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Positive Updates for Two Names

A pair of model portfolio holdings are trading higher today on news reports. Here are the details on each.
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Model portfolio names Kodiak Oil & Gas (KOG) and Martha Stewart Living Omnimedia (MSO) are both trading higher today on news reports. This Alert is an update on the companies and we're not recommending any trades for the model portfolio.

First, Kodiak is trading 2% higher on the session, with the shares currently changing hands around $13.58, as management announced preliminary quarterly production results earlier today.

The company produced a daily average of 35,400 barrels of oil equivalent (BOE) during the third quarter, with crude oil accounting for 90% of the mix. This represents 123% year-over-year growth and Kodiak expects production to increase to 42,000 BOE/day by the end of the year.

We maintain our Three rating on the stock, which has gained 62% over the past three months. We believe the company can continue to deliver above-average production growth over the coming quarters and will look to sell our remaining stake when the shares are trading around $15.

Second, Martha Stewart is trading 4% higher today, with the shares currently changing hands around $2.36. The company announced overnight that it has amended its licensing deal with retailer J.C. Penney (JCP) .

The agreement was shortened by a few years and will now end on June 30, 2017. In addition, following an ongoing legal battle with another Martha Stewart licensing customer, Macy's (M) , the category of "homegoods" was limited to window treatments and hardware, lighting, rugs, holiday and celebrations.

The company will continue to receive design fees and guaranteed minimum royalties from J.C. Penney. Martha Stewart will also get back the 11 million shares of the company that J.C. Penney bought two years ago.

We maintain our Two rating on the stock as we believe this amendment will help to remove a major overhang. Once Martha Stewart finds a permanent replacement for its chief executive officer, we believe that the shares can move back up through $3 in the coming quarters.

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