Nostradamus Effect Lifts Freeport, United Airlines and Waddell & Reed

Model Portfolio Daily Update:  December 9, 2010

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Of Note:
How can anyone not continue to be impressed, and impressed again, by the Freeport McMoran Copper & Gold Inc. (FCX) management team?  They are probably the best allocators of free cash flow the world has ever seen.  FCX announced a $1.00 supplemental dividend payable in December, which follows a move a few months ago to increase its annual dividend to $2.00 from $1.20.  Given its high free cash flow and the cited lack of acquisition opportunities, supplemental dividends from FCX will likely be an ongoing affair.  FCX also announced a 2-for-1 stock split, which goes in effect on February 1, 2011 to shareholders of record as of January 15, 2011.

We are almost as impressed with FCX as we are with ourselves for often providing stock ideas that subsequently obtain major, positive sell side ratings actions.  By focusing on four key factors we are able to generate some amazing stock ideas, many of which subsequently experience major positive sell side ratings actions.  These factors include:

1. Relative Value.
2. Operating Momentum.
3. Analyst Revision Momentum; and
4. Fundamental Quality.

Today three stocks from our model portfolio newsletter and a model portfolio based on real trade data, experienced the Nostradamus Effect, bringing the total number of positive sell side actions for stocks that have been in our portfolio since the beginning of the month, if not earlier, to seven:

1) United Continental Holdings (UAL) was named by Morgan Stanley a long Research Tactical Idea.

2) Freeport McMoRan (FCX) had its price target raised to a sell side high of $130 to $110 by Credit Suisse (in our opinion that target is easily attainable).

3) Waddell & Reed (WDR) was upgraded to Overweight from Equal Weight by Barclays, which also raised its price target $41 from $30.

About this report
This daily update is a supplement to a monthly report dated November 30, 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.