Stock Picking Process

Our Objective

To reduce the universe of all possible stocks in the market to the top 25

stocks that provide a high probability of success.

Master List Top 400 Stocks

Scoring Process

Final List TOP PROBABILITY STOCKS

Popular Lists

Ultimate List Top 100 Stocks

Analyst FavoritesCategory

Value Category

Growth Category

Sentiment Category

Second Screen

Quality Category

Screen-Based List Current List

First Screen

INVESTING UNIVERSE

400

Investing Universe

10,000+ Stocks

25 Stock Stars

Ultimate List

100 Stocks

100

Master List

400 Stocks

INVESTING UNIVERSE

First ScreenThree Evaluation Lists

Current List:- Current Nominees- Personal Nominees

Screen-Based List:- Value Screen- Growth Screen- Momentum Screen

Master ListTOP 400 Stocks

Popular List:- Top 50 stocks IBD- Top 100 stocks VL- Top 36 stocks SS- Top 37 stocks MS- Top 50 stocks B

Top 100 Stocks: Investors Business Daily

• The IBD 50 is a list of 50 top-rated growth stocks in IBD’s database with top fundamentals showing strong relative price strength in the market.

• Criteria to pick stocks:– EPS Rating– Relative Price Strength– Return on Equity– Management Ownership

INVESTING UNIVERSE

First ScreenThree Evaluation Lists

Current List:- Current Nominees- Personal

Nominees

Screen-Based List:- Value Screen- Growth Screen- Momentum Screen

Master ListTOP 400 Stocks

Popular List:- Top 50 stocks IBD- Top 100 stocks VL- Top 36 stocks SS- Top 37 stocks MS- Top 50 stocks B

SCREEN-BASED LIST

Investment Style:VALUE Screen Tests

Investment Style:MOMENTUM Screen Tests

Growth Screen 2

Comparative & Financial

Strength

Stock Screener

Growth Screen 1

Relative Growth

Value Screen 1

Relative Value

Value Screen 2

Comparative Value & Growth

ValueScreen 3

Contrarian Opportunities

Growth Screen 3

Comparative & Sustainable

Growth

Momentum Screen 2

Moving Average & Behavioral

Momentum Screen 3

Relative Momentum

Investment Style:GROWTH Screen Tests

Momentum Screen 1

Relative Strength

Stock Screener Stock Screener

Screen-Based Tests *

*The formulas have been altered to protect Proprietary Information

1. P/E Ratio <= Indy. Avg. P/E

2. Price/Sales <= Indy. Avg. P/S

3. TTM ROE > Indy. Avg. TTM ROE

4. TTM ROE > 0

5. 5 y Avg. ROE > 5 Y Indy. Avg. ROE

6. LT Debt/Equity ratio <= Indy. Avg. LT Debt Ratio

7. Price/Book <= 3

8. EPS Growth Est. > Indy. Avg. EPS Growth Est.

9. Y1 EPS Est. Growth > 0

Value Screen 2: Comparative Value

FIELDOPERATO

R COMPARE TO: STOCKSP/E Ratio <= Indy. Avg. P/E 2190

Price/Sales <= Indy. Avg. P/S 3581TTM ROE > Indy. Avg. TTM ROE 4464TTM ROE > 0 5909

5 Y Avg. ROE > 5 Y Indy. Avg. ROE 3452LT Debt/Equity

Ratio <=Indy. Avg. LT

Debt/Equity Ratio 3864

Price/Book <=Average Price/Book

Ratio 5459

EPS Growth Est. >Indy. Avg. EPS Growth

Est. 12361Y EPS Est.

Growth > 0 832

Screen Results: Value Screen 2

7 COMPANIES MET THE CRITERIA: AS OF September 1, 2012 COMPANY NAME SYMBOL SECTOR3SBio Inc. (ADR) SSRX Health Care

Assurant, Inc. AIZ FinancialBaker Hughes Incorporated BHI Energy

G-III Apparel Group, Ltd. GIII Consumer CyclicalHalliburton Company HAL Energy

Medicines Company, The MDCO Health CareWellCare Health Plans WCG Health Care

Securities offered through Triad Advisors, member FINRA/SIPC. Advisory services offered through Lee Johnson Capital Management, LLC (LJCM). LJCM is an independent Registered Investment Advisor and is not affiliated with Triad Advisors.

INVESTING UNIVERSE10,000 + Stocks

Master List TOP 400 Stocks

First Screen

Second Screen

Analyst FavoritesCategory:

1.Most Repeated Stocks

Value Category:1.Catching Up Stocks

Quality Category:1.Industry Leaders2.Fastest Turnover

Growth Category:1.Historical comparison2.Industry

Comparison

Sentiment Category:1.High P/E Multiples

2.Institutional Ownership

Second Screen

Master List Top 400 Stocks

Second Screen*

*The formulas have been altered to protect Proprietary Information

Third Screen

Ultimate List: Top 100Scoring Process:

- Growth Score- Profitability Score- Financial Health Score- Momentum Score

Stock Stars ListTOP PROBABILITY STOCKS

As of August 31, 2012 - Subject to change.

September 2012 Stock PicksTOP 25 STOCKS September-12

RANK TICKER NAME SECTOR INDUSTRY SCORE1 TFM Fresh Market Inc, The 09 - Services 0957 - Retail (Grocery) 79.392 TJX TJX Companies, Inc., The 09 - Services 0945 - Retail (Apparel) 78.723 CF CF Industries Holdings, Inc. 01 - Basic Materials 0103 - Chemical Manufacturing 78.064 PETM PetSmart, Inc. 09 - Services 0963 - Retail (Specialty Non-Apparel) 77.575 RAX Rackspace Hosting, Inc. 10 - Technology 1036 - Software & Programming 77.306 ADS Alliance Data Systems Corporat 07 - Financial 0703 - Consumer Financial Services 77.177 RMD ResMed Inc. 08 - Health Care 0812 - Medical Equipment & Supplies 76.778 ALXN Alexion Pharmaceuticals, Inc. 08 - Health Care 0803 - Biotechnology & Drugs 76.559 ROST Ross Stores, Inc. 09 - Services 0945 - Retail (Apparel) 76.48

10 AAPL Apple Inc. 10 - Technology 1006 - Computer Hardware 76.3911 ULTA Ulta Salon, Cosmetics & Fragra 09 - Services 0963 - Retail (Specialty Non-Apparel) 75.82

12 EL Estee Lauder Companies Inc05 - Consumer Non-Cyclical 0521 - Personal & Household Products 75.32

13 GILD Gilead Sciences, Inc. 08 - Health Care 0803 - Biotechnology & Drugs 75.1814 AGU Agrium Inc. (USA) 01 - Basic Materials 0103 - Chemical Manufacturing 74.8615 HFC HollyFrontier Corp 06 - Energy 0609 - Oil & Gas Operations 74.7616 ESRX Express Scripts Holding Co 09 - Services 0954 - Retail (Drugs) 74.5317 TSCO Tractor Supply Company 09 - Services 0960 - Retail (Home Improvement) 74.0918 WDC Western Digital Corp. 10 - Technology 1021 - Computer Storage Devices 74.0319 EBAY eBay Inc 09 - Services 0948 - Retail (Catalog & Mail Order) 73.4920 NEU NewMarket Corporation 01 - Basic Materials 0103 - Chemical Manufacturing 73.3821 SWI SolarWinds Inc 10 - Technology 1036 - Software & Programming 72.9122 CRUS Cirrus Logic, Inc. 10 - Technology 1033 - Semiconductors 72.7823 CTB Cooper Tire & Rubber Company 04 - Consumer Cyclical 0436 - Tires 72.2924 SCSS Select Comfort Corp. 04 - Consumer Cyclical 0421 - Furniture & Fixtures 71.9725 UTHR United Therapeutics Corporatio 08 - Health Care 0803 - Biotechnology & Drugs 70.68

September 2012 Stock Picks

01 - Basic Materials12%

04 - Consumer Cyclical

8%

05 - Consumer Non-Cyclical

4%

06 - Energy4%

07 - Financial4%08 - Health Care

16%

09 - Services32%

10 - Technology20%

Sectors in Portfolio

September 2012 Stock Picks

25%

13%

13%

25%

13%

13%

Service Industry in Portfolio 32%

0942 - Restaurants

0906 - Broadcasting & Cable TV

0951 - Retail (Department & Discount)

0945 - Retail (Apparel)

0960 - Retail (Home Improvement)

0948 - Retail (Catalog & Mail Order)

0963 - Retail (Specialty Non-Apparel)

0954 - Retail (Drugs)

0957 - Retail (Grocery)

Process is dynamic but we are not “traders”

Buying and selling designed to follow trends

Our Stock Selection Discipline