SFG’s Current Offerings to BuySide & Sell Side Firms

1) Market Letter & Capital Markets

The economy drives the markets, and the markets drive the economy, where the Fed and Government spending can stimulate in the short run, and destroy the system in the long run. We have cycles playing out in supply, and old fashioned inventory recessions as production was created for demand that did not materialize, and then, production was cut back. We have up cycles as credit is eased, and crunches as credit is cut back, and loans that have to be written off or down. We have a President and Congress and the Fed dedicated to meddling with the economy around elections, and they are always early, or late, and always do too much, or to little.

So, God help us in fighting inflation caused by massive government deficits pushing up run away money growth that only gets worse in a recession, and then, inflation starting to rip up and spiral like a tornado. The only cure is to jack up interest rates and tighten credit until something big in the financial system breaks, and then for government to step in and bail out the losses for those with big bucks that took big stupid bets with other people’s money. We have tons of fun writing about all this human drama and folly…. knowing where we are in cycles that over lap is the only way we get a handle on how to keep making wealth.

2) Wealth Creation & Protection Under Inflation & Gaming Price Indexes for Fun & Profit

GAAP Accounting under inflation treats a dollar of five years ago just like a dollar five years from now. Run ten years of 10% inflation and use GAAP, and the results will look laughable, and the numbers tell you little without serious adjustments and handicapping. SFG has specific insights into looking at holes in the tax code for tax and other not very intuitive, but key results to figure out if under inflation, you are killing it… or getting killed by it.

We learned a lot of tricks during days at DRI by designing price indexes to give the government or political types the talking points whey needed to message without technically ever being perfectly correct. How easy it would be for us to gin up a price index that will likely benefit a firm or industry to help them put prices up well above average, or hold costs down below average. The BLS is a master of picking actual prices with Hedonic adjustments, quality adjustments, and calling a substituted goods just as fine as the ones nobody can afford any more, all to make their case that inflation is under control. We consult on creating price indexes to justify the highest prices to charge counter parties for goods and services and be perfectly technically correct, all under the same morality codes used by the US Government to mollify citizens who are being starved to death by
the CPI adjustments.

Get to know John Williams at Shadow Stats and study his work and what he really sees is a more accurate inflation rate. It is up there in double digits!

3) Using Game Theory in Negotiation

Clients have often requested assistance with handling the intricate process of marketing and eventually selling their ongoing venture. Some were already concerned about muted interest, others, frustrated by the inability to find an offering price perceived as fair by all involved, and a few, simply put off by dealings with individuals of questionable integrity.

We have regularly seen entities making up imaginary “Indications of Interest” offers when trying to sell their business for a higher valuation under the theory that if a supposedly real buyer is willing to over pay, the next in line would then up their bid to the point of doing something equally stupid like over paying even more!

We offer better ways of first, determining and then, justifying the best price. Our approach to clients is to teach them how to play their cards in the right order to get the best mileage out of every card in their hand. Most important ~ at the negotiating table, the game is always poker. Every professional poker player will only want to play in a game where they know who the patsy is. If you don’t know who the patsy is, then you are the patsy. Our job is to make sure you are not the patsy!

4) How SFG Works with Clients

Our core business of capital raising is finding the right lenders, buyers of structured loan packages, providers of sub-debt and equity, and in many cases, loan buyers or strategic partners for flow asset purchases and working capital, and even acquiring an equity stake in the client’s venture.

For introductions, we use a simple Fee and Non-Circumvention Agreement with standard buy side low capital market pricing based on the business and degree of difficulty. We request a modest retainer that goes against the Fee due at close. SFG works for the most part on a best efforts, and only asks for an exclusive Agreement if there are unusual circumstances.

We have made an introduction when we get a first call completed with an investor group, and that group asks for an NDA and financial information.

We rarely make introductions to investors we do not know really well ~ our dealings are instead from prior experience, based on some level of assurance that the individual, firm, or group has both an interest in the client and the capacity to perform.

We are reluctant to provide investor identities before reaching out on a “no name” basis to first determine if they might like a firm and like the client, and then knowing they do, asking the investor if they know the client…..if they do not know the client and want us to we make an introduction, we do that immediately! The client, of course, can always say they do not want to talk to that investor at their discretion.

We work very quickly….

5) Pricing Deals to Both Maturity and Immaturity.

Every finance text book and CFA exam is going to stress pricing cash flows to maturity, but most make silly assumptions on what is the likely scenario in a world of rising inflation and rising interest rates… a situation that can certainly go on for the next ten or fifteen to twenty years. Oops!

SFG calls this problem, Pricing to Immaturity. The young investment kids of today assume interest rates normally hold on the low side… Time to grow up, and better yet, look for young counter parties at the hedge funds and banks to price what you sell them. They embrace future assumptions of refinancing costs that lack a base in reality, and if you can’t pick them off in a trade, then it is time to retire and hang up that Master of the Universe hat, and go drink margaritas in Jimmy’s Buffet Land near Mar Largo, or go to Dizzy Land in Southern California and, as the Eagles say, check into Hotel California, where “You can check out but you can never leave.”

6) Application of Artificial Intelligence & Higher Math to Make It Big, Bayesian AI in the Hands Of a Wizard Who Understands Why Humans Pay

Based on the Bayesian math SFG pioneered at the University of Wisconsin, paying the way through graduate school at Harvard was rigged in our favor by finding a Black Jack game in Aruba Hotels. (Lucky find on vacation) At certain hotels, the dealer only took one card until all players had stopped drawing cards. Because we were deep into linear & non linear programming and Bayesian math, we knew where to sit at the Black Jack table and, not bother to count cards like our friends at MIT. Sitting in the right seat when you know how to bet, you just rake in. However, as one who managed to not have arms or legs broken, it was a quick learn and quicker split when a heavy who looked like he was mobbed up wanted the “Winners Chair”. SFG teaches all our paying clients not only this seat trick, and the quick split maneuver, but also, real work techniques that could make them probable winners on the credit side of their Specialty Finance Businesses as well. Even today, SFG fleeces Wall Street Bankers who do not know the trick behind the simple Monty Hall Paradox that our six year old niece figured out. It is all in the value of additional material information, and when you learn it, what to do with it. There are all flavors of Artificial Intelligence. Some, involving diligent and correctly applied probability analysis of some or all loan repayments, is where billions are won and lost. Before lending, it’s a benefit to know the probability of getting back both Principal and Interest. Most math guys that tackle credit for consumers get about 2/3 of the easy stuff right, and the models have some merit. However, the 1/3 they don’t know can easily mean that their modeling will be more than 50% worse than one built by a master who knows borrowers inside and out, and what makes them tick, and then, CREATING A MODEL WITH THE RIGHT MATH IN THE RIGHT ORDER, there by figuring out how to get the BORROWER to click the PAY BUTTON. The best of the best are the Bayesian. SFG consults and likes fees to teach credit modeling concepts, or royalties based on increased loan portfolio performance. As Cap One likes to say, “What’s is in your Wallet?” ~ Cash, or an empty promise to pay.”

7) Short List of firms we have worked for and with ~ Past clients and investors ~ and all resources where we know the right key individuals for our current clients.

  • Old Hill Partners
  • DZ Bank
  • Aqua Finance
  • D.B. Zwirn
  • JAM Equity Partners
  • Cambridge Place Investment Management
  • Agility Ventures
  • B-Line
  • Credit Suisse
  • First Boston
  • Oliphant Financial
  • Goldman Sachs
  • Keefe Bruyette & Woods
  • First Heritage
  • Chase Manhattan Bank
  • IP Innovations
  • Heller Financial
  • FFAM
  • Pinnacle Business Finance
  • White Cap Advisors
  • JCR Capital
  • Crossroads Financial
  • ACA
  • IDB
  • Orix USA
  • North Fork Partners
  • Blue Meridian Capital
  • Vision Property Management
  • Automotive Management Services
  • Duff & Phelps
  • National City
  • Astoria Savings & Loan
  • Bank of New York
  • Thrift Investment Company
  • Flock Advisors
  • Abacus Settlements
  • Municipal Capital Markets Group
  • Flock Finance
  • Cigna
  • Dealer Services Corporation
  • Archerfield Funding
  • Axis Capital
  • Sunrise Leasing
  • Babcock & Brown
  • Wellington Management
  • Moody’s Investor Services
  • Concord Servicing Corp.
  • Diverse Funding
  • The Ugly Duckling
  • J.J. Lowery
  • Sunbridge Capital
  • Angelo Gordon
  • Security National Automotive Acceptance
  • Spartan Financial
  • Data Resources
  • E.F. Hutton
  • Imperial Savings & Loan
  • The Patriot Group
  • Florida Auto Finance
  • Brevet Capital
  • Bear Stearns
  • CIBC Worldwide
  • BMO
  • Archerfield Auto Funding
  • Petroleum and Franchise Capital
  • MedCash Funding
  • First Merchants Acceptance Corp.
  • Navigator Acceptance
  • Cohane Rafferty Securities
  • CapMac
  • Unicapital
  • People’s Savings Bank
  • Grand Pacific Resorts
  • Atalaya Capital
  • Friedman Billings & Ramsey
  • Eastern Capital Financial
  • Easy Money Group
  • The MMAR Group
  • Citicorp
  • Falk Finance
  • Leader’s Financial
  • Eastern Funding
  • Pentech Financial
  • Pioneer Capital
  • XL Assurance
  • Frontier Leasing
  • The Trepp Group
  • SunAmerica
  • Holding Capital
  • Merrill Lynch
  • First One Financial
  • New Stream Capital
  • Oxford Management
  • Puronics
  • Auto Info
  • Fitch Investor Services
  • Bancorp
  • Standard & Poors
  • CV Holdings
  • Vensource Capital
  • FranFund
  • Structured Finance Advisors
  • PDS Gaming
  • KDP Investment Advisors
  • Tangent Capital
  • Wisdom Financial
  • PrimaLend Capital
  • CTL
  • Coast 2 Coast Financial
  • Capital Source
  • Finova
  • Petroleum & Franchise Capital

Contact SFG today.