Ascendere Daily Update -- January 31, 2011 -- Our Record of Presaging 45 Sell Side Upgrades with a...

8/7/2019 Ascendere Daily Update -- January 31, 2011 -- Our Record of Presaging 45 Sell Side Upgrades with a 25-Stock Model Portfolio in January 2011

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Ascendere Associates LLC January 31, 2011

J. Stephen Castellano Page 1 [email protected]

Ascendere Associates LLC Innovative Long/Short Equity Research

Model Portfolio Daily Update: January 31, 2011This daily update is a supplement to amonthly reportdated December 31, 2010 that details the model portfolio strategies of Ascendere Associates LLC ("Ascendere"). For more

information, please see our list offrequently asked questions

, suggested tips onusing our newsletteror an interview with us onCovestor Live. See also ourlong-only model

based on actual trade data. Please see ourdisclosures and disclaimersat the back of this report.

New Actions Required:None

Of Note:Our 25-stock theoretical long portfolio published on December 31 presaged 45 major positive upgrades by more than 20 sell side firms. In other words, within a single day on

December 31 our firm issued a report with more actionable relevance, value and foresight than a disparate team of 20+ sell side analysts and their ~40+ associates produced

over the course of the entire month of January.

Despite our prescient stock picking it only finished up 1. 59% for the month versus 2.28% for the S&P 500. TRW Automotive (TRW) was our best performing holding, up 13.21%

and Westlake Chemical Corp. (WLK) was our worst at -10.93%.

Separately, we are assuming today's closing prices were obtained for the newly rebalanced portfolio models, which were published yesterday. Our long models now assume 32

stock positions versus 25 last month. We will begin tracking returns of the 32-stock portfolio on February 1 (see our previously issued monthly report for details).

Taking a wild guess -- The S&P 500 will close up ~0.93% on February 1, 2011

On average, going back to early 2005, stocks in our long models have closed roughly 0.40% higher on average on the first trading day of the month. But for 2010, the average

first day of the month gain was 1.42% for our theoretical long model and 0.93% for the S&P 500. These first day surges are probably created by the simple back office mechanics
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of portfolio rebalancing in an increasingly short-term and quantitative-driven market. On January 3, 2011 we expected another surge in stocks for the first day of trading and we

will be very surprised if February 1, 2011 does not experience another similarly positive up day.

As a result of these increasingly volatile though positive first-day-of-the-month returns, last month we started publishing our rebalancing actions a day prior to the end of the

month in an attempt to offer our clients a chance to reduce slippage relative to the theoretical model, and to be in better position to take advantage of a seemingly increasing

likelihood that the first-day-of-the-month surges in stock prices continues.

First TradingDay of the

Month

OpportunisticLong Model

Return* S&P 500

1/4/2010 2.74% 1.60%

2/1/2010 2.39% 1.43%

3/1/2010 1.96% 1.02%

4/1/2010 0.97% 0.74%

5/3/2010 2.49% 1.31%

6/1/2010 -3.32% -1.72%

7/1/2010 0.32% -0.32%

8/2/2010 2.26% 2.20%

9/1/2010 4.44% 2.95%

10/1/2010 -0.06% -0.31%

11/1/2010 0.15% 0.10%

12/1/2010 2.72% 2.16%

1/3/2011 1.41% 1.13%

*Backtest data through 7/1/2010, live data beyond

*Theoretical model portfolio that a ssumes no c osts


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Waddell & Reed Financial, Inc. (WDR) reported better than expected4Q10 resultsafter the close today and ROE showed another sequential, positive increase. Average assets

under management of $80.3 billion increased 11% during the quarter and 20% compared to the same quarter in 2009, with the effective fee rate during the quarter remained

unchanged on a sequential quarterly basis at 61.1 basis points. "Annual sales were $21.7 billion, a 10% increase over $19.7 billion in sales during 2009 and the highest annual

sales volume in the company's history. This year marked the 5th consecutive year of organic growth with inflows of $5.4 billion representing a rate of 7.8%, compared with the

industry's long-term rate of 3.1%."

Waddell & Reed Financial Inc. 500 499 498WDR 2000 1999 1998

Financials

Asset Management and Custody Banks

500

12/31/2010 # Estimates Forecast Actual Variance

Revenue 5 273$ 281$ 8$

High 278$ 3$

Low 270$ 12$

EBIT 4 69$ 70$ 1$

High 71$ (2)$

Low 67$ 3$

EPS quarter 11 0.49$ 0.54$ 0.05$

High 0.53$ 0.01$

Low 0.44$ 0.10$

Shares Outsanding 85 85 -
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There are limitations inherent in our backtested theoretical model results, particularly

with the fact that such results do not represent actual trading and they may not

reflect the impact material economic and market factors might have had on our

decision making if we were actually managing client money. Please see additionaldisclaimers and disclosures at the back of this report.


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Actions Taken for January to Date:

1/28/2011: A short position in Tidewater Inc. (TDW) was assumed closed at $57.98 for a 7.69% loss after closing above its stop price of $57.58 the prior trading day.

1/28/2011: A short position in ProLogis (PLD) was assumed closed at $15.21 for a 5.33% loss after closing above its stop price of $15.63 the prior trading day.

1/26/2011: A short position in Harley-Davidson Inc. (HOG) was assumed closed at $39.36 after closing above its stop price of $37.43 the prior trading day for a 13.53% loss.

1/18/2011: A long position in Lear Corp. (LEA) was assumed closed at $109.30 after closing above its price target of $108.53 the previous trading day for a 10.73% return.

1/18/2011: A long position in TRW Automotive Holdings Corp. (TRW) was assumed closed at $60.68 after closing above its price target of $60.20 the previous trading day for a

15.14% return.

1/11/2011: A short position in Packaging Corp. of America (PKG) was assumed closed at $28.07 after closing above its stop price of $27.55 the previous day for an 8.63% loss.

12/31/2010: Model portfolios were rebalanced following the 12/30/2010 close.


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Nostradamus Activity -- Core and Opportunistic Model Portfolios:We have noted on numerous occasions that it is not uncommon for stocks that appear in our model portfolios or our weekly ranking updates to presage major ratings actions by

sell side firms. See our "Nostradamus Report" and "Getting in Before Sell Side Institutions Follow" for more details. Below is a non-comprehensive list of sell side actions on

stocks that have been in our model portfolios since at least 12/31/2010:

1/27/2011 -- TRW Automotive (TRW) -- Goldman Sachs upgraded to Buy from Neutral and its price target was also raised to $77 from $60, based on valuation, above average

growth, and low expectations .

1/27/2011 -- RPC, Inc. (RES) -- Gabelli upgraded the stock to Buy from Hold.

1/27/2011 -- East West Bancorp (EWBC) -- Cantor Fitzgerald increased its price target on the stock to $26 from $22.

1/27/2011 -- United Continental Holdings (UAL) -- was upgraded to Buy from Hold at Dahlman Rose.

1/26/2011 -- East West Bancorp Inc. (EWBC) -- Credit Suisse raised its price target to $22 from $20, RBC raised its price target to $23 from $20, Sandler O'Neil raised its target to

$23 from $20 and Citigroup raised it to $22 from $20.

1/26/2011 -- United Continental Holdings, Inc. (UAL) -- Morgan Stanley lists the stock as a long Research Tactical idea.

1/25/2011 -- Lam Research Corp. (LRCX) --UBS raises LRCX price target to $60 from $59, and raises targets for AMAT, KLAC, NLVS, VSEA and TER as well.

1/25/2011 -- LyondellBasell Industries NV (LYB) -- UBS initiates with a Buy rating and $42 price target.

1/25/2011 -- Huntsman Corporation (HUH) -- UBS initiates the stock with a Buy rating and $21 price target.

1/24/2011 -- Waddell & Reed Financial, Inc. (WDR) -- Bank of America/Merrill Lynch upgraded the stock to Buy from Neutral and its price target was raised to $44 from $35.

According to TheFlyOnTheWall.com, "the firm believes the company's operating leverage is accelerating and that it should benefit from a rotation into equities."

1/21/2011 -- Parker-Hannifin Corp (PH) -- Citigroup raises target to $100 from $94, citing recent sell off as a buying opportunity.

1/20/2011 -- Macy's, Inc. (M) -- Credit Suisse names the stock its top pick for 2011 after previously upgrading on 1/11.

1/20/2011 -- TRW Automotive Holdings Corp. (TRW) -- Soleil raised its price target to $71 from $59 "to reflect higher build assumptions and new business wins."

1/19/2011 -- Avnet Inc. (AVT) -- UBS raises price target to $42 from $40.

1/19/2011 -- Waddell & Reed Financial, Inc. (WDR) -- Stifel Nicolaus raises rating to Buy from Hold

1/18/2011 -- Avnet Inc. (AVT) -- Longbow upgrades to Buy from Neutral with a $41 price target.
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1/14/2011 -- Lam Research Corp. (LRCX) --Deutsche Bank upgrades to Buy from Hold.

1/14/2011 -- Freeport McMoRan Copper & Gold (FCX) -- Dahlman Rose raises price target to $160 from $125.

1/14/2011 -- Lam Research Corp. (LRCX) -- Bank of America/Merrill Lynch raises price target to $50 from $40.

1/13/2011 -- Parker Hannifin Corp (PH) -- JP Morgan upgrades the stock to Overweight from Neutral.

1/13/2011 -- Huntsman (HUN) -- Jefferies raises price target to $21 from $18 maintaining Buy rating.

1/13/2011 -- Albemarle Corp. (ALB) -- Jefferies raises price target to $75 from $61 and maintains Buy rating.

1/12/2011 --Albemarle Corp. (ALB) -- named a long Tactical Research Idea by Morgan Stanley.

1/12/2011 -- Lear Corp. (LEA) -- Credit Suisse raises Lear target price to $142 from $133 and maintains Outperform rating.

1/12/2011 -- PNC Financial Services Group Inc (PNC) --Wells Fargo upgrades bank sector to Overweight from Neutral and names PNC Financial one of five bank stocks (BAC,

JPM, GS, CMA, PNC) as a top idea for 2011.

1/11/2011 -- Waddell & Reed Financial, Inc. (WDR) -- Barclays raises price target to $43 from $41.

1/11/2011 -- T. Rowe Price Group, Inc. (TROW) -- Barclays raises price target to $71 from $69.

1/11/2011 -- Macy's, Inc. (M) -- Credit Suisse upgrades to Outperform from Neutral and raised its price target to $27 from $25. The analyst expects shareholders to benefit from

the ongoing pay down of debt.

1/10/2011 -- Freeport McMoRan Copper & Gold (FCX) -- Stifel Nicolaus upgraded the stock to Buy from Hold based on expected leverage to rising commodity prices.

1/10/2011 -- United Continental (UAL) -- Soleil raised estimates and its price target for UAL to $35 from $33.

1/10/2011 -- LyondellBasell (LYB) -- BWS Financial raised its price target for LYB to $40 from $35. Also, FMR Corp. reported a 10.18% passive stake in the company.

1/10/2011 -- Lam Research (LRCX) -- Morgan Stanley added the name as a long Research Tactical Idea.

1/10/2011 -- Lear Corp. (LEA) -- Barclays upgraded the stock to Overweight from Equal weight, and increased its stock price target to $123 from $94.


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1/10/2011 -- Westlake Chemical Corp. (WLK) -- Goldman Sachs upgrades stock to Neutral from Sell and removes from its Americas Sell List. According to Reuters, Goldman

upgraded raised a number of ratings and price targets in the chemical industry given the group's "improved outlook, higher growth prospects and attractive valuation" and that

the group "...should see another year of outperformance primarily driven by continued estimate increases."

1/10/2011 -- Parker-Hannifin Corporation (PH) -- Goldman Sachs upgrades stock to Buy from Neutral and raises stock price target to $105 from $92.

1/10/2011 -- Dover Corporation (DOV) -- Goldman Sachs increased its price target to $72 from $65, removed the stock from the Conviction Buy List and kept it rated Buy.

1/7/2011 -- T. Rowe Price Group, Inc. (TROW) -- Deutsche Bank raises price target to $65 from $58.

1/7/2011 -- East West Bancorp Inc. (EWBC) -- Goldman Sachs initiated with a Buy rating and $24.50 price target.

1/7/2011 -- Freeport McMoRan Copper & Gold Inc. (FCX) -- Canaccord upgrades to Buy from Hold, raising target to $135 from $98.

1/6/2011 -- PNC Financial Services Group Inc (PNC) -- UBS names the stock a short-term Buy.

1/6/2011 -- PNC Financial Services Group Inc (PNC) -- Nomura initiated coverage of the stock with a Buy rating and $73 target.


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* This table represents a theoretical model, and is presented for informational purposes only. This table is not representative of any actual portfolio and is no t to be construed as any advertisement of any investment

service. The figures above are gross returns of various models and do not assume any kind of cost. Real portfolios that attempt to exactly replicate these theoretical strategies are guaranteed to generate relatively

lower returns.

"Naive" Model. So named because it excludes risk management and other refinements and is intended to show the returns due to fundamental factors alone, which include operating momentum, relative value,fundamental quality and analyst revision momentum. Typically the Naive Model comprises of approximately 80-100 stocks.

Core Model. A refined version of the Naive Model and uses stock-specific price targets and stops. Over the backtest, the number of stocks in the Core Model has comprised on average approximately 22 stocks in the

long portfolio and 15 stocks in the short portfolio.

Opportunistic Model. Uses the same stocks and stock-specific price targets and stops of the Core Model, but it additionall y applies target and stop loss rules to the long and short portfolios. This model is usuallydollar neutral, but when target or stops are reached this model could change to 100% long or short or to 100% cash at any given time.

Return of Stocks in the Long Portfolio - Return of Stocks in the Short Portfolio = Return of Overall Portfolio. Cumulative and YTD returns are based in part on backtested returns and returns collected in real time.

Cumulative returns include a backtest to 12/31/2004. Returns of the Naive Model have been tracked in real time since December 31, 2009. Returns of the Core Model has been tracked in real time since July 31, 2010.

Returns of the Opportunistic Model have been tracked in real time since August 31, 2010. Cumulative returns and the Sharpe Ratios are calculated from the 12/31/2004 "inception." The risk free rate used in the

calculation is the 90-day T-bill, which has averaged ~2.28% since 12/31/2004. The returns above do not include estimated expenses.

Model Portfolio Strategies* 01/31/11 WTD MTD YTD Cumulative Sharpe

Simple Returns (No Compounding)

Fundamentals Only Nave Model

No Risk Mgmt Long "High-Quality" 0.83% 0.83% 0.80% 0.80% 76.9% 0.41

Short "Low-Quality" 1.00% 1.00% 1.92% 1.92% 5.6% (0.04)

Dollar Neutral -0.17% -0.17% -1.12% -1.12% 71.3% 0.55

Stock Targets Core ModelLong 0.94% 0.94% 1.59% 1.59% 167.6% 0.80

Short 0.83% 0.83% 3.54% 3.54% -52.6% (0.41)

Dollar Neutral 0.11% 0.11% -1.95% -1.95% 220.1% 1.47

Stock Targets and Opportunistic Model

Portfolio Targets Long 0.94% 0.94% 1.59% 1.59% 219.5% 1.46

Short 0.83% 0.83% 3.54% 3.54% -57.2% (0.58)

Opportunistic Long/Short 0.11% 0.11% -1.95% -1.95% 276.6% 2.01

Stock Targets and Opportunistic Model I I

Portfolio Targets Long Stocks 0.94% 0.94% 1.59% 1.59% 219.5% 1.46

Short S&P 500 Futures 0.77% 0.77% 2.28% 2.28% -18.8% (0.33)Opportunistic Long/Short II 0.17% 0.17% -0.69% -0.69% 238.3% 2.08

S&P 500 Index, ex dividends 0.77% 0.77% 2.28% 2.28% 22.07% 0.06


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Opportunistic Long Only Theoretical Model versus Model Based on Real Trade DataNo Leverage Theoretical Model, Excluding Costs -- From "Inception": 217.97%

Excludes Dividends Since "Inception", Simple Returns 179%

Since "Inception", Compound Returns 406%

Estimated costs include slippage, transaction fees and management fees of 0.56% per month.

Description 31-Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 12/31/11 2011

Theoretical Model w/ Estimated Costs 1.03% 1.03%

Real portfol io, ex mgmt fees* 1.20% 1.20%

S&P 500 ex Div 2.28% 2.28%

S&P 500 with Div

De scription Ja n-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Se p-10 Oct-10 Nov-10 12/31/10 2010

Theoretical Model w/ Estimated Costs -4.40% 5.28% 7.40% 8.03% -0.56% -6.95% 7.19% -7.23% 7.59% 6.70% 3.30% 4.64% 31.00%

Real portfolio, ex mgmt fees* 1.69% 7.26% 2.66% 5.28%

S&P 500 ex Div -3.67% 2.93% 5.74% 1.56% -8.15% -5.26% 6.82% -4.72% 8.51% 3.67% -0.14% 6.37% 13.66%

S&P 500 with Div

De scription Ja n-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Se p-09 O ct-09 Nov-09 Dec-09 2009

Theoretical Model w/ Estimated Costs 10.06% -10.05% 6.54% 7.66% 8.16% -2.69% 10.98% 7.13% 9.06% 6.66% 7.60% 4.23% 65.34%

S&P 500 ex Div -8.35% -11.14% 9.20% 9.35% 5.49% 0.19% 7.34% 3.41% 3.60% -1.80% 5.68% 1.78% 24.75%

S&P 500 with Div 26.46%


Theoretical Model w/ Estimated Costs -13.51% 0.75% -4.10% 4.80% 5.19% -8.04% 7.81% -0.72% -14.33% -0.56% 7.76% 7.40% -7.55%

S&P 500 ex Div -6.07% -3.37% -0.28% 4.79% 1.14% -8.81% -0.77% 1.38% -8.30% -15.69% -5.96% 0.78% -41.17%

S&P 500 with Div -37.00%


Theoretical Model w/ Estimated Costs 4.28% 6.63% -0.90% 7.20% 7.43% 1.15% 6.91% 0.02% 4.80% 6.31% -3.46% 2.54% 42.91%

S&P 500 ex Div 1.42% -2.13% 1.07% 4.27% 3.24% -1.72% -3.13% 1.54% 3.61% 1.56% -4.22% -0.86% 4.63%

S&P 500 with Div 5.49%


Theoretical Model w/ Estimated Costs 6.61% -4.10% 7.17% 7.52% 6.62% 6.92% -2.66% -1.88% -4.44% 7.73% 5.66% 0.29% 35.45%

S&P 500 ex Div 2.56% 0.08% 1.13% 1.24% -3.07% 0.11% 0.58% 2.13% 2.42% 3.13% 1.66% 1.26% 13.23%

S&P 500 with Div 15.79%


Theoretical Model w/ Estimated Costs -0.62% 5.29% -6.29% -6.44% 4.73% 1.06% 7.03% 0.05% 3.09% -5.73% 6.50% 1.83% 10.50%

S&P 500 ex Div -2.52% 1.91% -1.89% -1.94% 2.99% 0.01% 3.57% -1.09% 0.73% -1.70% 3.49% -0.09% 3.46%

S&P 500 with Div 4.91%

*These theoretical returns can change at any time as we refine our backtests. "Real portfolio" returns are not audited.


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Most of the time, our models assume investors are long "high-quality" stocks and short "low-quality" stocks. Therefore, we would prefer to see "high-quality"

stocks moving up for the day and "low-qual ity" stocks moving down.

Nave Model

January 31, 2011

Best performing "high-quality" stocks: Worst performing "high-quality" stocks:

China Petroleum & Chemical Corp. SNP +5.35% United Continental Holdings, Inc. UAL -1.74%

Banco Santander-Chile SAN +4.25% Bed Bath & Beyond Inc. BBBY -1.23%

Dover Corp. DOV +3.14% Microchip Technology Inc. MCHP -1.14%

Best performing "low-quality" stocks: Worst performing "low-quality" stocks:

ProLogis PLD -1.91% Range Resources Corp. RRC +4.64%

TransAlta Corp. TAC -1.43% EOG Resources, Inc. EOG +3.76%

Alliance Data Systems Corporation ADS -0.72% Weatherford International Ltd. WFT +3.27%


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Core & Opportunistic Long Model Daily Opportunistic Portfol io Stop Date 10/22/2010 7.26%1/28/2011 to 1/31/2011

Target/ Date+1

Sector Company Ticker 1/28/2011 1/31/2011 Performance Price Target Stop Target Stop Date Sell Price Return

Industrials Dover Corp. DOV 62.15 64.10 3.14% 64.40$ None

Materials LyondellBasell Industries AF S.C.A. LYB 34.86 35.94 3.10% 38.66$ None

Materials Huntsman Corp. HUN 16.97 17.41 2.59% 18.36$ None

Industrials Parker Hannifin Corporation PH 87.19 89.41 2.55% 95.78$ None

Materials Freeport-McMoRan Copper & Gold InFCX 106.17 108.75 2.43% 139.08$ None

Financials Ares Capital Corporation ARCC 16.45 16.79 2.07% 18.15$ None

Energy RPC Inc. RES 17.27 17.58 1.80% 22.39$ None

Information Technology Avnet Inc. AVT 35.01 35.62 1.74% 37.34$ NoneIndustrials Avery Dennison Corporation AVY 41.39 42.09 1.69% 46.18$ None

Consumer Discretionary Fossil Inc. FOSL 69.96 71.05 1.56% 80.12$ None

Materials Albemarle Corp. ALB 55.58 56.16 1.04% 62.12$ None

Consumer Discretionary Lear Corp. LEA 104.85 105.63 0.74% None 1/14/2011 109.30$ 10.73%

Consumer Discretionary Macy's, Inc. M 22.99 23.15 0.70% 28.31$ None

Financials East West Bancorp Inc. EWBC 21.56 21.71 0.70% 22.23$ None

Health Care Biogen Idec Inc. BIIB 65.08 65.47 0.60% 73.22$ None

Information Technology LAM Research Corp. LRCX 49.63 49.89 0.52% 59.55$ None

Materials Westlake Chemical Corp. WLK 38.55 38.72 0.44% 49.81$ None

Industrials Nordson Corp. NDSN 92.07 92.31 0.26% 102.96$ None

Financials T. Rowe Price Group, Inc. TROW 65.85 65.92 0.11% 71.46$ None

Financials PNC Financial Services Group Inc. PNC 60.11 60.00 -0.18% 68.23$ None

Consumer Discretionary TRW Automotive Holdings Corp. TRW 59.89 59.66 -0.38% None 1/14/2011 60.68$ 15.14%

Financials Waddell & Reed Financial Inc. WDR 36.26 36.12 -0.39% 39.75$ None

Consumer Discretionary Williams-Sonoma Inc. WSM 32.34 32.20 -0.43% 41.32$ None

Consumer Discretionary Autoliv, Inc. ALV 77.39 76.80 -0.76% 88.20$ None

Industrials United Continental Holdings, Inc. UAL 25.85 25.40 -1.74% 27.90$ None

Core & Opportunistic Short Model Daily Opportuni sti c Portfol io Stop Da te 10/ 8/ 2010 6. 26%1/28/2011 to 1/31/2011

Target/ Date+1


Financials ProLogis PLD 15.21 14.92 -1.91% 1/27/2011 15.21$ 5.33%

Information Technology Alliance Data Systems Corporation ADS 71.25 70.74 -0.72% 66.86$ 75.20$

Materials Cemex S.A.B. de C.V. CX 9.47 9.47 0.00% 1/28/2011 9.47$ -11.58%

Industrials Bucyrus International Inc. BUCY 90.68 90.76 0.09% 75.57$ 103.23$

Consumer Discretionary Harley-Davidson Inc. HOG 39.37 39.65 0.71% 1/25/2011 39.36$ 13.53%Materials Packaging Corp. of America PKG 28.02 28.25 0.82% 1/10/2011 28.07$ 8.63%

Energy Pride International Inc. PDE 32.21 32.50 0.90% 30.47$ 35.53$

Energy Compagnie Gnrale de GophysiqueCGV 30.16 30.45 0.96% 26.62$ 34.56$

Energy Tidewater Inc. TDW 57.98 59.49 2.60% 1/27/2011 57.98$ 7.69%

Energy Weatherford International Ltd. WFT 22.97 23.72 3.27% 20.64$ 24.96$

Energy Range Resources Corp. RRC 47.66 49.87 4.64% 1/31/2011 49.87$ 10.87%


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Month to Date Returns


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Core & Opportunistic Long Model MTD Opportun isti c Por tfo lio S top Date 10/22/2010 7.26%12/31/2010 to 1/31/2011

Target/ Date+1


Consumer Discretionary TRW Automotive Holdings Corp. TRW 52.70 59.66 13.21% None 1/14/2011 60.68$ 15.14%

Materials Huntsman Corp. HUN 15.61 17.41 11.53% 18.36$ None

Financials East West Bancorp Inc. EWBC 19.55 21.71 11.05% 22.23$ None

Industrials Dover Corp. DOV 58.45 64.10 9.67% 64.40$ None

Information Technology Avnet Inc. AVT 33.03 35.62 7.84% 37.34$ None

Consumer Discretionary Lear Corp. LEA 98.71 105.63 7.01% None 1/14/2011 109.30$ 10.73%

Industrials United Continental Holdings, Inc. UAL 23.82 25.40 6.63% 27.90$ None

Materials LyondellBasell Industries AF S.C.A. LYB 34.40 35.94 4.48% 38.66$ NoneIndustrials Parker Hannifin Corporation PH 86.30 89.41 3.60% 95.78$ None

Financials Waddell & Reed Financial Inc. WDR 35.29 36.12 2.35% 39.75$ None

Financials T. Rowe Price Group, Inc. TROW 64.54 65.92 2.14% 71.46$ None

Financials Ares Capital Corporation ARCC 16.48 16.79 1.88% 18.15$ None

Consumer Discretionary Fossil Inc. FOSL 70.48 71.05 0.81% 80.12$ None

Materials Albemarle Corp. ALB 55.78 56.16 0.68% 62.12$ None

Industrials Nordson Corp. NDSN 91.88 92.31 0.47% 102.96$ None

Industrials Avery Dennison Corporation AVY 42.34 42.09 -0.59% 46.18$ None

Financials PNC Financial Services Group Inc. PNC 60.72 60.00 -1.19% 68.23$ None

Health Care Biogen Idec Inc. BIIB 67.05 65.47 -2.36% 73.22$ None

Consumer Discretionary Autoliv, Inc. ALV 78.94 76.80 -2.71% 88.20$ None

Energy RPC Inc. RES 18.12 17.58 -2.98% 22.39$ None

Information Technology LAM Research Corp. LRCX 51.78 49.89 -3.65% 59.55$ None

Consumer Discretionary Macy's, Inc. M 25.30 23.15 -8.50% 28.31$ None

Materials Freeport-McMoRan Copper & Gold IncFCX 120.09 108.75 -9.44% 139.08$ None

Consumer Discretionary Williams-Sonoma Inc. WSM 35.69 32.20 -9.78% 41.32$ None

Materials Westlake Chemical Corp. WLK 43.47 38.72 -10.93% 49.81$ None

Core & Opportunistic Short Model MTD Opportuni stic Portfol io S top Da te 10/ 8/ 2010 6.26%12/31/2010 to 1/31/2011

Target/ Date+1


Materials Cemex S.A.B. de C.V. CX 10.71 9.47 -11.58% 1/28/2011 9.47$ -11.58%

Energy Pride International Inc. PDE 33.00 32.50 -1.52% 30.47$ 35.53$

Energy Compagnie Gnrale de Gophysiqu CGV 30.59 30.45 -0.46% 26.62$ 34.56$

Information Technology Alliance Data Systems Corporation ADS 71.03 70.74 -0.41% 66.86$ 75.20$Industrials Bucyrus International Inc. BUCY 89.40 90.76 1.52% 75.57$ 103.23$

Financials ProLogis PLD 14.44 14.92 3.32% 1/27/2011 15.21$ 5.33%

Energy Weatherford International Ltd. WFT 22.80 23.72 4.04% 20.64$ 24.96$

Materials Packaging Corp. of America PKG 25.84 28.25 9.33% 1/10/2011 28.07$ 8.63%

Energy Tidewater Inc. TDW 53.84 59.49 10.49% 1/27/2011 57.98$ 7.69%

Energy Range Resources Corp. RRC 44.98 49.87 10.87% 1/31/2011 49.87$ 10.87%

Consumer Discretionary Harley-Davidson Inc. HOG 34.67 39.65 14.36% 1/25/2011 39.36$ 13.53%


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DISCLOSURESAscendere is in the business of providing equity research and related consulting services to investors and their advisors. The equity research it provides includes

basic quantitative model portfolios and more detailed fundamental research with respect to individual stocks. In addition, the firm manages stock portfolios for

itself and clients. Ascendere currently sources financial data from Capital IQ.

Ascendere does not rate stocks on any scale, but does offer individual stock commentary and valuation opinions. With regard to Ascendere's portfolio

strategies, "long" or "high-quality" baskets should generally be considered buys, unless otherwise noted. Stocks in our "short" or "low-quality" baskets should

generally be considered sells, unless otherwise noted. While exceptions may occasionally occur, typically stocks in the high-quality basket are expected tooutperform the S&P 500 over a month's time and stocks in the low-quality basket are expected to underperform. A more relevant benchmark would comprise

of all stocks and ADRs that trade on major U.S. stock exchanges with a market cap above $ 2 billion.

Ascendere adheres to professional standards and abides by codes of ethics that put the interests of clients ahead of its own. The following are specific

disclosures made by Ascendere:

1) Ascendere may have a financial interest in the companies referred to in this report ("the Companies"). The research analyst covering the Companies

and members of the analyst's immediate family have a financial interest in one or more of the Companies.

2) Ascendere generates revenue from research subscription revenue and portfolio management fees. At any given time it may be long or short any ofthe Companies.

3) Ascendere does not make a market in the securities of any of the Companies.

4) Ascendere has not received compensation from the Companies.

5) Ascendere has not managed or co-managed a publ ic offering for any of the Companies.

6) Neither Ascendere nor any of its officers or any family member of the covering analyst serve as an officer, director or advisory board member of any

of the Companies.

7) Neither Ascendere nor any of its officers or any family member of the covering analyst beneficially own 1% or more of any class of securities of any of

the Companies.

8) The covering analyst certifies that this report accurately reflects such analyst's personal views.


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DISCLAIMERSThis report is intended for informational purposes only and does not constitute a recommendation, or an offer, to buy or sell any securities or related financial

instruments. The report is not intended to be in furtherance of the specific investment objectives, financial situation, or particular needs of any individual

recipient. The information contained herein accurately reflects the opinion of Ascendere at the time the report was released. The opinions of Ascendere are

subject to change at any time without notice and without obligation or notification. The officers, affiliates or family members of Ascendere Associates may hold

positions in the securities of the Companies. No warranty is made as to the accuracy of the information contained herein. This information is intended for the

sole use of clients of Ascendere. Any other use, distribution or reproduction is strictly prohibited. Investing in stocks includes a high degree of risk, including the

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