Ascendere Associates LLC

Innovative Long/Short Equity Research

Model Portfolio Monthly Update: October 31, 2014

There are limitations inherent in our 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 additional disclaimers and disclosures at the back of this report.
We highlight stocks that demonstrate solid growth at a reasonable price (GARP). Stocks selected for our model portfolio strategies all rank highly
for the following metrics, with an emphasis on proxies for cash flow growth and ROIC:

Relative Value
Operating Momentum
Analyst Revision Momentum
Fundamental Quality

Page 2 contains rebalancing actions for our long-only model portfolio.

Page 3 contains rebalancing actions for our short-only model portfolio.
Target and stop prices, as well as updated return data, to be provided in our daily reports that will follow.

Ascendere Associates LLC

J. Stephen Castellano

Page 1

October 31, 2014

steve@ascenderellc.com

Long Model Portfolio -- Rebalancing Actions

10/31/2014 Rebalancing
Core and Opportunistic Long Portfolio:
26 stocks in the model portfolio = 3.85% weight per position

Close Position
Magna International Inc.
Foot Locker, Inc.
Tata Motors Limited
The Home Depot, Inc.
CVS Health Corporation
Halliburton Company
The Blackstone Group L.P.
Lazard Ltd.
Affiliated Managers Group Inc.
Primerica, Inc.
Protective Life Corporation
Gilead Sciences Inc.
Align Technology Inc.
Allergan Inc.
Trinity Industries Inc.
ManpowerGroup Inc.
Snap-on Incorporated

MGA
FL
TTM
HD
CVS
HAL
BX
LAZ
AMG
PRI
PL
GILD
ALGN
AGN
TRN
MAN
SNA

Hold/Rebalance
GameStop Corp.
GME
Pilgrim's Pride Corporation
PPC
VCA Inc.
WOOF
Huntington Ingalls Industries, Inc.
HII
Robert Half International Inc. RHI
Brocade Communications Systems,
BRCDInc.
Anixter International Inc.
AXE
Skyworks Solutions Inc.
SWKS

Open Position
Marriott International, Inc.
FMC Technologies, Inc.
Progressive Corp.
PrivateBancorp, Inc.
SunTrust Banks, Inc.
Dover Corporation
Kirby Corporation
AU Optronics Corp.
Micron Technology, Inc.
MAXIMUS, Inc.
RF Micro Devices Inc.
Manhattan Associates, Inc.
Texas Instruments Inc.
Flextronics International Ltd.
MasterCard Incorporated
TE Connectivity Ltd.
F5 Networks, Inc.

MAR
FTI
PGR
PVTD
STI
DOV
KEX
AUO
MU
MMS
RFMD
MANH
TXN
FLEX
MA
TEL
FFIV

Source: Ascendere Associates LLC

Ascendere Associates LLC

J. Stephen Castellano

Page 2

October 31, 2014

steve@ascenderellc.com

Short Model Portfolio -- Rebalancing Actions

When the market anticipates an improving economy from low price levels, low-quality stocks will at times out-perform high-quality stocks as the
expected improvements in fundamentals are discounted from a relatively more depressed price level.

10/31/2014 Rebalancing
Core and Opportunistic Short Portfolio:
21 stocks in the model portfolio = 4.76% weight per position

Close Position
Dresser-Rand Group Inc.
Williams Companies, Inc.
Popular, Inc.
Credit Suisse Group AG
Deutsche Bank AG
Cubist Pharmaceuticals Inc.
Alkermes plc
Jacobs Engineering Group Inc.
Joy Global, Inc.

Source: Ascendere Associates LLC

Ascendere Associates LLC

J. Stephen Castellano

DRC
WMB
BPOP
CS
DB
CBST
ALKS
JEC
JOY

Hold/Rebalance
General Motors Company
GM
Pioneer Natural Resources Co. PXD
Golar LNG Ltd.
GLNG
Memorial Resource Development
MRD
Corp.
ING Groep N.V.
INZ
Kennametal Inc.
KMT
Eaton Corporation plc
ETN
KBR, Inc.
KBR
3D Systems Corporation
DDD
SunEdison, Inc.
SUNE
CRH plc
CRH
Allegheny Technologies Inc.
ATI

Page 3

Open Short Sale

Gulfport Energy Corp.
Qiagen NV
Vertex Pharmaceuticals Incorporated
Belden Inc.
The Ultimate Software Group, Inc.
Qlik Technologies, Inc.
The Mosaic Company
Carpenter Technology Corp.
Sprint Corporation

GPOR
QGEN
VRTX
BDC
ULTI
QLIK
MOS
CRS
S

October 31, 2014

steve@ascenderellc.com

Return Data

Core & Opportunistic Long Model

Theoretical Longs
MTD
Stopped Out on 8/4/2011 close for a -12.33% loss

9/30/2014 to 10/31/2014
Sector
Health Care
Industrials
Consumer Discretionary
Consumer Staples
Industrials
Health Care
Consumer Discretionary
Financials
Health Care
Consumer Discretionary
Consumer Discretionary
Health Care
Industrials
Consumer Discretionary
Financials
Information Technology
Information Technology
Financials
Information Technology
Financials
Financials
Industrials
Consumer Staples
Energy
Industrials

Ascendere Associates LLC

J. Stephen Castellano

Company
VCA Antech Inc.
Robert Half International Inc.
Snap-on Inc.
CVS Caremark Corp.
Tata Motors Ltd.
Allergan Inc.
The Home Depot, Inc
Primerica, Inc.
Gilead Sciences Inc.
Magna International, Inc.
GameStop Corp.
Align Technology Inc.
Huntington Ingalls Industries, Inc.
Foot Locker Inc.
Protective Life Corp.
Anixter International Inc.
Skyworks Solutions Inc.
Affiliated Managers Group Inc.
Brocade Communications Systems,
Lazard Ltd.
The Blackstone Group
Manpower Inc.
Pilgrim's Pride Corporation
Halliburton Company
Trinity Industries Inc.

Ticker

WOOF
RHI
SNA
CVS
TTM
AGN
HD
PRI
GILD
MGA
GME
ALGN
HII
FL
PL
AXE
SWKS
AMG
Inc.
BRCD
LAZ
BX
MAN
PPC
HAL
TRN

9/30/2014
39.33
49.00
121.08
79.59
43.71
178.19
91.74
48.22
106.45
94.91
41.20
51.68
104.21
55.65
69.41
84.84
58.05
200.36
10.87
50.70
31.48
70.10
30.56
64.51
46.72

Page 4

10/31/2014
45.57
54.78
132.14
85.81
47.10
190.06
97.52
51.15
112.00
98.71
42.76
52.62
105.82
56.01
69.68
85.17
58.24
199.79
10.73
49.21
30.12
66.75
28.41
55.14
35.71

Performance
15.87%
11.80%
9.13%
7.82%
7.76%
6.66%
6.30%
6.08%
5.21%
4.00%
3.79%
1.82%
1.54%
0.65%
0.39%
0.39%
0.33%
-0.28%
-1.29%
-2.94%
-4.32%
-4.78%
-7.04%
-14.52%
-23.57%

Target/
Date+1
Stop Date
Sell Price
10/24/2014 $
44.41
10/31/2014 $
54.57
10/28/2014 $

85.19

Return
12.92%
11.37%
7.04%

October 31, 2014

steve@ascenderellc.com

Core & Opportunistic Short Model

Theoretical
MTD shorts hit target 8/4/2011 for 14.84% gain

9/30/2014 to 10/31/2014
Sector
Information Technology
Energy
Materials
Financials
Industrials
Energy
Financials
Industrials
Industrials
Materials
Consumer Discretionary
Energy
Energy
Energy
Financials
Industrials
Information Technology
Industrials
Financials
Health Care
Health Care

Ascendere Associates LLC

J. Stephen Castellano

Company
Ticker
3D Systems Corp.
DDD
Golar LNG Ltd.
GLNG
Allegheny Technologies Inc.
ATI
Deutsche Bank AG
DB
Kennametal Inc.
KMT
Pioneer Natural Resources Co.
PXD
Credit Suisse Group
CS
Joy Global, Inc.
JOY
Jacobs Engineering Group, Inc.
JEC
CRH plc
CRH
General Motors Company
GM
Dresser-Rand Group Inc.
DRC
Memorial Resource Development Corp.
MRD
Williams Companies, Inc.
WMB
ING Groep NV
ING
KBR, Inc.
KBR
SunEdison, Inc.
SUNE
Eaton Corp.
ETN
Popular Inc.
BPOP
Cubist Pharmaceuticals Inc.
CBST
Alkermes, Inc.
ALKS

9/30/2014
46.37
66.40
37.10
34.86
41.31
196.97
27.64
54.54
48.82
22.81
31.94
82.26
27.11
55.35
14.19
18.83
18.88
63.37
29.44
66.34
42.87

Page 5

10/31/2014
37.80
56.11
32.85
31.32
38.61
189.06
26.64
52.63
47.45
22.41
31.40
81.70
27.09
55.51
14.32
19.08
19.51
68.39
31.88
72.29
50.55

Performance
-18.48%
-15.50%
-11.46%
-10.15%
-6.54%
-4.02%
-3.62%
-3.50%
-2.81%
-1.75%
-1.69%
-0.68%
-0.07%
0.29%
0.92%
1.33%
3.34%
7.92%
8.31%
8.97%
17.91%

Target/
Stop Date
10/9/2014
10/8/2014
10/7/2014
10/10/2014
10/10/2014
10/9/2014
10/16/2014
10/10/2014
10/13/2014
10/9/2014
10/3/2014

$
$
$
$
$
$
$
$
$
$
$

Date+1
Sell Price
39.14
52.10
33.78
31.51
38.31
176.24
25.60
48.94
46.70
20.73
33.75

Return
-15.59%
-21.54%
-8.95%
-9.61%
-7.26%
-10.52%
-7.38%
-10.27%
-4.34%
-9.12%
5.67%

10/9/2014 $
10/9/2014 $
10/16/2014 $

22.09
50.15
13.45

-18.52%
-9.39%
-5.21%

10/10/2014
10/13/2014
10/10/2014
10/13/2014
10/28/2014

14.30
59.05
27.83
60.05
49.61

-24.26%
-6.82%
-5.45%
-9.48%
15.72%

$
$
$
$
$

October 31, 2014

steve@ascenderellc.com

Theoretical Model Portfolio* 10/31/14

Simple Returns (No Compounding)
Stock Targets

MTD

YTD

Since
03/31/09

Sharpe

Core Model
Long
Short
Core Long/Short

-0.44%
0.12%
-0.56%

1.51%
-7.45%
8.96%

8.43%
-5.29%
13.72%

147.1%
80.7%
66.4%

1.03
0.64
0.66

Stock Targets and

Portfolio Targets

Opportunistic Model
Long
Short
Opportunistic Long/Short

-0.44%
0.00%
-0.44%

1.51%
-8.74%
10.25%

1.43%
-6.90%
8.33%

131.2%
30.6%
100.7%

1.20
0.21
1.11

Stock Targets and

Portfolio Targets

Opportunistic Model III

Long Stocks
Long Inverse ETF ^SH
Opportunistic Long/Short III

-0.44%
0.00%
-0.44%

1.51%
-2.50%
-0.99%

1.43%
-10.35%
-8.92%

131.2%
-75.8%
55.5%

1.20
(1.05)
0.64

S&P 500 Index

-0.60%

2.44%

9.32%

100.65%

1.07

* Return figures are calculated using cumulative simple returns. This table represents returns of several theoretical portfolios that do not assume any costs. This table is not to
be construed as advertising for any investment service. Real portfolios that attempt to exactly replicate these theoretical strategies will generate lower returns relative to these
models due to slippage, transaction costs, tax expenses and other costs. There are limitations inherent in our theoretical 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. We do our best to provide accurate information, but do not guarantee this. Please see additional disclosures and disclaimers.

Ascendere Associates LLC

J. Stephen Castellano

Page 6

October 31, 2014

steve@ascenderellc.com

Ascendere Associates LLC

J. Stephen Castellano

Page 7

October 31, 2014

steve@ascenderellc.com

Ascendere Associates LLC

J. Stephen Castellano

Page 8

October 31, 2014

steve@ascenderellc.com

DISCLOSURES
Ascendere 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 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 to outperform 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 of the 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 public 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.

DISCLAIMERS
This 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. Investment decisions should
be based on an individual's own goals, time horizon and tolerance for risk. 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. The views and
opinions expressed in the market commentary reflect the opinions of the author and may be based upon information obtained from third-party sources believed to be reliable
but not guaranteed. These opinions are subject to change at any time based upon market or other conditions. Ascendere disclaims any responsibility to update such views.
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 risk of total loss. This is for informational purposes only and is not intended to constitute a current or past recommendation, investment advice of any kind,
or a solicitation of an offer to buy or sell any securities or investment services. All information, opinions and estimates are current as of original distribution by author and are
subject to change at any time without notice. Any companies, securities and/or markets referenced are solely for illustrative purposes. Past performance is not indicative of
future performance, and no representation or warranty, express or implied, is made regarding future performance.
For Investment Professional use only. NOT FOR FURTHER DISTRIBUTION. Any dissemination or copying of this commentary is strictly prohibited.

Ascendere Associates LLC

J. Stephen Castellano

Page 9

October 31, 2014

steve@ascenderellc.com

J. Stephen Castellano founded Ascendere Associates LLC to provide innovative equity research
and investment advisory services that blends fundamental and quantitative approaches.
In general, our approach is quite simple -- we believe that return on invested capital and long-term
earnings growth are key to stock valuation. More specifically, we use powerful and unique financial
models that combine publicly available data, consensus estimates and our own inputs to generate
consistent and actionable stock recommendations.
Among the services that Ascendere provides are: 1) detailed custom equity research analysis; 2) valuation scenario analysis
studies; 3) supply /demand studies; 4) long and short stock idea generation; 5) portfolio feedback; 6) detailed fundamental
financial modeling services; and 7) additional analytical consulting services. Additional information is available at
www.ascenderellc.com.
Mr. Castellano has over 15 years of experience in equity research and related consulting work. At PaineWebber, Warburg
Dillon Read and Credit Lyonnais Securities he developed fundamental equity valuation models and conducted in-depth
research on the steel and telecom services industries. At Boston Private Value Investors, he developed quantitative models
for stock idea generation and also provided general fundamental equity research coverage. Steve received a MBA from the F.
W. Olin School of Business at Babson College (2005) and a BA from Oberlin College (1993).
Mr. Castellano's career history is highlighted below:

Startup Ecommerce Company (2013-Present)

Ascendere Associates, LLC (2009-Present)
Boston Private Value Investors , Equity Research, Equity Research Analyst (2005-2009)
Pyramid Research, Contract Consultant, Telecom Services (2002-2003)
Credit Lyonnais Securities (USA), Equity Research, Telecom Services, Vice President (2000-2001)
Warburg Dillon Read, Equity Research, Telecom Services, Research Associate (1999-2000)
PaineWebber, Equity Research, Steel and Nonferrous Metals, Research Associate, Editor (1995-1999)

Ascendere Associates LLC

J. Stephen Castellano

Page 10

October 31, 2014

steve@ascenderellc.com