Trump Rally Continues To Drive Short Covering

Nov. 14, 2016 7:39 PM ETRF, UNM, FRC, UTHR, MASI, MAN, NOC, AEO, ING, CPRT, LOW, APO, TER, LEA, AMAT, TXN, LOGI, CAA, CRUS, VIPS, WP, VRSN, NTES, TCOM, LBTYA, P, CLR, DATA, NXPI, NWL, ADM, FTNT, UAA, JOY, COP, CMPR, ST, BLKB, FLS, NOV, FCNCA, TRCO, WPX, FMC, PAG, MRO, LGF.A, TSRO
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Long/Short Equity, Growth At A Reasonable Price

Contributor Since 2009

J. Stephen Castellano founded the equity research and financial modeling consulting firm Ascendere Associates in 2009, building upon a diversified 20-year career in sell side and buy side equity research. His roles included coverage of the steel industry at PaineWebber and telecom services at Warburg Dillon Read (the predecessors to UBS), where he worked closely with institutional sales people, traders and investment bankers. In addition, he provided analytical support for numerous independent valuation, consulting and investment banking studies, including for mergers, secondary offerings and IPOs. At Ascendere Associates, in addition to developing equity research for family offices and other clients, he has consulted for a wide range of startups, established businesses, and global consulting firms. Mr. Castellano holds a B.A. in English from Oberlin College, an MBA from the F.W. Olin School of Business at Babson College, and has passed the first two levels of the CFA exam.

This is an update to our model portfolio report, 23 Stocks for November 2016.

Theoretical Short Model Portfolio Assumes 100% Cash
The Opportunistic Short Model portfolio has assumed a 100% cash position as of the November 11, 2016 close and will remain that way at least through the balance of the month.

Our two theoretical long/short models differ from one another in that one does not use cash allocation rules (the Core Model) and the other does (the Opportunistic Model).

12 out of 27 Stocks in the Theoretical Short Model Have Hit Stop Losses
For the month to date, 12 out of 27 stocks in the theoretical short model portfolios have hit stop loss targets including two additional stocks at the close today: Penskey Automotive Group (PAG) and Tribune Media Company (TRCO). These stocks will be replaced with cash positions as of the close tomorrow.

A theoretical short position in Ctrip.com International Ltd. (CTRP) reached a price target today and will be assumed closed at the end of trading tomorrow. CTRP was our favorite short idea back in October 2016.

Until noted otherwise, the Core Short Model will continues to maintain positions in the 15 remaining companies.

4 our of 23 Stocks in the Theoretical Long Model Have Hit Price Targets
A long position in Northrop Grumman Corp. (NOC) reached its stock price target today and will be assumed closed and replaced with cash at the end of trading tomorrow.

For the month to date, 4 out of 23 long positions have reached their price targets, including NOC.

Detailed returns and stock price targets
For updated returns and stock price targets, please visit our latest post on jstephencastellano.tumblr.com.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in OR SHORT POSITION IN ANY STOCK over the next 72 hours.

Additional disclosure: 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.

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