A Record of How in a Single Day We Created More Actionable and Valuable Stock Research than 20 Sell Side Analyst Teams Over a Month

Model Portfolio Daily Update:  January 31, 2011

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Of Note:
Our 25-stock theoretical long portfolio issued to clients on December 31 presaged 45 major positive upgrades by more than 20 sell side firms.  (A real portfolio model based in part on our theoretical models is available on Covestor Ltd.)

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, our theoretical Opportunistic Long Only model portfolio 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). We are doing this to avoid the huge surges in stock prices we have increasingly been seeing on the first day of the month.

To go back to the theme of presaging sell side analysts, we provide below 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 (HUN) – 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.

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.

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.

About this report
This daily update is a supplement to a monthly report dated December 31, 2010 that details the model portfolio strategies of Ascendere Associates LLC (“Ascendere”).  For more information, please see our list of frequently asked questions, suggested tips on using our newsletter or an interview with us on Covestor Live.  See also our long-only model based on actual trade data. Please see our disclosures and disclaimers at the back of this report.