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Ascendere Associates LLC www.ascenderellc.

com
Steve Castellano steve@ascenderellc.com

March 17, 2010

Goldman Sachs, Nostradamus and Genetic Algorithms vs. Simple Quantitative Models, Experience and Common Sense

Or

An Analyst's Guide to Preempting Goldman Sachs and the Rest of the Street to their Conviction Buy Lists

If Al Gore invented the Internet, and if an estimated 4,000,000+ very close and personal Facebook fans bought Citigroup (C)
at $0.97 and Bank of America (BAC) at $3.12 last March, well -- we have some of our own pronouncements to make.

Specifically, Ascendere Associates LLC -- founded by a self-proclaimed internationally renowned genius -- has beaten
Goldman Sachs, usurped UBS AG, outmanned Credit Suisse First Boston, outplayed Davenport & Co., presaged Fortune
Magazine and Standard & Poors, and trounced a number of other major Wall Street edifices by auguring a significant
number of market-moving Wall Street rating actions. It has also concurred with some notable Wall Street downgrades after
the fact.

We are not writing this article to promote ourselves -- nor our model portfolios, weekly long/short focus list ideas,
quantitative ranking systems or deeper fundamental research services-- nor are we implying that we have reverse-
engineered the genetic algorithms of Nostradamus.

Instead, we wish to demonstrate (in the most academic and objective way possible) the power of deceptively simple
quantitative models and some deeper level fundamental research when combined with the common sense of an
experienced professional who holds a varied background in sell-side and buy-side equity research and supply/demand
consulting, and who is adroit in basic VBA programming and is expert financial spreadsheet modeling. (It may come to a
surprise to some as to what former liberal arts students from Oberlin College can do -- we are not referring to ourselves so
much as we are to memorable characters like Dan Zane and John Gutfreund, among others).

Prescient or promotional? Please take a look at recent Wall Street actions with Domtar Corp. (UFS), Starbucks Corp. (SBUX),
Joy Global, Inc. (JOYG), Limited Brands (LTD), Fortune Brands (FO), McKesson Corp. (MCK) and Netflix, Inc. (NFLX). And
decide for yourself:

Ascendere Associates LLC March 17, 2010


Steve Castellano steve@ascenderellc.com
DOMTAR CORP.

Ascendere Associates LLC Pronounces Domtar Corp (UFS) of "Particular Interest" on March 8, 2010
"Of particular interest on the long side are LTD, THI, CMI, WCRX, SNDK and UFS."
--Ascendere Associates LLC, "Potential New Long and Short Ideas" --March 8, 2010

8 Days Later, Goldman Sachs upgrades Domtar Corporation and makes it a Conviction Buy!
"Goldman Sachs upgraded Domtar Corporation (NYSE:UFS) from Neutral to the Conviction Buy List and raised their price
target from $63 to $82. The firm cited rising pulp prices, tightening uncoated freesheet markets, stronger EPS and free cash
flow outlook, and an attractive 4.6X 2010 EBITDA multiple. "
-- StreetInsider.com, March 16, 2010

Ascendere Associates LLC March 17, 2010


Steve Castellano steve@ascenderellc.com
STARBUCKS CORP.

Ascendere Associates LLC Proclaims Starbucks Corp. (SBUX) "A Good Option for Growth Investors"
"At the current level, SBUX is a good option for growth investors that expect significant upside to current consensus
forecasts -- because we do think there is some chance of this occurring. SBUX is also currently a good stock ideas for high
turnover portfolios driven by constantly updated relative value decisions, such as the Ascendere Long/Short Model
Portfolio."
--Ascendere Associates LLC, "Starbucks Improving Across the Board: Is That Enough?" -- February 16, 2010

A month later, UBS AG Raises Starbucks' EPS Estimate, Increases Price Target and Raises Rating to Buy
Palmer lifted his rating on shares of the Seattle-based company to "buy" from "neutral," and raised his price target to $29,
from $27. According to the analyst, "We are upgrading Starbucks ( SBUX) based upon our belief that sales and earnings
momentum can drive ongoing, significant earnings revisions over the next two or more years."
--Forbes, March 16, 2010

Ascendere Associates LLC March 17, 2010


Steve Castellano steve@ascenderellc.com
JOY GLOBAL, INC.

Ascendere Associates LLC Proclaims Joy Global, Inc. as Probably the Best Midcap Industrial on Dec 29, 2009
"JOYG has one of the strongest fundamental profiles of any stock in the Industrial Sector, and there is a reasonable
possibility improving global economic drivers which could in turn drive analyst estimates higher for this company. As such,
JOYG is probably one of the best mid cap stocks to own in the Industrial Sector."
--Ascendere Associates LLC, Joy Global, Inc. Not a Bargain, but Still Probably the Best Midcap Industrial Stock to Own,
December 29, 2010

Two Weeks Later, UBS AG Upgrades Joy Global, Inc.


Shares of Joy Global (Nasdaq: JOYG) are trading higher this morning as an analyst at UBS raised his investment rating on the
stock from Neutral to Buy. The firm also lifted its price target from $62 to $70. The stock last traded at $58.80, up 2.8%
from yesterday's close. UBS' new price target represents potential upside of about 19% from where the stock is trading
today.
--StreetInsider.com, January 13, 2010

Ascendere Associates LLC March 17, 2010


Steve Castellano steve@ascenderellc.com
LIMITED BRANDS

Ascendere Associates LLC Singles Out Limited Brands (LTD) As a Long Idea on March 8, 2010
"Of particular interest on the long side are LTD, THI, CMI, WCRX, SNDK and UFS."
--Ascendere Associates LLC, "Potential New Long and Short Ideas", March 8, 2010

Credit Suisse First Boston Corp. raises LTD estimates a week later
"LTD: Raising Estimates - LTD announced a special $1/share dividend and authorized a new $200MM share repurchase
program. After the market close on March 15, LTD announced it will pay a special $1/share dividend on April 19, 2010 (to
shareholders of record on April 5, 2010), and authorized a $200MM repurchase program. Increasing firm F10E from $1.63 to
$1.64 to reflect expectation for $200MM in share repurchase in F10 (vs. $0 previously)."
--BusinessWeek, March 16, 2010

Ascendere Associates LLC March 17, 2010


Steve Castellano steve@ascenderellc.com
FORTUNE BRANDS

Ascendere Associates LLC Names Fortune Brands as Particular Interest on the Short Side
"Of reluctant particular interest on the short side are FO, LUX, UDR, DRE and SMS."
--Ascendere Associates LLC, "Potential New Long and Short Ideas", March 8, 2010

Davenport Downgrades Fortune Brands Less than a Week Later


Davenport analyst says, "We are lowering our rating to Neutral to reflect the recent strength and our belief that the stock
currently reflects the potential for improving results in the Home and Security segment.
--StreetInsider.com, March 12, 2010

Ascendere Associates LLC March 17, 2010


Steve Castellano steve@ascenderellc.com
MCKESSON CORPORATION

Ascendere Associates LLC Heralds McKesson Corp. as "One of the Best Healthcare Stocks to Own" on January 28, 2010
McKesson Corporation has a very strong fundamental profile, is securely situated in an industry that should show
considerable long-term growth, and seems undervalued relative to its historical ROIC, growth prospects and other
Healthcare stocks. As such, it is probably one of the best Healthcare stocks to own at the current moment."
--Ascendere Associates LLC, McKesson Corporation: One of the Best Healthcare Stocks to Own, January 28, 2010

More than a Month Later, Fortune Magazine rates McKesson the "World's Most Admired" Company on March 5, 2010, and
S&P Raises Corporate Credit Rating to A- on March 12, 2010

Ascendere Associates LLC March 17, 2010


Steve Castellano steve@ascenderellc.com
NETFLIX, INC

Ascendere Associates LLC Quantitative Models Concur with Sell Side Downgrades of Netflix
"We recall that a sell side few firms downgraded Netflix, Inc. (NFLX) this past week due to valuation. Interestingly, our
models concurred with this move. . All that could mean is that NFLX is moving into growth territory, so the stock could
move some more. "
--Ascendere Associates LLC, Our Updated Focus List and Portfolio Leverage Strategies, March 15, 2010

A week prior, at least three sell side analysts downgraded the stock
Netflix (NFLX) shares are coming under pressure this morning from a trio of analyst downgrades. Bank of America/Merrill
Lynch analyst Nat Schneider this morning downgrades the stock to Underperform from Buy, while keeping his price target at
$70. He notes that the stock is up 26% year to date through yesterday’s close, “pricing in a very optimistic scenario,” with his
discounted cash flow model requiring a near tripling of subscribers by 2015 to justify the current price. “....Kaufman Bros.
analyst Aaron Kessler downgrades the stock to Hold from Buy...Susquehanna Financial analyst Marianne Wolk cut her rating
on the stock to Neutral from Positive..."
--Barron's, March 3, 2010

Summary
If we had the time, we believe we could point to other "coincidences." But we think we have made our points: 1) Anyone
interested in obtaining cutting edge and value-added equity research idea generation as well as deeper fundamental
analysis does not necessarily have to get it from the behemoths of Wall Street; and 2) Wall Street can take relatively simple
steps to drastically improve the relevance of their existing fundamental research product.

Ascendere Associates LLC March 17, 2010


Steve Castellano steve@ascenderellc.com
J. Stephen Castellano – founded Ascendere Associates LLC to provide cutting-edge equity research that blends fundamental
and quantitative approaches to generating long and short ideas for the short- and long-term investor.

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 granularly, 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) long/short stock ideas generation; 2) detailed custom equity research
analysis; 3) valuation scenario analysis studies; 4) supply /demand studies; 5) quantitative portfolio analysis feedback; and
6) detailed fundamental financial modeling services. For more information, visit www.ascenderellc.com.

Steve has over 10 years of experience in equity research. 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).

Steve’s career history is highlighted below:

 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 March 17, 2010


Steve Castellano steve@ascenderellc.com