Ascendere Associates LLC

Innovative Long/Short Equity Research

Model Portfolio Monthly Update: March 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

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March 31, 2014 steve@ascenderellc.com

Long Model Portfolio -- Rebalancing Actions

3/31/2014 Rebalancing Core and Opportunistic Long Portfolio: 27 stocks in the model portfolio = 3.70% weight per position

Close Position Macy's, Inc. M Nomura Holdings, Inc. NMR Omega Healthcare Investors Inc. OHI Grifols, S.A. GRFS Flowserve Corp. FLS NXP Semiconductors NV NXPI

Source: Ascendere Associates LLC

Hold/Rebalance DIRECTV DTV Pilgrim's Pride Corporation PPC Monster Beverage Corporation MNST Oceaneering International, Inc. OII Ultrapar Holdings Inc. UGP The Blackstone Group L.P. BX Waddell & Reed Financial, Inc. WDR SEI Investments Co. SEIC Fifth Third Bancorp FITB Protective Life Corporation PL PAREXEL International Corporation PRXL Align Technology Inc. ALGN American Airlines Group Inc. AAL Lennox International, Inc. LII Paychex, Inc. PAYX Broadridge Financial Solutions, BR Inc. Anixter International Inc. AXE Packaging Corporation of America PKG

Open Position Cablevision Systems Corporation AMC Networks Inc. Cimarex Energy Co. Primerica, Inc. Spirit Airlines, Inc. Harris Corporation DST Systems Inc. Ansys, Inc. Wipro Ltd.

CVC AMCX XEC PRI SAVE HRS DST ANSS WIT

Ascendere Associates LLC J. Stephen Castellano

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March 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.

3/31/2014 Rebalancing Core and Opportunistic Short Portfolio: 19 stocks in the model portfolio = 5.26% weight per position

Close Position Tempur Sealy International Inc. TPX Molson Coors Brewing Company TAP EnLink Midstream Partners, LP ENLK Plum Creek Timber Co. Inc. PCL American Tower Corporation AMT InterMune, Inc. ITMN BioMarin Pharmaceutical Inc. BMRN TIBCO Software Inc. TIBX Qlik Technologies, Inc. QLIK E. I. du Pont de Nemours and Company DD Eldorado Gold Corp. EGO New Gold, Inc. NGD
Source: Ascendere Associates LLC

Hold/Rebalance Jarden Corp. JAH Sears Holdings Corporation SHLD Peabody Energy Corp. BTU The Royal Bank of Scotland Group RBS plc Allscripts Healthcare Solutions,MDRX Inc. Armstrong World Industries, Inc. AWI Yahoo! Inc. YHOO SunEdison, Inc. SUNE Carpenter Technology Corp. CRS Allegheny Technologies Inc. ATI TransAlta Corp. TAC

Open Short Sale Sinclair Broadcast Group Inc. Ctrip.com International Ltd. Darling International Inc. Pioneer Natural Resources Co. Golar LNG Ltd. Kennametal Inc. 3D Systems Corp. Crown Holdings Inc.

SBGI CTRP DAR PXD GLNG KMT DDD CCK

Ascendere Associates LLC J. Stephen Castellano

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March 31, 2014 steve@ascenderellc.com

Return Data March 2014

Core & Opportunistic Long Model
2/28/2014 to 3/31/2014 Sector Consumer Staples Energy Financials Financials Financials Information Technology Consumer Discretionary Information Technology Health Care Financials Energy Financials Financials Industrials Health Care Industrials Consumer Discretionary Information Technology Healthcare Materials Industrials Information Technology Financials Consumer Staples Company Pilgrim's Pride Corporation Ultrapar Holdings Inc. Fifth Third Bancorp Waddell & Reed Financial Inc. Omega Healthcare Investors Inc. NXP Semiconductors NV Macy's, Inc. Paychex Inc. Parexel International Corp. Protective Life Corp. Oceaneering International, Inc. SEI Investments Co. The Blackstone Group American Airlines Group Inc. Align Technology Inc. Lennox International Inc. DirecTV Group Inc. Broadridge Financial Solutions Inc. Grifols, S.A. Packaging Corp. of America Flowserve Corp. Anixter International Inc. Nomura Holdings Inc. Hansen Natural Corp.
Ticker

Theoretical Longs MTD Stopped Out on 8/4/2011 close for a -12.33% loss Target/ Date+1 Stop Date Sell Price 3/31/2014 $ 20.92 3/20/2014 $ 23.39

PPC UGP FITB WDR OHI NXPI M PAYX PRXL PL OII SEIC BX AAL ALGN LII DTV BR GRFS PKG FLS AXE NMR HANS

2/28/2014 17.53 22.30 21.70 69.70 31.96 56.23 57.86 41.76 53.57 52.14 71.58 33.57 33.35 36.93 52.33 91.88 77.60 37.76 42.08 72.89 81.21 106.95 6.79 74.00

3/31/2014 20.92 24.09 22.96 73.62 33.52 58.81 59.29 42.60 54.09 52.59 71.86 33.61 33.25 36.60 51.79 90.91 76.42 37.14 41.30 70.37 78.34 101.52 6.43 69.45

Performance 19.34% 8.03% 5.81% 5.62% 4.88% 4.59% 2.47% 2.01% 0.97% 0.86% 0.39% 0.12% -0.30% -0.89% -1.03% -1.06% -1.52% -1.64% -1.85% -3.46% -3.53% -5.08% -5.30% -6.15%

Return 19.34% 7.81%

Ascendere Associates LLC J. Stephen Castellano

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March 31, 2014 steve@ascenderellc.com

Core & Opportunistic Short Model

2/28/2014 to 3/31/2014 Sector Materials Materials Health Care Information Technology Information Technology Energy Information Technology Financials Industrials Healthcare Financials Consumer Discretionary Consumer Discretionary Energy Telecommunication Services Materials Utilities Information Technology Consumer Staples Consumer Discretionary Health Care Materials Materials Company New Gold, Inc. Eldorado Gold Corp. BioMarin Pharmaceutical Inc. Qlik Technologies, Inc. Yahoo! Inc. Peabody Energy Corp. Tibco Software Inc. Royal Bank of Scotland Group plc Armstrong World Industries, Inc. Allscripts Healthcare Solutions, Inc. Plum Creek Timber Co. Inc. Jarden Corp. Tempur Pedic International Inc. EnLink Midstream Partners, LP American Tower Corp. EI DuPont de Nemours & Co. TransAlta Corp. SunEdison, Inc. Molson Coors Brewing Company Sears Holdings Corporation InterMune Inc. Carpenter Technology Corp. Allegheny Technologies Inc.
Ticker

Theoretical MTD shorts hit target 8/4/2011 for 14.84% gain Target/ Stop Date 3/24/2014 3/27/2014 3/25/2014 3/26/2014 Date+1 Sell Price 5.27 5.81 69.99 26.22 15.83 20.04 10.09

NGD EGO BMRN QLIK YHOO BTU TIBX RBS AWI MDRX PCL JAH TPX ELNK AMT DD TAC SUNE TAP SHLD ITMN CRS ATI

2/28/2014 6.11 6.66 81.00 30.50 38.67 17.56 21.79 10.96 54.89 18.57 43.29 61.47 51.87 30.89 81.47 66.62 11.52 18.36 56.83 44.75 30.04 59.15 31.78

3/31/2014 4.88 5.58 68.21 26.59 35.90 16.34 20.32 10.38 53.25 18.03 42.04 59.83 50.67 30.42 81.87 67.10 11.64 18.84 58.86 47.76 33.47 66.04 37.68

Performance -20.13% -16.22% -15.79% -12.82% -7.16% -6.95% -6.75% -5.29% -2.99% -2.91% -2.89% -2.67% -2.31% -1.52% 0.49% 0.72% 1.04% 2.61% 3.57% 6.73% 11.42% 11.65% 18.57%

$ $ $ $

Return -13.75% -12.76% -13.59% -14.03% -9.85% -8.03% -7.94%

3/11/2014 $ 3/27/2014 $ 3/21/2014 $

3/27/2014 $

41.64

-3.81%

3/14/2014 $

35.10

13.63%

3/20/2014 $

20.33

10.73%

3/20/2014 $ 3/17/2014 $

65.23 36.08

10.28% 13.53%

Ascendere Associates LLC J. Stephen Castellano

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March 31, 2014 steve@ascenderellc.com

Theoretical Model Portfolio* 03/31/14 Simple Returns (No Compounding) Stock Targets Core Model Long Short Core Long/Short Opportunistic Model Long Short Opportunistic Long/Short Opportunistic Model III Long Stocks Long Inverse ETF ^SH Opportunistic Long/Short III S&P 500 Index S&P 500 Total Return Index

MTD

YTD

Since 03/31/09

Sharpe

-0.44% 0.12% -0.56%

1.16% -1.42% 2.58%

2.42% -2.91% 5.33%

141.1% 83.1% 58.0%

1.07 0.72 0.61

Stock Targets and Portfolio Targets

-0.44% 0.00% -0.44%

1.00% -1.42% 2.42%

-2.39% -2.91% 0.53%

127.4% 34.6% 92.9%

1.27 0.27 1.12

Stock Targets and Portfolio Targets

-0.44% 0.00% -0.44% -0.60% #REF!

1.00% 1.16% -0.16% 0.73% 0.88%

-2.39% 0.13% -2.52% 1.46% 1.96%

127.4% 65.8% 61.6% 92.79% 103.51%

1.27 0.77 0.83 1.07 1.19

* 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. Theoretical returns in this table are based in part on backtests which may be changed or updated at any time as refine our strategies. 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. 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

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March 31, 2014 steve@ascenderellc.com

Core

Opportunistic

"Dollar Neutral" 1

"Dollar Neutral" 2

Inception March 31, 2009

Long , Stock Targets Theoretical 1.61% 1.16% 2.42% 141.06%

3/31/2014 Simple Returns Today MTD YTD Cumulative from 12/31/04 Absolute Risk Daily Average Daily Range Daily Standard Deviation Daily Return/Standard Deviation Average 90-Day T-bill Annualized Daily Returns Annualized Standard Deviation Sharpe Ratio Percentage Down Days Average Daily Downside Value Daily Downside Deviation Daily VAR of 1000 at 95% Conf Benchmark Relative Risk Correlation R-Squared Daily Tracking Error Regression Beta Daily Alpha Jensen's Daily Alpha Trading Days

Long, Stock and Portfolio Targets Theoretical 1.61% 1.00% -2.39% 127.43%

Long/Short, Stock Targets and Portfolio Targets Theoretical 0.96% 2.42% 0.53% 92.88%

Long, Stock and Portfolio Targets / Long ^SH ETF Theoretical 1.61% 0.21% -3.49% 60.91%

S&P 500 Total Return Index

0.80% 0.88% 1.96% 103.51%

0.12% 16.86% 1.62% 7.11% 1.52% 29.10% 25.8% 1.07 44.1% -1.18% -1.21% -25

0.11% 15.84% 1.22% 8.81% 1.52% 27.17% 19.4% 1.32 32.0% -1.03% -1.02% -19

0.08% 11.84% 0.98% 7.73% 1.52% 19.17% 15.6% 1.13 42.3% -0.65% -0.63% -15

0.05% 12.00% 0.88% 5.73% 1.52% 12.71% 14.0% 0.80 42.2% -0.59% -0.63% -14

0.08% 11.39% 1.12% 7.43% 1.52% 21.03% 17.8% 1.09 43.1% -0.82% -0.85% -17

0.91 0.84 0.73%

0.69 0.47 0.91%

(0.07) 0.00 1.50%

0.05 0.00 1.36%

1.32 0.030% 0.039% 1258

0.75 0.019% 0.014% 1258

-0.06 -0.008% 0.001% 1258

0.04 -0.034% -0.001% 1258

*Returns calculated by the simple return method (not compounded). * Portfolio models are theoretical and assume no costs. * Data collected in real time since 3/31/2009 Source: Ascendere Associates LLC

Ascendere Associates LLC J. Stephen Castellano

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March 31, 2014 steve@ascenderellc.com

Ascendere Associates LLC J. Stephen Castellano

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March 31, 2014 steve@ascenderellc.com

Ascendere Associates LLC J. Stephen Castellano

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March 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

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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

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