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Jeffrey Sweeney is an investment banker with years of experience in direct lending and corporate finance for small- to middle-market companies. He is the chairman and CEO of US Capital Partners, an innovator in small- to middle-market business lending. US Capital Partners has been providing prompt, innovative, and reliable financing solutions across the United States and abroad for more than a decade.

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Sunday
Dec102017

Consumer Sentiment High, President Approval Low - Good for Markets

The stock market had a bullish week driven by accelerating economic activity. Cyber Monday sales were up 16.8% from last year. Traditional retailers like Macy’s (M) reported improving trends. In the past three weeks, M has appreciated by 36%. The Leading Economic Index (LEI) jumped up 1.2% in October from the prior month which was revised up from -0.2% to +0.1% (see Dashboard below).  Personal income and employment reports were better than expected. GDP growth in the third quarter was revised higher to 3.3%. 3%+ is substantially better than the 1-2% GDP growth rates that have been the hallmark of the current expansion.

Despite improving fundamental economic numbers, a rising stock market and cycle high consumer confidence, investors are far from euphoric. Since 2009, $763 billion has come out of equity funds and ETFs while $1.5 trillion has gone into bonds. 

Tumultuous political headlines may be one reason investors have remained skeptical. President Trump’s most recent weekly average approval rating is 37%. His presidential term average to date is 38%.

Over the past 55 years, the markets have performed best when the president’s approval rating polled somewhere between 35%-50%.

In our 2018 Stock Market Outlook published November 17, we forecast 11% growth for the S&P 500. The 11% projection is based on the consensus S&P 500 earnings growth forecast of about 11% and a constant price/earnings multiple. It is also supported by the approval ratings of the President.

Funds follow performance. As the stock market moves higher, it is likely to attract new money. Eventually, too much money will drive stock returns down and potentially from positive to negative.

As the famous boxer Joe Louis once said “Everyone has a plan until they get hit.” Investors may chase returns near the top of a market cycle as greed controls their sentiments.

Although we are currently bullish and have a bullish outlook for 2018, we first establish the rules by which we will sell before we invest. As a firm, we are dedicated to using rules-based controls to manage stock market exposure. We seek to participate in bullish markets and avoid major bearish markets. Having an established sell discipline allows us to ride the bull this week, this year and hopefully much if not all of next year with peace of mind.

Over a fifth of the S&P 500 is represented by the technology sector. Consensus revenue growth for the technology sector in 2018 is 9.4% which should drive 35% earnings growth. In the past month, the revenue growth forecast was revised up from 8.7% to the current 9.4%.


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We invite you to give us a call at (415) 249-6337 or email us at info@uscapitalwm.com if you have questions about your account and how we can assist you.


US Capital Wealth Management Stock Market Dashboard


Delta Market Sentiment Indicator (MSI) is published weekly in Barron’s


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Sunday
Dec102017

US Capital Engaged as Exclusive Adviser on $2MM Senior Secured Convertible Note Raise for Intellibidder Corporation

Click on Offering Tile Below to See Opportunity

Intellibidder

San Francisco-based private financial group supports the launch of a new e-commerce platform that aims to define the new standard of B2B e-commerce, worldwide.

SAN FRANCISCO, DECEMBER 2017 – US Capital Partners Inc. (“US Capital”) has been engaged by Intellibidder Corporation (“Intellibidder”) as its exclusive financial adviser for a $2 million senior secured convertible note issuance for the firm, as a bridge to an $11 million Series-A equity raise. US Capital Partners is a full-service private financial group headquartered in San Francisco, CA.

Intellibidder will use the new financing towards developing its proprietary Intellibidder platform, a B2B e-commerce technology software system that facilitates the buying and selling of bulk commercial-grade general goods. The platform aims to be a complete end-to-end system to facilitate bulk purchase transactions, for use in almost every applicable B2B high-volume industry.

“Using a proprietary, patent-pending algorithmic software system, Intellibidder aims to achieve maximum efficiency in the B2B marketplace,” said Shams Merchant, President and CEO at Intellibidder. “We are very excited about our developing B2B e-commerce platform, and look forward to meeting strategic investors and other potential partners.”

“We are delighted to be assisting Intellibidder with its financing needs,” said Jeffrey Sweeney, Chairman and CEO at US Capital. “The opportunity to participate in Intellibidder’s $2 million convertible note raise is now open to eligible investors through our digital investment platform at www.uscgs.com.”

James B. Baty, Ph.D., Senior Vice President at US Capital Partners, said: “While buyer-side-only aggregation systems might experience diseconomies of scale when large lots can be filled only by large suppliers, the Intellibidder business architecture aims to offer a combined synergy of additional seller-side aggregation, targeting of standardizable commodity products, and centralized logistics and fulfillment attractive to both buyers and sellers. I believe this creates a notable competitive value proposition.”

About Intellibidder Corporation

Based in Dallas, TX, Intellibidder is developing a new proprietary and patent pending B2B e-commerce platform that facilitates the buying and selling of bulk commercial-grade general goods. Currently, popular B2B e-commerce systems, such as Alibaba and eBay, act as an open marketplace for buyers and sellers to connect. While productive, these systems are inefficient: buyers often do not receive optimal pricing and many sellers are left unable to participate and compete. The new Intellibidder platform aims to aggregate supply, demand, and logistics, thereby delivering an optimum price-per-unit to purchasers. Intellibidder aims to be the world’s most intelligent B2B e-commerce system.

About US Capital Partners

Since 1998, US Capital Partners Inc. has been committed to providing small and lower middle market businesses and investors with sophisticated debt, equity, and investment opportunities usually available only to larger middle market companies and institutional investors. The firm manages direct investment funds and provides wealth management and capital raise services. Operating with its registered investment bank affiliate, US Capital Global Securities, LLC, the firm acts as a licensed placement agent for companies, funds, and projects, and collaborates closely with its peers in professional banking and investment advisory.

To learn more, email Jeffrey Sweeney, Chairman and CEO, at jsweeney@uscapitalpartners.net or call (415) 889-1010.

Wednesday
Nov292017

US Capital Advises on $5MM Equity Raise for Food by Rail

Click on Offering Tile Below to See Opportunity

Food By Rail

San Francisco-based private financial group supports the launch and growth of a nationwide environmentally focused logistics and food transportation company.

SAN FRANCISCO, NOVEMBER 2017 – US Capital Partners Inc. (“US Capital”) has been engaged by Food by Rail Logistics Holdings, Inc. (“Food by Rail”) as its exclusive financial adviser for a $5 million Series-A preferred equity raise for the firm. Food by Rail will use the new financing to fund the launch, growth, and development of the company.

Headquartered in San Francisco, US Capital is a full-service private financial group committed to impact investing. Through its investment bank affiliate, US Capital Global Securities, LLC, the firm provides private placement services and has wide distribution for debt and equity private placements.

Food by Rail intends to provide state-of-the-art refrigerated boxcars for transporting food and beverages primarily by rail with a unique stacking system to use more cube capacity. According to a recent report, on average trains are four times more fuel efficient than trucks. The report goes on to say that moving freight by rail instead of truck lowers greenhouse gas emissions by 75%.  Finally, trains reduce highway gridlock and emissions of particulate matter and nitrogen oxides.

Marcus S. Kostolich, Founder, President and CEO of Food by Rail, commented: “We are entering a multi-billion-dollar transportation and logistics market for frozen and refrigerated protein, produce, packaged foods, and beverage as a third-party logistics provider with refrigerated boxcars and origin and destination trucking service in North America. We approached US Capital to raise $5 million pre-revenue funding to launch the company and begin operations starting January 2018. We were extremely pleased with the first-class service, process, and results.”

“We are delighted to be assisting Food by Rail with its financing needs to launch and develop this nationwide environmentally focused business,” said Jeffrey Sweeney, Chairman and CEO at US Capital. “The opportunity to participate in Food by Rail’s $5 million Series-A financing raise is now open to eligible investors through our digital investment platform at www.uscgs.com, which offers a curated selection of private placement opportunities.”

About Food by Rail

Formed in May 2017, Food by Rail Logistics Holdings, Inc. is a logistics and transportation company for frozen and refrigerated protein, produce, packaged food, and beverages. The company will be operating as a third-party logistics provider (3PL) of refrigerated boxcars (reefers), operating on railroads nationwide. Food by Rail’s vision is that by using its services, producers, growers, and buyers will benefit from transporting large volumes (up to four truckloads per refrigerated boxcar) of perishable freight, faster, at costs that may be 10% or more below competitive highway transportation, with a lower carbon footprint, over greater distances. Food by Rail plans to begin operations in January 2018.

About US Capital Partners

Since 1998, US Capital Partners Inc. has been committed to providing small and lower middle market businesses and investors with sophisticated debt, equity, and investment opportunities usually available only to larger middle market companies and institutional investors. The firm manages direct investment funds and provides wealth management and M&A services. Operating with its registered broker dealer affiliate, US Capital Global Securities, LLC, the firm acts as a licensed placement agent, and collaborates closely with its peers in professional banking and investment advisory.

To learn more, email Jeffrey Sweeney, Chairman and CEO, at jsweeney@uscapitalpartners.net or call (415) 889-1010.

Thursday
Nov232017

Jeffrey Sweeney’s Article “Why Is Asset-Based Lending So Expensive?” Published in ABF Journal

Click here to read the full article in ABF Journal

ABF Journal

Chairman and CEO of US Capital Partners compares cost structures for asset-based loans and commercial bank loans, and explains how specialty finance companies may be able to greatly reduce their cost of capital.

SAN FRANCISCO, NOVEMBER 2017 – ABF Journal, a leading trade journal for the asset-based lending (ABL) community, has published an article by Jeffrey Sweeney, Chairman and CEO at US Capital Partners Inc., in its November/December 2017 issue.

Entitled “Why Is Asset-Based Lending So Expensive? Comparing Cost Structures for ABL and C&I Loans,” Sweeney’s article explains why ABL loans are more expensive than commercial and industrial (C&I) loans. Sweeney also highlights how specialty lenders can secure the greatest reduction in their costs, while tapping new sources of private capital.

“There is a common belief, especially among business borrowers, private equity funds and M&A sponsors, that inefficiencies leading to predatory pricing exist in the small-cap and lower middle market business lending space,” Sweeney explains. “That assumption may be incorrect because the ABL cost structure is very different in comparison to inexpensive bank lending. By utilizing a new, more optimized funding structure, ABL firms may be able to greatly reduce their cost of capital in order to compete with highly levered, low-cost financing provided by C&I loans.”

Sweeney is an investment banker and fund manager with years of experience in direct lending and corporate finance for small to lower middle market businesses. Headquartered in San Francisco, his firm US Capital Partners Inc. is a full-service private financial group that specializes in making traditional middle market banking products and services available to the lower middle market.

After setting out strategies to reduce ABL costs, Sweeney concludes, “Specialty finance companies may find it helpful to evaluate new, optimized fund structures to reshape their own balance sheet capital structures. Making use of a private investment fund structure and innovative capital raise solutions allows specialty finance companies to give a greater number of investors access to their asset class, potentially driving down the costs of capital.”

About US Capital Partners

Since 1998, US Capital Partners Inc. has been committed to providing small and lower middle market businesses and investors with sophisticated debt, equity, and investment opportunities usually available only to larger middle market companies and institutional investors. The firm manages direct investment funds and provides wealth management and capital raise services. Operating with its registered investment bank affiliate, US Capital Global Securities, LLC, the firm acts as a licensed placement agent for companies, funds, and projects, and collaborates closely with its peers in professional banking and investment advisory.

To learn more, email Jeffrey Sweeney, Chairman and CEO, at jsweeney@uscapitalpartners.net or call (415) 889-1010.

Wednesday
Nov222017

Market Insights: Capex Spurs the Bull

One of the complaints about earnings growth since the 2008 recession is that some of it may be attributed to “financial engineering.” Corporations report earnings per share (EPS). One way to increase EPS is to buy stock (shares) back. This reduces the denominator of the earnings/shares equation which increases EPS.

A reduction of share count to increase EPS is not the same as revenue growth. Share buybacks can make earnings per share grow although the company is experiencing no sales growth.

In the hierarchy of growth that investors want to see and are willing to pay for, revenue growth is king. For example, Amazon (AMZN) reported its third quarter earnings on October 26. Net sales increased by 34% year-over-year. Operating income decreased by -40% year-over-year and EPS was flat at $0.52.

At market close on October 26, AMZN was $972.42 per share. Amazon then reported the earnings results described above. The stock is now trading at about $1,125 per share, up nearly 16%.

Why, you may wonder, would AMZN appreciate by 16% when operating earnings are down -40% and there is no EPS growth? Fundamentally, it is because the company has strong sales growth and is investing in a diversified set of business activities which look to keep real growth strong for years to come. Investors believe that eventually there will be enormous profits on giant revenues.

For the S&P 500, it looks like earnings expanded by 9.5% year-over-year in the third quarter. It was the fifth straight quarter of positive earnings growth. Earnings growth tends to lead capital expenditures which tends to create revenue growth. What the first chart above and the chart below show is that buybacks are slowing and capital expenditures are picking up. This should be viewed in a positive light, as it signals that companies are focusing more on investing and growing their business over the long-term (revenue growth), as opposed to reaping short-term EPS benefits of buybacks.

As the expansion ages and return expectations fall, capex is one metric that if it remains positive, could significantly extend the secular bull market.

As we approach 2018 and consider adjusting investment allocations for the New Year, we invite you to give us a call at (415) 249-6337, visit www.uscapitalwm.com or email us at info@uscapitalwm.com if you have questions about how we can assist you in managing your investment accounts.


US Capital Wealth Management Stock Market Dashboard




Delta Market Sentiment Indicator (MSI) is published weekly in Barron’s

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