Seeking Alpha
Long/short equity, growth at reasonable price, research analyst
Profile| Send Message|
( followers)  

Domtar Corp (NYSE:UFS) led the Ascendere "high-quality long model portfolio today moving up 4.14% to $70.45.

This stock caught our attention in particular today because we have been mentioning it positively and fairly often over the last few weeks. Readers may recall we first highlighted UFS in our Weekly Focus List on March 7, 2010, and Goldman Sachs followed with a conviction list upgrade of the stock on March 16, 2010, which we mentioned in our "Nostradamus" report the next day. UFS also made our monthly focus list published prior to the market open on April 1, 2010. The stock is up roughly 16% since the close of March 8.

A great way to use our list of stocks is to see if corroborates other conviction lists or quantitative models. If you see a stock on our list and a number of others, it's probably a safe bet that it's worth spending some extra time on the idea.

Ascendere Long/Short Strategy Daily Update
'High-quality' stocks in the unlevered long portfolio rose 0.05% and 'low-quality' stocks in the unlevered short portfolio declined -0.44% for the day ended April 7, 2010.

For the MTD, 'high-quality' stocks in the unlevered long portfolio are up 2.40%, ahead of the S&P 500 (ex dividends) at 1.11%.

'Low-quality' stocks in the unlevered short portfolio are up even more for the MTD at 3.02%.

Market Neutral Portfolio
As a result, the Market Neutral Model Portfolio increased 0.49% today and is now down -0.61% MTD.

Moderate Long/Short Portfolio
Given the 120/80 long/short weighting in the Moderate Long/Short Model Portfolio, it appreciated 0.41% overall for the day. The Moderate portfolio performance is now up 0.47% MTD versus 1.11% for the S&P 500, excluding dividends.

The Moderate Long portfolio is up 2.89% for the month and the Moderate Short portfolio is down -2.39%.

Aggressive Long/Short Portfolio
Given the 200/0 long/short weighting in the Aggressive Long/Short Model Portfolio, it appreciated 0.10% overall for the day. The Aggressive portfolio performance is now up 4.85% MTD versus 1.11% for the S&P 500, excluding dividends.

The Aggressive Long portfolio is up 4.85% for the month.

'High-Quality' Long Stocks Performance
The best daily performers in the long portfolio included Domtar Corporation (UFS) up 4.14%, Big Lots Inc. (NYSE:BIG) up 3.42%, and Kinross Gold Corporation (NYSE:KGC) up 3.10%.

The worst daily performers in the long portfolio included Warner Chilcott Limited (NASDAQ:WCRX) down -2.05%, Visa Inc. (NYSE:V) down -1.83%, and Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) down -1.60%.

'Low-Quality' Short Stocks Performance
The best daily performers in the short portfolio included Focus Media Holding Ltd. (NASDAQ:FMCN) down -3.71%, Sunoco Inc. (NYSE:SUN) down -3.31%, and Valero Energy Corp. (NYSE:VLO) down -3.04%.

The worst daily performers in the short portfolio included Plains Exploration & Production Company (NYSE:PXP) up 6.99%, EOG Resources, Inc. (NYSE:EOG) up 6.53%, and Textron Inc. (NYSE:TXT) up 2.83%.

Our Long/Short indicator moved incrementally lower today, but is still well above the net long threshold

About the Model Portfolio
The Ascendere Long/Short Model Portfolios are "tactical tilt" portfolios that buy the highest quality stocks and sell the lowest quality stocks while maintaining a net long or net short position at all times. They are composed about 80-100 stocks and rebalanced monthly.

Investors focusing on daily moves could find monitoring our model portfolio useful as a proxy for what is working in the market in general as viewed through the lens of "high-quality" versus "low-quality" stocks.

In addition, daily readers can be apprised to changes in our proprietary long/short indicator, which has been successful at capturing general trends in the market.

Click to enlarge:

Daily-Ascendere-Associates-2010-04-07



Disclosure: None

Source: Domtar Leads Rise in High-Quality Stocks List