Ascendere Associates LLC

Innovative Long/Short Equity Research

Model Portfolio Monthly Update: February 28, 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

February 28, 2014 steve@ascenderellc.com

Commentary Our favorite pair trade for the month is long NXP Semiconductor (NXPI) and short Sun Edison (SUNE). The Opportunistic long model portfolio reentered the market on February 25 with a 70% equity and 30% cash allocation. It should stay 70% allocated for at least the next 16 trading days. The Opportunistic long model finished up 0.53% in February versus 4.54% for the S&P 500 Total Return Index. The Core long model, which does not adjust itself with increased cash positions following sudden spikes of volatility, stays 100% invested in cash. It finished up 3.87% for the month.

Ascendere Associates LLC J. Stephen Castellano

Page 2

February 28, 2014 steve@ascenderellc.com

Long Model Portfolio -- Rebalancing Actions

2/28/2014 Rebalancing Core and Opportunistic Long Portfolio: 24 stocks in the model portfolio = 4.17% weight per position

Close Position Foot Locker, Inc. FL Bally Technologies, Inc. BYI Lumber Liquidators Holdings, Inc.LL Western Refining, Inc. WNR EPR Properties EPR Raymond James Financial, Inc. RJF ICON Public Limited Company ICLR United Therapeutics Corporation UTHR VCA Antech Inc. WOOF Great Plains Energy IncorporatedGXP
Source: Ascendere Associates LLC

Hold/Rebalance DIRECTV DTV Macy's, Inc. M Pilgrim's Pride Corporation PPC SEI Investments Co. SEIC Fifth Third Bancorp FITB Omega Healthcare Investors Inc. OHI Align Technology Inc. ALGN Grifols, S.A. GRFS American Airlines Group Inc. AAL Broadridge Financial Solutions, BR Inc. Paychex, Inc. PAYX Packaging Corporation of America PKG

Open Position Monster Beverage Corporation Oceaneering International, Inc. Ultrapar Holdings Inc. The Blackstone Group L.P. Nomura Holdings, Inc. Waddell & Reed Financial, Inc. Protective Life Corporation PAREXEL International Corporation Lennox International, Inc. Flowserve Corp. Anixter International Inc. NXP Semiconductors NV

MNST OII UGP BX NMR WDR PL PRXL LII FLS AXE NXPI

Ascendere Associates LLC J. Stephen Castellano

Page 3

February 28, 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 improvements are discounted from a more depressed base.

2/28/2014 Rebalancing Core and Opportunistic Short Portfolio: 23 stocks in the model portfolio = 4.35% weight per position

Close Position Sinclair Broadcast Group Inc. SBGI General Motors Company GM Liberty Media Corporation LMCA Radian Group Inc. RDN Equity One Inc. EQY The Hartford Financial Services Group, HIG Inc. Deutsche Bank AG DB Woodward, Inc. WWD Kennametal Inc. KMT Clean Harbors, Inc. CLH KBR, Inc. KBR Nimble Storage, Inc. NMBL Concur Technologies, Inc. CNQR Air Products & Chemicals Inc. APD
Source: Ascendere Associates LLC

Hold/Rebalance Peabody Energy Corp. BTU Plum Creek Timber Co. Inc. PCL Allscripts Healthcare Solutions,MDRX Inc. Yahoo! Inc. YHOO TIBCO Software Inc. TIBX Carpenter Technology Corp. CRS Allegheny Technologies Inc. ATI

Open Short Sale Jarden Corp. JAH Tempur Sealy International Inc. TPX Sears Holdings Corporation SHLD Molson Coors Brewing Company TAP Crosstex Energy LP XTEX American Tower Corporation AMT The Royal Bank of Scotland Group plc RBS InterMune Inc. ITMN BioMarin Pharmaceutical Inc. BMRN Armstrong World Industries, Inc. AWI Qlik Technologies, Inc. QLIK SunEdison, Inc. SUNE E. I. du Pont de Nemours and Company DD Eldorado Gold Corp. EGO New Gold, Inc. NGD TransAlta Corp. TAC

Ascendere Associates LLC J. Stephen Castellano

Page 4

February 28, 2014 steve@ascenderellc.com

Return Data February 2014

Core & Opportunistic Long Model
1/31/2014 to 2/28/2014 Sector Consumer Discretionary Materials Consumer Discretionary Health Care Industrials Consumer Discretionary Consumer Discretionary Utilities Healthcare Consumer Staples Financials Information Technology Financials Financials Financials Information Technology Health Care Financials Health Care Energy Consumer Discretionary Health Care Company Lumber Liquidators, Inc. Packaging Corp. of America DirecTV Group Inc. ICON plc American Airlines Group Inc. Macy's, Inc. Foot Locker Inc. Great Plains Energy Inc. Grifols, S.A. Pilgrims Pride Corporation Entertainment Properties Trust Broadridge Financial Solutions Inc. Raymond James Financial Inc. Fifth Third Bancorp Omega Healthcare Investors Inc. Paychex Inc. United Therapeutics Corp. SEI Investments Co. VCA Antech Inc. Western Refining Inc. Bally Technologies, Inc. Align Technology Inc.
Ticker

Theoretical Longs MTD Stopped Out on 8/4/2011 close for a -12.33% loss Target/ Date+1 Stop Date Sell Price 2/26/2014 $ 109.30 2/27/2014 $ 2/20/2014 $ 77.60 46.70

LL PKG DTV ICLR AAL M FL GXP GRFS PPC EPR BR RJF FITB OHI PAYX UTHR SEIC WOOF WNR BYI ALGN

1/31/2014 88.99 64.60 69.43 42.01 33.55 53.20 38.60 24.68 39.61 16.73 51.08 36.29 50.91 21.02 31.94 41.82 102.62 34.06 31.94 39.11 73.32 59.42

2/28/2014 107.28 72.89 77.60 46.84 36.93 57.86 41.71 26.27 42.08 17.53 53.26 37.76 52.78 21.70 31.96 41.76 101.42 33.57 30.97 36.45 67.75 52.33

Performance 20.55% 12.83% 11.77% 11.50% 10.07% 8.76% 8.06% 6.44% 6.24% 4.78% 4.27% 4.05% 3.67% 3.21% 0.06% -0.14% -1.17% -1.44% -3.04% -6.80% -7.60% -11.93%

Return 22.82% 11.77% 11.16%

Ascendere Associates LLC J. Stephen Castellano

Page 5

February 28, 2014 steve@ascenderellc.com

Core & Opportunistic Short Model

1/31/2014 to 2/28/2014 Sector Industrials Industrials Consumer Discretionary Financials Consumer Discretionary Financials Industrials Materials Industrials Information Technology Materials Information Technology Financials Energy Consumer Discretionary Financials Financials Information Technology Information Technology Healthcare Materials Company Ticker Clean Harbors Inc. CLH KBR, Inc. KBR Sinclair Broadcast Group Inc. SBGI Deutsche Bank AG DB General Motors Company GM Plum Creek Timber Co. Inc. PCL Kennametal Inc. KMT Allegheny Technologies Inc. ATI Woodward, Inc. WWD Concur Technologies, Inc. CNQR Carpenter Technology Corp. CRS Tibco Software Inc. TIBX Equity One Inc. EQY Peabody Energy Corp. BTU Liberty Media Corporation LMCA Radian Group Inc. RDN Hartford Financial Services Group Inc.HIG Yahoo! Inc. YHOO Nimble Storage, Inc. NMBL Allscripts Healthcare Solutions, Inc. MDRX Air Products & Chemicals Inc. APD 1/31/2014 56.08 31.30 31.42 48.18 36.08 43.07 43.34 31.44 42.85 121.34 58.11 21.29 22.66 17.05 131.63 14.88 33.25 36.01 43.23 16.56 105.14 2/28/2014 47.26 27.62 29.62 48.34 36.20 43.29 43.74 31.78 43.59 123.45 59.15 21.79 23.20 17.56 137.16 15.55 35.19 38.67 48.01 18.57 121.32

Theoretical MTD shorts hit target 8/4/2011 for 14.84% gain Target/ Date+1 Stop Date Sell Price 2/26/2014 $ 46.20 2/28/2014 $ 27.62 2/10/2014 $ 27.86

Performance -15.73% -11.76% -5.73% 0.33% 0.33% 0.51% 0.92% 1.08% 1.73% 1.74% 1.79% 2.35% 2.38% 2.99% 4.21% 4.50% 5.83% 7.39% 11.06% 12.14% 15.39%

Return -17.62% -11.76% -11.33%

2/18/2014 $

23.59

4.10%

2/3/2014 $ 2/21/2014 $ 2/11/2014 $

39.78 18.47 111.87

-7.98% 11.53% 6.40%

Ascendere Associates LLC J. Stephen Castellano

Page 6

February 28, 2014 steve@ascenderellc.com

Theoretical Model Portfolio* 02/28/14 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%

3.87% 0.48% 3.39%

1.26% -1.49% 2.75%

139.9% 84.5% 55.4%

1.07 0.74 0.59

Stock Targets and Portfolio Targets

-0.44% 0.00% -0.44%

0.53% 0.48% 0.05%

-3.38% -1.49% -1.89%

126.4% 36.0% 90.5%

1.28 0.29 1.10

Stock Targets and Portfolio Targets

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

0.53% 2.78% -2.25% 4.28% 4.54%

-3.38% -1.03% -2.36% 0.73% 1.08%

126.4% 64.6% 61.8% 92.06% 102.63%

1.28 0.76 0.84 1.07 1.86

* 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

Page 7

February 28, 2014 steve@ascenderellc.com

Core

Opportunistic

"Dollar Neutral" 1

"Dollar Neutral" 2

Inception March 31, 2009

Long , Stock Targets Theoretical 0.17% 3.87% 1.26% 139.90%

2/28/2014 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 0.12% 0.53% -3.38% 126.44%

Long/Short, Stock Targets and Portfolio Targets Theoretical 0.90% 0.05% -1.89% 90.47%

Long, Stock and Portfolio Targets / Long ^SH ETF Theoretical 0.12% -0.43% -0.88% 63.52%

S&P 500 Total Return Index

0.28% 4.54% 1.08% 102.63%

0.12% 16.86% 1.62% 7.11% 1.54% 29.10% 25.8% 1.07 44.1% -1.18% -1.21% -25

0.11% 15.84% 1.22% 8.81% 1.54% 27.17% 19.4% 1.32 32.0% -1.03% -1.02% -19

0.08% 11.84% 0.98% 7.73% 1.54% 19.17% 15.6% 1.13 42.3% -0.65% -0.63% -15

0.05% 12.00% 0.88% 5.73% 1.54% 12.71% 14.0% 0.80 42.2% -0.59% -0.63% -14

0.08% 11.39% 1.12% 7.43% 1.54% 21.03% 17.8% 1.09 43.1% -0.82% -0.85% -17

0.91 0.84 0.73%

0.68 0.47 0.92%

(0.07) 0.00 1.51%

0.04 0.00 1.37%

1.32 0.030% 0.040% 1237

0.74 0.019% 0.014% 1237

-0.06 -0.010% 0.001% 1237

0.04 -0.032% -0.001% 1237

Ascendere Associates LLC J. Stephen Castellano

Page 8

February 28, 2014 steve@ascenderellc.com

Ascendere Associates LLC J. Stephen Castellano

Page 9

February 28, 2014 steve@ascenderellc.com

Ascendere Associates LLC J. Stephen Castellano

Page 10

February 28, 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 11

February 28, 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 12

February 28, 2014 steve@ascenderellc.com