it has a history of operating losses and may "substantially reduce the scale of our operations and curtail our business plan" if it can't raise additional money.

- Jonathan Berr

The whole business of thinking up drug names is pretty well-regulated and monitored by the FDA, which has to make sure a guy needing high-blood pressure medicine doesn't accidentally take Viagra. Drug names are often, perhaps ironically, based on art as much as science. The individual risk is probably less in the choice of power company names, although we wonder what both companies were thinking when they settled on Exelon, which sounds more like an evil planet from Star Trek than a medicine or utility.

- Jonathan Berr

Shares of the Blue Bell-based company are up about 40 percent since November, when MMI Investments, a New York-based investor that has a knack for picking companies that later are sold, said it had acquired a 6 percent stake. It since has raised its stake to 8 percent. Lon Juric of Streetinsider.com, in an entry on his blog, noted MMI's "buyout touch" in a parody of the Genesis song "Invisible Touch."

MMI Investments seems to have a buyout touch - yeah. They take a stake, and you should take it to heart. MMI Investments seems to have a buyout touch - yeah. They take control before a buyer looks to tear it apart.

Five out of 7 stocks in MMI's portfolio have now been acquired, he wrote. This week its invesment in medical supply maker DJO Inc. (NYSE: DJO) paid off with a $1.3 billion buyout offer from Blackstone Group. Among the companies in MMI's portfolio that have not been bought, one is Brink's Co. (NYSE: BCO), which MMI is pushing to spin off one of its two businesses and is a rumored buyout target anyway. The other: Unisys. What's motivating MMI's interest in Unisys? It didn't return a call to PhillyInc and Unisys spokesman Jim Kerr said by email the company declined to comment on relationships with specific shareholders or on potential mergers and acquisitions.

But MMI obviously sees something in Unisys that eludes Wall Street analysts. Their median 12-month target price on Unisys is $8.50, about 50 cents below where it currently trades. The stock also isn't particularly cheap either, trading at a higher price-to-earnings multiple than peers such as Perot Systems Inc. (NYSE: PER) and Affiliated Computer Services Inc. (NYSE: ACS).

How actually attractive is Unisys? The company does about a $1 billion worth of business with the federal government, which would make it attractive to large defense contractors such as Lockheed Marin Corp. (NYSE: LMT) and Northrop Grumman Corp. (NYSE: NOC), which also have large IT services businesses.

My hunch is that any new buyer would want to retain as many Unisys employees as possible with technical backgrounds, but that's difficult to predict. Until a buyout comes, the company will continue to muddle through as it has done for years. Its next quarterly earnings report due Tuesday is expected to be dreadful. Sales have declined for three out of the past five quarters, and Thomson Financial says analysts expect the sales trend to be little changed in the second-quarter earnings report. Bloomberg estimates that net income, which has dropped for seven out of the past nine periods, will be about $15.57 million. That's the lowest profit since at least 2003.

Stay tuned.

- Jonathan Berr

Comcast, which reaffirmed its earlier guidance of $5.7 billion for capital expenditures this year, is in a pickle. On one hand, the company needs to ratchet up spending because, among other things, it's adding 6,000 new workers and building a new headquarters building in Center City. That hurts earnings in the short term, which angers investors that flock to tech stocks looking for quick gains.

The company also is victim of its own success. Wall Street not only expects Comcast to beat Wall Street earnings forecasts but to exceed them greatly. The 28 percent gain in profit and 31 percent jump in revenue only met analysts' forecasts. Bloomberg also points out that Comcast beat analysts' estimates for new TV and phone subscribers, though lagged expectations for high-speed Internet users.

That's good. But not good enough.

- Jonathan Berr

J.P. Garnier, CEO of GlaxoSmithKline P.L.C. (NYSE: GSK), reportedly netted about $2.6 million in an insider stock sale in the wake of his company's survival of an FDA review of its diabetes drug Avandia. (Pharmalot spotted this on Bloomberg.) Actually, it doesn't seem like a lot of money. More sales to come?

- Thomas Ginsberg

The company’s president and general counsel, John Tobin, told us that it was a mistake, not a scam. “We’re not proud to have to have any accounting error.” As to the nefarious motives alleged in the lawsuit, he said: “That’s not correct.”

The suit was filed in April 2006 on behalf of holders of Astea’s common stock between May 11, 2005 and March 31, 2006, when the company announced the restatement. Officers sold shares in November 2005.

Tobin said the best news for Astea is that the suit was thrown out before the discovery stage, where it can cost hundreds of thousands to defend pre-trial. “That’s when your costs of litigation start skyrocketing. They just want the leverage and that’s why it’s great to have it dismissed at this point.”

Among the lawyers representing plaintiffs were Robert Roseman and David Felderman of Spector Roseman and Kodroff P.C. in Philadelphia. Defending Astea before U.S. District Judge William Yohn was Pepper Hamilton LLP. in Philadelphia.

- Jane M. Von Bergen

PharMerica, based in Louisville, Kentucky, is recently hatched and just started trading its shares Aug. 1. AmerisourceBergen employs about 370 Teamsters in a workforce of more than 14,000, including some in the company’s Thorofare, N.J. distribution center.

Here's a question: Why would the union write a letter that could lead to Amerisource losing business and their members, perhaps, losing jobs?

A Teamster spokesman -- not international president James P. Hoffa -- told PhillyInc that Teamsters’ pension funds are invested in both companies, hence the union's concern. And, he said, AmerisourceBergen should be able to compete for the business in the marketplace.

Michael Kilpatric, an AmerisourceBergen spokesman told PhillyInc that it is standard practice for institutional pharmacies to buy most of their drugs from one company “because it increases efficiency and lowers costs.”

It's also standard practice for unions to have research staffs who examine companies' business performance for investment and organizational purposes.

By the way, Yost is set to leave PharMerica's board next year.

- Jane M. Von Bergen

How far is Lower Bucks County from Outer Space?

Not that far, perhaps. Environmental Tectonics Corp. (AMEX:ETC) in Southampton has signed a contract with Virgin Galactic, a company owned by Virgin Group's Richard Branson to provide training for Virgin Galactic's suborbital space travelers -- the first set of space tourists. At first, Environmental Tectonics will train Virgin Galactic's Founders, the name given to the first 100 travelers to sign on with Virgin Galactic. But the contract extends beyond those travelers, the company said. Training runs September through November at Environmental Tectonics' NASTAR Center in Southampton.

Environmental Tectonics creates software that provides flight simulation so pilots can learn to respond in an emergency. But so far, they haven't managed to create the software that will teach chairman William F. Mitchell and the rest of management how to respond to three years of losses and declining revenues. Nonetheless, at least for today, shares are up and trading is brisk -- maybe that's because of today's announcement, or because of Tuesday's news that the company's largest investor, former cable-television executive H.F. "Gerry" Lenfest sunk another $3.3 million in the company, by buying 3,300 shares of preferred stock.

- Jane M. Von Bergen

Power Medical Interventions Inc. Chief Executive Michael Whitman doesn't let little things like product delays or lack of profitability get in the way of his plans to sell shares of the medical device company to the public.

The company's PLC 60 linear stapler, which had been expected in 2006, was delayed almost nine months because of design flaws and problems getting parts, the Langhorne, Pa.-based company said in a filing today with the Securities & Exchange Commission.

"Our ability to generate revenue from the PLC 60 staplers that we have placed in hospitals since December 2006 has been adversely affected due to the unavailability in 2007 of certain reload cartridges for the device," the filing said.

A recent FDA inspection also found instances where Power Medical failed to properly process customer complaints. Some of the FDA's "inspectional observations" had also been observed in previous inspections by the agency, the company said

"Whether the FDA will accept our response is uncertain, particularly in light of the similar nature of the current inspectional observations to the previous observations," the company said, adding that the company recently hired a senior vice president of regulatory affairs and quality assurance and has engaged a consultant who has noted that the company is making improvements.

Power Medical, which has an accumulated deficit of $150.9 million as of June 30, also has found "material weaknesses" in its financial reporting that need to be fixed. The company expects to lose money through at least next year.

- Jonathan Berr

The Philadelphia Stock Exchange, led by chairman Meyer Frucher, has finalized its settlement of a class-action lawsuit instigated by a former floor trader alleging that the PHLX bungled its sale to six investment houses in 2005 (UBS Securities LLC, Morgan Stanley & Co. Inc., Citigroup Financial Products Inc., Credit Suisse First Boston, Citadel Derivatives Group LLC and Merrill Lynch, Pierce Fenner & Smith Inc.) Their lead law firm, Berger & Montague P.C., says the plaintiffs will divvy up between $67 million and $80 million from the PHLX.

Says Lawrence Deutsch of Berger & Montague: "We are pleased by this settlement which is a fine result for our class. This result also upholds the rights of all shareholders to successfully challenge a board's actions in a dilutive transaction."

No comment from Frucher or the PHLX. But the finalized deal clears a liability and comes just in time, because Frucher now wants to sell the PHLX again.

- Thomas Ginsberg

As we noted below, SaveDarfur.org has now turned its sights on Vanguard Group Inc. We asked Rebecca Cohen, a Vanguard spokeswoman in Valley Forge, to respond to SaveDarfur.org's divestment campaign against the investment firm (and others). She explained, as we suspected, that two of the three funds in question are index funds guided by benchmarks over which Vanguard has no direct control. The third is actively managed by Vanguard in conjunction with Wellington Management Co L.L.P., a separate firm over which Vanguard claims to have no direct control (but with which it does have a long, mutually beneficial relationship through founder Jack Bogle.)

All as expected. But then Cohen said this, too:

"Back in the 1980s, we did not divest from South Africa either. ... We did not divest from South Africa. If it's illegal due to government regulations, we won't invest. But as long as we meet all regulations, the actively managed funds will seek the highest return."

Think whatever you want about ethical investing and economic sanctions. But even in hindsight about a rotted system like apartheid, you gotta give Vanguard credit for intellectual consistency in its refusal to buckle to divestment campaigns. Apartheid fell without Vanguard's help. Maybe Darfur also will be saved no thanks to Vanguard.

- Thomas Ginsberg

Michelle Leder, creator and author of Footnoted.org, has been saying that public companies seem to be increasingly blaming their financial woes on the subprime mess. And it may be true. But this is an awfully tenuous way to prove the point.

Looking over the latest 10-K from Orleans Homebuildings Inc. (AMEX:OHB), Leder writes today that she realized the company uses two different spellings: subprime and sub-prime. In case you were wondering, journalists sometimes make their very sophisticated estimates of trends by merely searching for a term in a database, then citing the number of times it pops up. But they usually remember to count all spellings and variations of a word. Turns out Michelle was only searching for one spelling of the word (she doesn't say which) instead of both. Now using both search terms in 10K Wizard, Leder has roughly doubled her count of the number of times companies that have cited the mortgage meltdown in their filings from 788 to 1,255 in August.

Theoretically this should not change her conclusions, just the number of references. We'll give Michelle credit for finding something interesting in the Orleans 10-K, which we didn't. And for owning up to her mistake.

- Thomas Ginsberg

Hope van Beuren, whose grandfather John T. Dorrance invented condensed soup in 1897, and her husband John recently unloaded more shares of Campbell Soup Co. (NYSE: CPB) than they have in years. The van Buerens, who report their holdings to the Securities & Exchange Commission separately, have reported transactions valued at more than $83 million from selling Campbell's stock over the past 18 months, according to InsiderScore.com (reg. required). They stepped up the pace of their sales significantly this week.

On September 11, Hope Van Beuren sold more than 304,000 shares, her biggest one-day sale since at least 2004, while John van Beuren disposed of more than 234,700, his biggest sale since 1998, according to InsiderScore. John van Beuren also sold another 4,800 shares a day later. And Hope van Bueren disposed of 56,500 shares on both September 10 and September 7.

No word on what prompted the sale. The van Beurens didn't respond to requests for comment left with one of their lawyers and at their foundation in Newport, Rhode Island. A Campbell spokesman also didn't respond to a request for comment.

The van Beurens and other Dorrance heirs in the past have sold large amonts of shares. Individuals whose wealth is tied to one stock do sell shares from time to time for a variety of reasons. Wall Street's sentiment toward Campbell is lukewarm at best. Its shares have dropped more than 8 percent this year amid worries about rising costs. Recently Campbell has begun trying to sell its Godiva chocolate business for more than $1 billion to focus on soup.

With a fortune estimated at $1 billion, Hope van Beuren ranks 297 on the Forbes magazine list of the 400 Richest Americans, which features her cousins Mary Alice Dorrance Malone (No. 140) of Coatesville, Pa. and Bennett Dorrance (No. 153), who both sit on the company's board.

- Jonathan Berr

Howard Gittis died last night in NYC. His office has sent out notices today. The Philadelphia-area native has been Vice Chairman & Chief adminstrative officer of MacAndrews & Forbes Holdings Inc., the holding company of Ronald O. Perelman, for the past 22 years. Gittis' office says he was "Ronald's closest friend and advisor and business partner." Gittis served on the boards of most of MacAndrew companies including Revlon, Panavision, Scientific Games, Allied barton Security Services, Harland Clarke and M&F Worldwide, where he had been chairman and CEO.

Gittis' impact in the Philadelphia area was huge, even after he moved to New York in 1985. He was a partner and chairman of the executive committee at Wolf, Block, Schorr and Solis-Cohen LLP, where he worked for 25 years. Gittis' office notes that he had been Chairman of the board of trustees of Temple University, where the Howard Gittis student center is named for him. Here's a profile in the Temple Times a few years ago. He was also a memeber of the boad of overseers of the University of Pennsylvania Law School, where Gittis Hall and the Gittis Center for clinical and legal studies are named for him. In politics, Gittis was also a heavy weight. Since 2004, he has donated more than $240,000 to Democratic and Republican candidates and committees.

- Thomas Ginsberg

Pacman or Sacman?

That's not surprising, because the Wharton graduate avoids the press like the plague. Forbes magazine describes him as a "highly secretive investor (who) commands one of the highest performance fees in the business." Cohen, also a major art collector, founded S.A.C. Capital Advisors L.L.C. in 1992 with nine employees and $25 million in assets under management. In February, the firm employed more than 700 people and had $12 billion in assets, according to the company's Web site.

Cohen probably didn't need too much encouragement to buy Cephalon since its shares are cheap, having plunged more than 11 percent over the past three months. Recently, it has confirmed that questions have arisen over its marketing of the painkiller Fentora for purposes other than what's allowed by the FDA. The company has denied any wrongdoing.

Cephalon spokeswoman Sheryl Williams, in an interview with PhillyInc, says: "We have had an amazing journey. It could be a simple as simple as the fact that they have paid attention to that story."

In a recent note to clients, UBS analyst Annabel Samimy reiterated her buy rating on the stock, saying the warnings over Fentora won't have any impact on future sales, according to the Associated Press, adding that the analyst estimates peak Fentora sales of $370 million.

- Jonathan Berr

Howard Gittis, the Philadelphia powerhouse attorney, deal-maker and political fund-raiser who died last week in NYC, is grandly eulogized in a WSJ obituary today ($ required). Says billionaire investment banker and partner Ron Perelman: "Together we made one full person." Says Peter Liacouras of Temple University: "(He) was the quickest-witted and closest thing to a purely rational being." Says ex-mayor William J. Green: After Gittis tried to persuade Green to run for re-election, Green asked Gittis: "If you were me, would you seek another term? He looked at me with a smile on his face and said, 'No.' "

That's a Bryn Mawr home of Jack Bogle, founder of Vanguard Group Inc. and one of the most-admired CEOs (albeit former) in the Philadelphia area. It has recently gone up for sale at an asking price of $2.35 million, according to various listing services.

Is Bogle bugging out? Moving across town? Sensing an even bigger drop in the real estate market? We've put in a call to his office.

The home is known as the Jay Gates Residence, according to the Philadelphia Architects and Buildings web site. Here's the description of the house from Prudential Fox and Roach:

Located on one of the Main Line's most desirable and private lanes...this handsome stone & stucco colonial is a one-of-a-kind property. A blend of old and new with large inviting rooms, high ceilings and three fireplaces. Some special features include deep Jefferson windows and French doors, spacious eat-in Kitchen with large island and skylights. Adjoining the Kitchen is a magnificent Family Room with vaulted ceiling and large stone fireplace with raised hearth, first floor office and bright Playroom. Lovely terraces, 2 car Garage, circular drive and original 100 year old 'Smokehouse' complete this magnificent 1 1/2 acre estate.

- Michael Klein

For many years, BusinessWeek magazine published a list of "best and worst boards." Now Penn State associate professor Henock Louis has documented that roughly two-thirds of those "worst" companies did shape up after the media exposure. In a research paper, the Smeal College of Business professor concludes there is a causal link between the publication and cleanups. He also says savvy Wall Street traders profited handsomely from the articles by buying -- not selling -- the companies' stocks in response to the exposure that they saw not as bad news, but a harbinger of corrective action.

- Thomas Ginsberg

Things are heating up (even more than usual) at Mace Security International Inc. (NASDAQ:MACE) in Mount Laurel. Andrew Shapiro's Lawndale Capital Management, one of Mace's biggest shareholders, based in Mill Valley, Calif., told the SEC last week that it has formally notified Mace - led by Louis D. Paolino Jr. - that it will put up four candidates for an expanded board at the next annual meeting. It previously had named three. The fourth, first mentioned in a late August filing, is Philip B. Livingston, the vice chairman of an auditing software company Approva Corp. in Reston, Va. (who also has an affinity webite www.phillivingston.com). The others are listed here and in the filing. Lawndale's letter states that the firm has raised its complaints with Paolino and his team several times:

... such discussions to date have been fruitless and, in Lawndale's opinion, only highlight the existing Board's lack of independence. As a result, Lawndale currently believes that the only way Lawndale can achieve the improvements in the Company's governance structure necessary to create value for all shareholders is to conduct a proxy contest to change the Board and approve the other items set forth in the Lawndale Notice. As described in the Prior Letters and the Lawndale Notice, Lawndale believes that replacing all of the Board members (other than Mr. Paolino) with truly qualified and independent directors who will act solely in the best interests of the Company's shareholders is the best way to improve the Company's governance structure. ...

No date for the annual meeting, yet.

Today, October 19, 2007, is the 20th anniversary of the 1987 stock market crash, still the worst one-day percentage drop in NYSE history. The NYSE itself has embraced the event in part by e-mailing to all financial reporters several spreadsheets (here, here and here) detailing just how far it's come since then, which indeed is pretty far.

Commentators at blogs, newspapers and magazines have offered everything from warnings that current conditions look similar to 1987, to snickering that it was a great day to buy. Conrad de Aenelle in the NYT goes into some detail from Henry J. Herrmann, chief executive of Waddell & Reed, on the similarities. Jaclyne Badal at the WSJ ($ req) leads on the perfect-hindsight fact that "Black Monday" turned out to be one of the best stock-buying days in history. Tim Paradis at The Associated Press neatly summarizes all the retrospective, and prospective, thoughts.

One comment caught our eye from Citigroup Inc. strategist Tobias Levkovich, quoted in the New York Post: "That kind of crash doesn't happen when people are worried about everything, but when they are euphoric about everything."

In other words, anxiety is good? That may not be quite as resonant at "greed is good" (a la Gordon Gekko and Ivan Boesky) but perhaps it's more appropos today than Oliver Stone's epithet for the 1980s.

- Thomas Ginsberg

The Wall Street Journal is saying that the Nasdaq Stock Market Inc. at the moment is the "exclusive" potential buyer of the Philadelphia Stock Exchange, quoting people "familiar with the matter." A PHLX spokeswoman said no comment. The PHLX is run by Meyer "Sandy" Frucher. The WSJ notes a deal is uncertain and hinges, in part, on whether the PHLX wants to stay in Philly. But just remember, the PHLX has been for sale before. And before that.

- Thomas Ginsberg

Not sure what to make of this. The Pennsylvania Securities Commission has climbed on the executive compensation bandwagon, officially, with other securities’ regulators. Two weeks ago, the state commission approved a resolution (curiously announced only yesterday) that "encourages issuers engaged in public offerings to enhance disclosure of executive compensation." Unfortunately the resolution itself is not findable on the commission's website. The director of the commission's division of corporation finance, John Quinn, noted in the press release that "executive compensation issues are big news" and the commission decided to act after the commission's professional group, the North American Securities Administrators Association, adopted its own resolution on the subject in early October.

Canadian billionaire Michael Lee-Chin's mutual fund management firm, AIC Ltd., has unloaded all its holdings in Radian Group Inc. (NYSE: RDN), the Philadelphia-based mortgage insurance company. So says Radian in an SEC filing. That means AIC has gone from being Radian's biggest shareholder to its biggest deserter in just two months. AIC held about 13 percent of Radian shares in September, according to Bloomberg News. Lee-Chin's firm, now run by his successor, was known for emulating Warren Buffett's "buy-and-hold" strategy. Or at least it used to be.

- Thomas Ginsberg

Back when he was a baseball star, former Phillie Lenny Dykstra famously admitted he'd lost tens of thousands of dollars betting on himself in high-stakes poker games. Now as a bettor, Dykstra has moved up to the big leagues. Dykstra, who operates a Southern California carwash chain under his name, also has been moonlighting over the past year as a daily stock options columnist for TheStreet.com.

And in Monday's column, Dykstra cheered the boardroom coup at Hershey last weekend, which resulted in a new board featuring former Pennsylvania Attorney General LeRoy Zimmerman, former Gov. Tom Ridge, former Philadelphia School Reform Commission head James Nevels and a group of prominent businessmen.

"This is great news for Hershey investors," Dykstra wrote. He didn't predict if the new board would decide to merge with CadburySchweppes, cut costs, or boost offerings of novelty Reese's Peanut Butter Cups. He did crow about having been bullish on Hershey contracts in a column last week. He predicted the stock would pop a bit Monday, which it did. He also called the coup "a sweet indication of things to come" and urged readers to "keep your eye on the ball!" Dykstra also noted that he has not put his own money into Hershey shares.

- Joseph N. DiStefano

James J. Maguire Sr., chairman and founder of Philadelphia Insurance Cos. in Wayne, has made a relatively big purchase of his own company's shares. He said in an SEC filing yesterday that he bought 114,500 shares worth $4.2 million worth this week. Maguire is at least 73 and this could be for his children. The filing says the purchases were "made from family trusts, of which certain of his children are beneficiaries." PHLY stock rose about 1 percent to $38.26 since his purchase at $37.

- Thomas Ginsberg

Environmental Tectonics Corp. is reporting more fallout from its dispute with the U.S. Navy over a contract. After taking a charge for the value of the receivables of that contract, the Southampton company now says in a filing to the SEC that it must restate its prior financial statements. And that means it is not in compliance with its $15 million credit agreement with PNC Bank.

ETC, which makes decompression chambers and simulation trainers, says it has borrowed $14.3 million under the agreement, and PNC Bank could demand immediate payment. Gerry Lenfest, a big Tectonics shareholder, has guaranteed all of the company's obligations under the PNC Bank loan. ETC's audit committee has identified errors in accounting related to the Navy contract. Until it figures out what happened, the company is telling investors not to rely on its financial statements for the last five fiscal years.

- Thomas Ginsberg

Enersys, the battery and power-system maker based in Reading, rose 14 percent last week on the NYSE, one of the biggest moves among Philadelphia area non-penny stocks. Unclear why. Since Nov. 8, several officers including CEO John D. Craig and president Raymond R. Kubis have sold a total of $18 million worth of stock and options, according to InsiderScore.com. No answer Friday at the company to our call asking for explanation. Anybody know what's happening?

The stock price of Exelon Corp., the Chicago-based parent of Peco Energy and Exelon Generation Co. L.L.C. in Philadelphia, has bubbled up steadily over the last year and hit a five-year high in the last few weeks. Turns out that's particularly good for chief executive officer John W. Rowe: He has exercised stock options valued at nearly $54 million so far this year, including $3.6 million last week alone, according to InsiderScore and SEC filings. Compare that with his compensation last year of $10.9 million. He made the sales under his 10b5-1 stock plan, which allows insiders to prearrange their sales. Rowe set these sale dates in September 2006 and seemed to pick well. Exelon closed yesterday at $82.30, nearly 38 percent above a year earlier. Says spokeswoman Jennifer Medley: "We are a pay-for-performance company, and when the company does well, our executives do well."

- Thomas Ginsberg

Speaking of the housing slowdown: Robert I. Toll, chief of Toll Bros. Inc., has told the SEC (here, here and here) that he exercised 960,000 stock options on Monday that were due to expire at year's end.

Though he apparently had little choice other than to lose the shares, it's hardly an ideal time to sell. Toll stock as of yesterday was down 33 percent from a year earlier and the company just reported its first-ever quarterly loss. Not a great moment for a big insider sale, either.

So, Toll preemptively announced that he sold only enough -- about $13.2 million worth of shares -- to cover the option purchases and taxes, and is holding the rest, about 374,600 shares. Toll chief operating officer Zvi Barzilay and chief financial officer Joel Rassman did likewise with their expiring options. Not that Toll is suffering. He disclosed that his holdings rose to 29.12 million shares, which were worth about $609 million yesterday. But give him credit for not taking the money now, when his option shares were still worth roughly $8.5 million. Because odds are good they will go down before going up. After all, this is the same CEO who openly predicts a real estate-led recession is coming.

- Thomas Ginsberg

The Philadelphia Stock Exchange, which has one of the country's biggest options trading floors, said last week it had broken its own volume record. Good thing, because given the market turmoil driving up options trading everywhere, anything but a big increase might look a bit off: On Dec. 20, the PHLX recorded 6.399 million contracts traded, giving it roughly 31.5 percent of options market that day.

The other big options exchanges also have been bustling. The Chicago Board Options Exchange (CBOE) and Intenational Securities Exchange (ISE), both usually bigger than PHLX by volume, also have both declared they broke their own monthly records for November.

- Thomas Ginsberg

The teeth-gnashing and hand-wringing over executive compensation has some new ammunition from the Conference Board, which is releasing a report today that finds stock and other non-cash compensation for small-company chiefs, on average, is worth 11 times more than their salaries. That compares with 80 times more for big-company honchos. That essentially jibes with other studies.

But the board goes on to say these salary multiples mean that big company CEOs actually do have a lot of "skin in the game" with shareholders. Whether it's enough skin to make them shareholders' pain and truly links their pay to performance is another question. The board asks: "The amount of 'skin in the game' appears less dramatic if total holdings are looked at as a percentage of total compensation instead of as a multiple of salary, prompting the question: is salary the right denominator for measuring how much skin there is in the game?"

Speaking of CEO skin, the outsourcing firm CDI Corp. said an a filing to SEC last Friday that it has a new employment agreement with Roger H. Ballou, its president and chief executive, under which he will get $750,000 in salary next year plus stock and cash bonuses. It also says this: Ballou must hold at least $2.5 million worth of the company's stock by next December. Now that's skin.

- Thomas Ginsberg

Lists of '07's worst stocks are filled with home builders, mortgage lenders and other financials who have gotten hammered with the subprime/housing bubble/credit crisis. The Inquirer/Bloomberg Philadelphia Index is no different. But just because a stock is a mutt one year doesn't mean it can't become a show dog the next. Case in point: SunCom Wireless Inc., this year's best-performing local stock. In 2006, SunCom shares lost 75 percent of their value. That year, the Berwyn company had posted widening losses, CEO Michael Kalogris was severely injured in a car crash, and its shares were delisted by the New York Stock Exchange. The wireless service provider's finances improved in 2007, but the stock popped in September, thanks to a buyout launched by T-Mobile.

Vanguard Group, run by Jack Brennan, picked up a lot more money to manage in 2007. According to data from Financial Research Corp., Vanguard raked in $70.6 billion in assets for the first 11 months compared with $37.5 billion for same period of 2006. California-based American Funds attracted $67.6 billion during that same time period vs. $64.8 billion in 2006.

Try not to be surprised, but a survey of financial advisors picked a "Democrat in the White House" as their greatest economic worry for 2008. "Recession" came in fourth behind "Global unrest" and "U.S. economic growth." Berwyn-based Brinker Capital's latest quarterly survey had 236 respondents.

After you read Joseph N. DiStefano's story on Friday morning's protest by the SEIU over a speech the head of the Carlyle Group, take a gander at the New York Times' DealBook site which has a post on the action outside the Park Hyatt hotel.

Another rough week for investors in Radian Group Inc. as its shares slumped 33 percent to close at $6.00 Friday. The Philadelphia provider of mortgage and other financial guarantee insurance really didn’t make any news. But shares of all such specialty insurers fell after credit-rating agencies said they may downgrade competitor Ambac Financial Group Inc.
- Mike Armstrong

So never mind about "panic" on the Street.
The Federal Open Market Committee launched a pre-emptive strike this morning against what was looking like a huge downdraft in the U.S. markets: It will lower the federal funds rate 75 basis points to 3.5 percent.
That's a cut coming before its scheduled two-meeting at the end of this month.
It's happened before, but an interest rate cut coming between meetings is a rare event.
Was it the right move? Is it coming too late to head off a recession?
- Mike Armstrong

Latest PhillyInc videocast is here.

(Clicks takes you to Philly.com's multimedia page.)

Given yesterday's market gyrations and Fed rate cut, it wouldn't be a surprise if many people missed these news items yesterday.

DuPont Co. and Johnson & Johnson, two companies that employ 14,400 people in the Philadelphia region, issued fourth-quarter earnings results on Tuesday. DuPont reported lower net income, but managed to beat analysts' estimates. Johnson & Johnson's earnings were 10 percent higher.

These are giants in the chemicals and health-care industries. But their conference calls were drowned out by the wail of worry emanating from the world's stock markets.

At any other time, a 10 percent increase in the worldwide sales of Remicade, the drug developed by Horsham-based Centocor Inc. , would warrant a second look. At $3.33 billion in sales, Remicade is one of the most lucrative drugs to emerge from Philadelphia's life-sciences sector.

Perhaps on another day, investors might have paid attention when DuPont chief executive officer Charles O. Holliday Jr. explained how the Wilmington company has benefited from compound annual sales growth rates of 18 percent in Asia's emerging markets.

It's hard to focus on tales of growth when so many are nervous about recession.

- Mike Armstrong

After getting pressure to split up the company, Unisys Corp. is talking with the hedge fund that has been pushing for change.

To enable the Blue Bell computer services company to continue those discussions with MMI Investments LLP, of New York, Unisys said today that it is postponing a deadline for advance notice of director nominations and shareholder proposals to Feb. 19.

Unisys issued the following in a statement this morning:

Like MMI, the Unisys Board and management believe that Unisys shares are substantially undervalued and that the company's current share price does not appropriately relfect the value of the significant improvements achieved in the company's operating performance and profitability.

MMI, which is run by Millbrook Capital Management Inc., made its call for a breakup of Unisys earlier this month.

Unisys hit its high of $9.60 on July 5. Shares were trading at $3.34, down 6 cents, early today.

- Mike Armstrong

Thank the Fed for making Radian Group Inc. the local non-penny stock that moved the most last week.

Yes, the Philadelphia provider of mortgage and other financial guarantee insurance was the big loser the previous week. But this week, it rose 28 percent to close at $8.18 after the surprise cut in the federal funds rate and talk of a possible bailout for the bond insurance industry.

- Mike Armstrong

The lousy January start for the U.S. stock market is giving activist hedge funds plenty of company in the misery they see.

You don't have to look far for local examples.

Comcast Corp. and its chairman and CEO Brian L. Roberts have come under withering criticism from a hedge fund that owns about 2 percent of the cable company’s shares.

Chieftain Capital Management Inc. sent a letter to Comcast's board of directors in which it called for the ouster of Brian Roberts as CEO. It also wants the board to change the company's voting structure, under which the founding Roberts family keeps control with 33 percent of the voting power while owning about 1 percent of the shares.

Corporate-governance issues tend to make many people shrug their shoulders. Everyone's a critic, right? But Comcast's shares, which closed at $17.22 Friday, are trading below where they were when the Philadelphia cable company launched its failed effort to capture Walt Disney Co. in 2004.

Even a patient investor like Microsoft Corp., which has owned more than 7 percent of Comcast for years, might listen to what Chieftain has to say.

Call it a show of faith: Unisys Corp. executives bought more than 100,000 shares over the last week.

Those actions follow the words of Unisys CEO Joseph McGrath, who said Jan. 29 that investors would be seeing "a commitment from the senior team in support of our confidence" in the computer company whose shares have declined 53 percent in the last year.

Unisys has been under pressure from a hedge fund that has demanded changes, including the sale or spin-off of its federal government business.

McGrath made his comments on an earnings call, and one analyst said he views management stock purchases as a positive sign.

Nine Unisys executives bought a total of 137,480 shares Jan. 31 through Feb. 4, according to filings with the Securities and Exchange Commission. While McGrath accounted for much of that insider buying — 80,500 shares — executives at the vice president level participated in the vote of confidence.

In all, management spent a total of $574,050, paying between $4.10 and $4.35, to boost their holdings in the Blue Bell company. (Yes, that was their own money.) McGrath invested nearly a quarter-million dollars.

- Mike Armstrong

After another punishing week for bank and financial stocks, it's somewhat surprising that First Keystone Financial Inc. was the biggest gainer among the Philadelphia-area companies the Inquirer tracks. The Delaware County-based bank reported decent first-quarter earnings, and the market responded nudging its stock price up 14 percent to close at $11.71 on Friday.

On the other hand, more bad news for the new-home building sector put pressure on Bensalem-based Orleans Homebuilders Inc. Shares fell 24 percent as Toll Bros. Inc. and others saw little end to one of the nation's worst housing slumps. Orleans closed at $4.42 Friday.

- Mike Armstrong

Americans have made progress in reducing their addiction to smoking, but very little in cutting their consumption of oil.

Those are reasons enough for the keepers of the Dow Jones Industrial Average to change the makeup of the widely watched stock-market measure.

Gone are Altria Group Inc. and Honeywell International Inc. in favor of Bank of America Corp. and Chevron Corp.

Financials and energy were underrepresented in the Dow, the editors of the Wall Street Journal say. So they are dropping Honeywell - a Dow member since a predecessor joined in 1925 - because at $34.6 billion in sales it is the smallest of the industrials. No room for sentiment in a global economy.

Altria has always been a money machine, but its new, narrow focus - it spun off Kraft Foods in 2007 - doesn't suit the Dow, the Journal says.

The Philadelphia area doesn't lose much representation with the changes. New York-based Altria did buy cigar maker John Middleton Inc., of King of Prussia, for $2.9 billion in the fall. But Bank of America, of Charlotte, N.C., has a big presence locally.

Other Dow components with large operations in the region are Boeing Co., DuPont Co., Johnson & Johnson and Merck & Co. Inc.

- Mike Armstrong

Comcast Corp. will pay its first dividend - a payment totally 25 cents annually.

That's a first for the Philadelphia-based cable television giant. And it's a move long sought by shareholders, especially some of the activist hedge funds that have taken aim at how the company has been managed.

Here's what Comcast CEO Brian Roberts had to say:

With a business model that generates significant cash flow, we are in a position to take advantage of profitable growth opportunities while continuing to return capital to shareholders.

- Mike Armstrong

The local stock that rose the most among non-penny last week was GMH Communities Trust, of Newtown Square. American Campus Communities Inc., of Austin, Texas, agreed to buy GMH, which ignited the Delaware County company’s shares, which closed Friday at $8.84, up 55.1 percent. Both GMH and American Campus specialize in providing off-campus student housing for colleges and universities.

First Resource Bank, a small Exton bank, saw its shares fall the most. It closed at $5.40, down 16.9 percent. The bank, which has less than $100 million in assets, released its 2007 financial results last Monday. First Resource posted its first annual profit of $650,973 since it opened in May 2005.

Why'd the shares fall then? Maybe it had to do with the $6.5 million decline in deposits during the fourth quarter. The bank did say that its deposits rose $5.7 million in January alone to $75.3 million.

- Mike Armstrong