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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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Friday
Feb172017

Climbing A Wall of Worry

Market Insights
February 17, 2017

One of the great adages of the investment business is that bull markets climb a wall of worry. "How can the stock market be hitting new highs when so much is wrong in the world?" “Isn’t the market riskier now after a nearly 8-year bull run?” “Aren’t we in the 8th or 9th inning of this bull market?” “Aren’t stock valuations rich?” These are all good questions. The truth is we would be more worried if we were not fielding these questions.
 
This bull market is the second longest in history at 2,902 days or roughly 95 months. Certainly, relative to the average bull market of 54 months, the current advance is old, but don’t call it over yet as it still may eclipse the longest bull market (3,452 days) - only another 18 months away. 
 
Corporate Tax Reform

Investors are looking at the new administration and the new Congress for potential tax reform, fiscal expansion and deregulation. Below is a look at how the United States stacks up on corporate income tax rates with other nations.  It would appear the U.S. needs to level the playing field.

Over the past 10 years, Germany, Japan, Canada, Korea and the UK have all cut tax their corporate tax rates – the UK by 33%!  All countries are lower and the UK’s corporate tax rate is essentially half! Lower corporate income taxes in the U.S. would translate into higher corporate earnings (and make valuations less rich).
 
Low Volatility Market
 
On November 9, the morning after the US election, the US stock market was set to open down 2% - well off the -6% lows in overnight trading, but still down. The Japan Nikkei was trading -5.4%. The VIX (a measure of market volatility) was elevated at 21 – it would deflate by a third to 14 by the end of the trading day and the S&P 500 closed +1%. 

Since November 9, the S&P 500 has climbed 10.3% and the VIX has been range-bound at a low level. Although 40% of the days have been negative over the past 67 trading days, not once has the index closed down more than 1% (-0.83% the worst daily performance on Dec 14 and Dec 28). The intra-day change (high-low) has only been greater than 1% three times since November 10. 

Financial Health Check-Up

Households and corporations are looking solid.  The household debt service ratio at 10% is near the lowest level over the past 37 years and household net worth is at an all-time.   

Corporate bond issuance had a record year in 2016 and has started 2017 with the strongest start, ever.   What does that mean for stocks and equity investors? More stock buybacks! More M&A! And more dividends!
 
One of the keys to investing is sifting through all available information and sticking to a plan.  Somehow, we need to control our emotions about something that is very important to each of us. We invite you to call or email anytime if you have questions about how we can help you with your wealth management.  Please give us a call at (415) 249-6337 or email us at info@uscapitalwm.com  to learn more.
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UPCOMING SPEAKING ENGAGEMENTS AT AAII CHAPTERS
New York City: March 1st




Stock Market Dashboard



US Capital Wealth Management is your investment solutions partner. 

Listed below are some of the investment strategies we offer. 
We are eager to speak with investors and investment advisors looking for a new trusted partner.
Please give us a call at 415-249-6337 if you would like to talk.

  

  



 


This commentary and previous editions are available as PDFs:

2/17/2017: Climbing A Wall of Worry
2/10/2017: Value Shopper - Europe on Sale
2/3/2017: What, Me Worry
1/27/2017: Extraordinary Earnings Louder Than Trump
1/20/2017: It's Not All About Trump
1/13/2017: I Gotta Feeling
1/6/2017: Finally, A Case for International in Your Portfolio
12/30/2016: Predicting the Future -2017
12/23/2016: Bullish New Year
12/16/2016: All I Want For Christmas is Financial Independence
12/9/2016: Debt Trap
12/2/2016: 
Trade What Is, Not What You Think It Should Be – 2017 Outlook
 

US Capital Partners

Pursuant to the provisions of Rule 206(4)-1 of the Investment Advisors Act of 1940, we advise all readers to recognize that they should not assume that recommendations made in the future will be profitable or will equal the performance of past recommendations. This publication is not a solicitation to buy or offer to sell any of the securities listed or reviewed herein. The contents of this letter have been compiled from original and published sources believed to be reliable, but are not guaranteed as to accuracy or completeness. Nicholas Atkeson and Andrew Houghton are also principals of US Capital Wealth Management, a registered investment advisor. Clients of US Capital Wealth Management and individuals associated with US Capital Wealth Management may have positions in and may from time to time make purchases or sales of securities mentioned herein.

THIS NEWSLETTER IS PROTECTED BY COPYRIGHT LAW. UNAUTHORIZED DISTRIBUTION AND/OR REPRODUCTION BY PHOTOCOPY OR ANY OTHER MEANS IS STRICTLY PROHIBITED AND PUNISHABLE BY A FINE OF UP TO $25,000.

Thursday
Feb162017

Thanks, girls, for the beautiful artwork. We’re proud to continue our monthly sponsorship of Sandipani Muni School in Braj, India.

Tuesday
Feb142017

Richard Byrd Joins US Capital Partners as Senior Vice President

Leading private investment bank for the lower middle market appoints additional Senior Vice President following another year of strong business growth across multiple verticals.

SAN FRANCISCO, FEBRUARY 2017 – US Capital Partners Inc. announced today that Richard Byrd has joined the firm as Senior Vice President. Headquartered in San Francisco, US Capital Partners is a private investment bank that makes direct debt investments, participates in debt facilities, and has wide distribution for debt and equity private placements for small and medium-sized businesses.

With over 25 years of investment banking experience, Mr. Byrd has assisted in capital raises totaling over $600 million. A financial services industry veteran, he initiated and developed retail securities sales departments for the former Merchants National Bank in Indianapolis, Indiana; for Ameritrust in Cleveland, Ohio; and for Provident Securities/Bank in Cincinnati, Ohio.

“I am extremely pleased to welcome Richard to the firm,” said Jeffrey Sweeney, Chairman and CEO at US Capital Partners. “Richard brings over twenty-five years of financial services experience to US Capital Partners, and joins the firm’s Investment Banking group following another year of increased demand for our innovative, customized products and services. Richard’s responsibilities at US Capital Partners will include business development for the firm’s debt and equity raises, advisory services, and client relationship management.”

Mr. Byrd began his career with Chicago-based municipal bond firm Clayton Brown and Associates. He went on to develop and lead the Debt & Equity Departments at Glaser Capital Corporation, where he executed mergers and acquisitions, non-traditional loans, private placements, and equity deals totaling $61 million. Mr. Byrd assisted in the development and placement of the first negotiated certificate of deposit (CD) program in the country through Irwin Union Capital.

About US Capital Partners

Since 1998, US Capital Partners (www.uscapitalpartners.net) has been providing well-structured, custom finance solutions to private and public companies with up to $250 million in top-line sales revenue or project size. Headquartered in San Francisco, US Capital Partners is a private investment bank that makes direct debt and equity investments between $500,000 and $100 million, participates in debt facilities, and has very wide distribution for debt and equity private placements. The firm also offers financial advisory services for buy-side and sell-side engagements and for capital formation, including early-stage financings requiring equity or debt.

Monday
Feb132017

Value Shopper - Europe on Sale

If you are a value shopper, Europe may be just the buy for you.  Since the March 2009 market low through the end of last year, the S&P 500 is up twice as much as the MSCI European stock market index.

  

The lead may be changing, however.  Year-to-date, the S&P 500 is lagging the Morningstar benchmark MSCI ACWI Ex USA Index ETF (ACWX) by about 50%.  The Vanguard FTSE Europe ETF (VGK) is also running ahead of the S&P 500 index year-to-date.
 
On a relative price-to-book basis over the past twenty years, European stocks have almost never been this inexpensive.

 

Measured by the differential between the dividend yield and the 10-year bond yield, Europe continues to offer a higher dividend yield than treasury yield.  The ETF VGK has a current dividend yield of 3.43% versus the S&P 500 dividend yield of about 1.95%.

Value shopping is not just about low prices.  It is about paying a lower than normal price for a quality product or service.  If the price of stocks is what we are willing to pay for future company earnings, then European stocks look like a value rather than just cheap.
 
The chart below shows that month-over-month earnings revisions in Europe are positive and more robust than what we are experiencing in the U.S.

 

The U.S. stock market continues to be an excellent place to invest.  Our economy is strong and growing and corporate earnings are showing acceleration.  But increasing your international exposure today may make sense given the relatively attractive valuations, earnings acceleration and dividend yield.  The U.S. economy appears to be further along in its growth cycle than most international markets.  Shifting funds from the U.S. to international investments may be the equivalent of moving money from a late cycle investment to an early cycle investment.
 
The international markets are not as large, efficient or liquid as the U.S. stock market.  It often pays to use active managers in these less efficient markets.  We have met and invested with market leading portfolio managers who manage concentrated international stock portfolios and have done the due diligence to identify some of the top performing investment opportunities outside of the U.S.

We invite you to call or email anytime if you have questions about our wealth management solutions.  Please give us a call at (415) 249-6337 or email us at info@uscapitalwm.com  to learn more.
 


UPCOMING SPEAKING ENGAGEMENTS AT AAII CHAPTERS
Raleigh, NC: February 11 at 10AM
Winter Park, FL: February 15 at 6:30PM
Sarasota, FL: Febraury 16 at 4PM




Stock Market Dashboard



US Capital Wealth Management is your investment solutions partner. 

Listed below are some of the investment strategies we offer. 
We are eager to speak with investors and investment advisors looking for a new trusted partner.
Please give us a call at 415-249-6337 if you would like to talk.

  

  



 


This commentary and previous editions are available as PDFs:

2/10/2017: Value Shopper - Europe on Sale
2/3/2017: What, Me Worry
1/27/2017: Extraordinary Earnings Louder Than Trump
1/20/2017: It's Not All About Trump
1/13/2017: I Gotta Feeling
1/6/2017: Finally, A Case for International in Your Portfolio
12/30/2016: Predicting the Future -2017
12/23/2016: Bullish New Year
12/16/2016: All I Want For Christmas is Financial Independence
12/9/2016: Debt Trap
12/2/2016: 
Trade What Is, Not What You Think It Should Be – 2017 Outlook
 

US Capital Partners

Pursuant to the provisions of Rule 206(4)-1 of the Investment Advisors Act of 1940, we advise all readers to recognize that they should not assume that recommendations made in the future will be profitable or will equal the performance of past recommendations. This publication is not a solicitation to buy or offer to sell any of the securities listed or reviewed herein. The contents of this letter have been compiled from original and published sources believed to be reliable, but are not guaranteed as to accuracy or completeness. Nicholas Atkeson and Andrew Houghton are also principals of US Capital Wealth Management, a registered investment advisor. Clients of US Capital Wealth Management and individuals associated with US Capital Wealth Management may have positions in and may from time to time make purchases or sales of securities mentioned herein.

THIS NEWSLETTER IS PROTECTED BY COPYRIGHT LAW. UNAUTHORIZED DISTRIBUTION AND/OR REPRODUCTION BY PHOTOCOPY OR ANY OTHER MEANS IS STRICTLY PROHIBITED AND PUNISHABLE BY A FINE OF UP TO $25,000.

Monday
Feb132017

US Capital Engaged on $2M Convertible Debt Financing for Provia Laboratories, LLC.

Click Tombstone Below for Offering Details

Provia Labs

San Francisco-based private investment bank backs innovative stem cell processing, manufacturing, and bio-storage company with a leading position in dental stem cell storage and related services.

SAN FRANCISCO, FEBRUARY 2017 – US Capital Partners Inc. has been engaged by Provia Laboratories, LLC (“Provia”) as its strategic advisor for a $2 million convertible debt financing. Provia will use the new financing to expand sales and marketing activities, retire existing debt, and provide general working capital as the business continues to grow.

US Capital Partners Inc. is a private investment bank headquartered in San Francisco. Through its affiliate broker dealer, US Capital Global Securities, LLC, the firm facilitates equity private placements, makes direct debt investments, participates in debt facilities, and has a wide distribution for these services and financial products for small and medium-sized businesses.

“We are extremely pleased to be assisting Provia with its business financing needs in a strategic investment banking role, as the company moves into the next phase of its business expansion,” said Jeffrey Sweeney, Chairman and CEO at US Capital Partners. “The opportunity to participate in Provia’s $2 million convertible debt financing raise is now open to eligible investors through our digital investment platform, available at www.uscgs.com, which offers a curated selection of private placement opportunities.”

“At the core of Provia’s vision, we believe in helping individuals benefit from their own cells,” said Howard Greenman, CEO at Provia. “Store-A-Tooth offers one of the few opportunities we have as parents to collect and preserve our children’s stem cells when our children are young, and their cells are healthy. We have prepared our business to scale, and plan to work nationally with dental and oral surgery offices, expand our direct-to-consumer activities, and bring our technology to additional markets through strategic partnerships.”

About Provia Laboratories, LLC

Provia is a revenue-generating stem cell processing, manufacturing, and bio-storage company with a leading position in dental stem cell storage and related services. Provia’s primary service, Store-A-Tooth™, provides private storage of stem cells from children’s teeth for future use in the child’s personalized regenerative medicine. Store-A-Tooth™ is a similar service to cord blood stem cell banks like ViaCord (purchased by PerkinElmer) and Cord Blood Registry (purchased by AMAG Pharma). Provia has a proprietary set of protocols for cell processing, expansion, validation, and cryopreser­vation. Provia’s laboratory provides these services under FDA guidelines for current good manufacturing practice (cGMP) for human cell and tissue products.

About US Capital Partners Inc.

Since 1998, US Capital Partners has been providing well-structured, custom finance solutions to private and public companies in the United States and abroad. Headquartered in San Francisco, US Capital Partners, operating with its affiliate US Capital Global Securities, LLC, is a full-service private investment bank with a wide distribution for debt and equity private placements. The group makes debt investments between $500,000 and $100 million, participates in debt facilities, and offers asset management, financial advisory services for buy-side and sell-side engagements, and capital formation, including early-stage financings requiring equity or debt. For more information, visit www.uscapitalpartners.net.