Saturday, September 16, 2017

Weekend Update - 9/16/17

Weekend Update

Top of the morning everybody. Tis football season once again, both my teams (IU and Cowboys) won last week, so that was nice.  Now that I am retired, I think I will try and see at least one Cowboys game this year - perhaps the November game in Atlanta.

Everyone is big on memes right now, I guess we could label Charlie Brown as the NFL and Lucy as TV viewers.  Rating were down 10% for opening weekend after a lackluster 2016.  Of course most of Florida was dark last week from Irma.

Politics is all over the place.  Here in CT, some Democratic lawmakers broke ranks with their party and sided with Republicans on hotly debated budget.  Now Gov Malloy is threatening to veto.  But CT needs to take some bold action - it is stunning how much higher our taxes are than the majority of states.  And if Malloy gets his way,  CT will continue the trend of taxpayers voting with their feet and leaving for warmer and less tax-oppressive climes. As I am now retired, I might just join them.

Then Trump also broke ranks and has been cosying up with Pelosi and Schumer.  In my view some compromise and bipartisanship in DC would be a breath of fresh air.  We shall see.  Ok, I know this is not politico.

You have found your way to the MFI Diary, a blog where I let readers know my thoughts and performance on real life, real dollar Magic Formula Portfolios (based of course on "The Little Book The Beats The Market" by Joel Greenblatt.  I also spend some effort tracking hypothetical portfolios based on downloads from the official website going back to January 2006.

Of course, I have to have a disclaimer - I am just a guy with a spreadsheet and not a stock advisor.  You should do your own due diligence before acting on anything you read here.

Any opinions you read are my own unless they end up being really bad.

The Past Week

Seems like things were better for me last week.  I did sell a couple larger, non-MFI holdings.  I decided my BCRH purchase was misinformed - so I sold them and took about a 12% loss.  They did pop back post Irma this past week (which helped a bit), but I have a queasy feeling they will need to reduce their dividend (at least temporarily) and I did not want to be around for that.  I also sold my NYRT, a large-ish holding of a REIT that is being liquidated.  There were rumors the liquidation was going slower than anticipated, so I bailed.  I did replace the BCRH with CPLP, a shipping stock with a 8.8% yield.  The MFI side was good, as you'll see.  Here is where I am YTD:


 Component   YTD 
 Overall  +10.13%
 MFI Select  +20.50%
 MFI Formula  +6.10%
 Miscellaneous  +0.12%
 Dividend  +12.62%
 R3K  +12.36%
 MFI Index  -0.84%


So I was up almost 2 percent during the week.  Gotta be happy with that!  You can see my MFI Index continues to lag and that my two MFI portfolios, Select and Formula are doing relatively well.

Here are the MFI stocks for the week:


 Stock   Last Week   Current   Dividend   Change 
 SYNT              18.26         18.09                       -   -0.9%
 CSCO              31.48         32.44                       -   3.0%
 HPQ              19.12         19.47                  0.13 2.5%
 GILD              85.10         82.36                  0.49 -2.6%
 GME              19.15         20.29                       -   6.0%
 CA              33.16         33.10                       -   -0.2%
 TGNA              21.11         20.97                       -   -0.7%
 OMC              72.83         73.04                       -   0.3%
 CPLA              65.90         68.20                       -   3.5%
 BKE              14.35         15.75                       -   9.8%
 RGR              46.25         47.30                       -   2.3%
 LDOS              57.11         56.40                  0.32 -0.7%
 PBI              12.62         12.98                       -   2.9%

Wow, the favorite dog to kick, retail, actually had a good week as BKE was up 10% and GME 6%.


 Stock   Last Week   Current   Dividend   Change 
 ATHM              65.45         65.83                       -   0.6%
 RHI              45.49         46.47                       -   2.2%
 YY              78.01         77.11                       -   -1.2%
 AKRX              33.11         33.10                       -   0.0%
 AMGN            180.64       187.47                       -   3.8%
 CA              33.16         33.10                       -   -0.2%
 ICHR              22.57         24.33                       -   7.8%
 WNC              20.50         20.86                       -   1.8%
 SIMO              47.14         47.44                       -   0.6%
 MPAA              26.28         27.05                       -   2.9%
 MD              41.98         42.90                       -   2.2%
 GHC            563.70       562.80                       -   -0.2%
 WSTC              23.37         23.38                       -   0.0%
 QCOM              49.64         52.19                       -   5.1%
 KLAC              94.35         98.64                       -   4.5%
 MSGN              20.75         21.25                       -   2.4%
 TGNA              21.11         20.97                       -   -0.7%
 RGR              46.25         47.30 2.3%
 TIME              13.05         13.05 0.0%

And here, a few of my Semi plays, KLAC, QCOM and ICHR were strong.

MFI Select

Now for real money.  MFI Select is a portfolio of 4 tranches, each with 5 stocks that I buy and hold for a year per the "rules" from "The Little Book That Beats the Markets".  I rebooted this portfolio 5 years ago after quitting MFI for a year in 2011.  It has done well.  Here is how a hypothetical $100,000 invested in the first four tranches would have grown since 2012:


 Date   Differential   MFI Value   R3K Value 
12/1/2012 -2.20%          99,765            101,965
1/1/2013 -1.78%        102,798            104,575
2/1/2013 -2.26%        102,594            104,856
3/1/2013 -2.23%        102,881            105,114
4/1/2013 -0.43%        106,804            107,234
5/1/2013 2.00%        110,423            108,423
6/1/2013 4.75%        115,831            111,085
7/1/2013 4.29%        114,888            110,597
8/1/2013 6.91%        124,799            117,889
9/1/2013 10.46%        124,536            114,079
10/1/2013 19.67%        138,655            118,990
11/1/2013 19.75%        143,514            123,764
12/1/2013 23.70%        150,105            126,405
1/1/2014 26.63%        157,138            130,503
2/1/2014 24.70%        150,619            125,918
3/1/2014 25.66%        158,116            132,458
4/1/2014 30.38%        162,991            132,616
5/1/2014 29.65%        162,428            132,779
6/1/2014 31.44%        167,001            135,559
7/1/2014 39.23%        177,971            138,740
8/1/2014 31.13%        167,054            135,922
9/1/2014 35.90%        177,792            141,892
10/1/2014 29.38%        168,321            138,944
11/1/2014 26.14%        168,810            142,666
12/1/2014 30.22%        176,420            146,198
1/1/2015 28.17%        174,306            146,140
2/1/2015 20.63%        162,833            142,201
3/1/2015 25.15%        175,476            150,324
4/1/2015 29.95%        178,565            148,612
5/1/2015 37.31%        186,655            149,348
6/1/2015 51.53%        202,897            151,371
7/1/2015 62.69%        211,437            148,743
8/1/2015 40.75%        192,117            151,369
9/1/2015 36.41%        178,603            142,195
10/1/2015 43.12%        181,175            138,052
11/1/2015 69.02%        217,959            148,936
12/1/2015 73.49%        223,435            149,946
1/1/2016 63.33%        209,514            146,186
2/1/2016 49.49%        187,428            137,934
3/1/2016 56.48%        194,415            137,934
4/1/2016 47.34%        195,770            148,430
5/1/2016 46.38%        194,301            147,923
6/1/2016 51.44%        201,999            150,558
7/1/2016 50.41%        201,092            150,680
8/1/2016 52.72%        207,223            154,501
9/1/2016 67.04%        222,481            155,446
10/1/2016 42.98%        198,563            155,582
11/1/2016 41.86%        195,726            153,863
12/1/2016 45.92%        202,775            156,859
1/1/2017 45.60%        209,503            163,936
2/1/2017 45.20%        212,330            167,146
3/1/2017 48.80%        222,583            173,829
4/1/2017 55.70%        229,473            173,735
5/1/2017 55.80%        231,497            175,712
6/1/2017 53.40%        230,599            177,203
7/1/2017 60.28%        239,060            178,782
8/1/2017 57.76%        239,924            182,163
9/1/2017 68.85%        251,265            182,419
Current 71.02%        255,802            184,786

So up by a factor of 2.55 to $255,802.  Much better than if you had put $ in Russell 3000 benchmark.  Now I do often call this "hypothetical".  This is because (1) $100,000 was not my actual starting point and (2) I have added $ since 2012 while this hypothetical approach assumes no additional investment.  It makes a difference.  Here is overall table of all tranches:


 Category/Tranche   August   November   February   May   Total 
 Initial Investment         25,000             25,000           25,000        25,000         100,000
 Current Tranche  6.8% 48.6% 37.8% -9.4% 21.0%
 Previous Tranche  -0.1% 8.0% 10.7% 19.1% 15.9%
 Tranche -2  2.8% 69.4% -14.3% -25.2% 8.2%
 Tranche -3  11.2% 14.2% 8.5% 18.3% 13.0%
 Tranche -4  41.4% 43.7% 78.3% 33.0% 49.1%
 Tranche -5  14.1% 0.0% 0.0% 0.0% 3.5%
 MFI Overall Gain  96.8% 346.5% 153.0% 27.0% 155.8%
 Current Balance         49,199           111,626           63,238        31,738         255,802
 R3K Current Tranche  1.9% 16.5% 10.4% 4.7% 8.3%
 R3K Overall Gain  95.1% 98.5% 78.5% 67.0% 84.8%
 R3K Balance         48,776             49,619           44,635        41,755         184,786
 Annualized IRR  14.2% 36.2% 22.2% 5.6% 19.6%

You'll note the annualized IRR of 19.6%. But if you look by tranche, you'll see that for whatever reason, November has been outstanding at 36.2%, while May has lagged at 5.6%. Probably just luck of the draw, I do not believe there is seasonality.  So since November has been so good, the hypothetical $25,000 it started with has really grown - up to $111,626.  At the same time, May's growth has been stunted and is just 31,738.

That means in my hypothetical tracking - how November does going forward is more critical than how May does as it has 3x the weight.  In my real tracking, I add money virtually every time a portfolio hits anniversary date.  And in doing so, I make an effort to vene out the $ in each tranche.  So the table below compares the hypothetical allotment with my actual allotment (although for comparison purposes I have factored my actual dollars by quarter to staill ballance to the overall 255,802.


 Me v Hypo   August   November   February   May   Total 
 With Adds         57,546             85,345           65,142        47,769         255,802
 Hypothetical         49,199           111,626           63,238        31,738         255,802

So you can see I have tempered the differentials, Nov vs May goes from 111,626/31,738 to 85,345/47,769.   This is exacerbated by the fact that this year, November is once again doing way better than May as you can see from tables below:


11/15/2016  Start   Current   Dividend   Pct Gain   R3K Gain 
 MPAA  $26.55 $27.05 $0.00 1.9% 16.5%
 ATHM  $22.61 $65.83 $0.00 191.2% 16.5%
 AMGN  $145.14 $187.47 $3.15 31.3% 16.5%
 RHI  $43.23 $46.47 $0.94 9.7% 16.5%
 CA  $31.11 $33.10 $0.77 8.9% 16.5%
 Totals  48.6% 16.5%
2/1/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 AKRX  $19.10 $33.10 $0.00 73.3% 10.4%
 YY  $41.08 $77.11 $0.00 87.7% 10.4%
 KLAC  $85.11 $98.64 $1.67 17.9% 10.4%
 WNC  $17.65 $20.86 $0.06 18.5% 10.4%
 RGR  $52.75 $47.30 $1.15 -8.2% 10.4%
 Totals  37.8% 10.4%
5/6/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 WSTC  $24.15 $23.38 $0.00 -3.2% 4.7%
 TGNA  $25.75 $20.97 $0.14 -18.0% 4.7%
 TIME  $15.05 $13.05 $0.04 -13.0% 4.7%
 MSGN  $23.55 $21.25 $0.00 -9.8% 4.7%
 QCOM  $54.93 $52.19 $1.14 -2.9% 4.7%
 Totals  -9.4% 4.7%
8/15/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 GHC  $591.10 $562.80 $0.00 -4.8% 1.9%
 ICHR  $19.80 $24.33 $0.00 22.9% 1.9%
 MD  $43.00 $42.90 $0.00 -0.2% 1.9%
 SIMO  $43.05 $47.44 $0.00 10.2% 1.9%
 RHI  $44.15 $46.47 $0.24 5.8% 1.9%
 Totals  6.8% 1.9%

So I have actually "hurt" myself in this instance as I allocated more marginal $ to May than November over past year and May since then is down 9.4% while November is up over 44%.  But I think risk-wise it is best for me to try and keep the 4 tranches in the same ballpark as far as size.  I want to keep stock weighting relatively equal.  If I believed in seasonality, then more $ to Nov would make sense.


MFI Formula

My second approach of real $ was started 3 years ago, October 2014. It is formula-driven, from stocks from official screen that have a dividend yield of 2.4% or greater.  While that works great in back testing, it has been a bit more challenged since I started.


 Date   Differential   Value   R3K Value 
10/1/2014 0.00%        100,000            100,000
11/1/2014 1.63%        102,288            100,658
12/1/2014 0.30%        101,375            101,075
1/1/2015 -0.33%        100,664            100,995
2/1/2015 1.67%        101,281              99,611
3/1/2015 3.62%        106,073            102,454
4/1/2015 5.09%        106,781            101,695
5/1/2015 5.78%        107,859            102,077
6/1/2015 5.08%        108,213            103,134
7/1/2015 4.82%        106,423            101,604
8/1/2015 3.71%        107,112            103,404
9/1/2015 4.38%        101,523              97,139
10/1/2015 6.39%        100,703              94,312
11/1/2015 2.93%        104,835            101,907
12/1/2015 -3.48%          99,443            102,926
1/1/2016 -3.36%          96,830            100,012
2/1/2016 -0.72%          93,797              94,367
3/1/2016 4.07%          98,588              94,367
4/1/2016 0.34%        102,371            101,548
5/1/2016 -1.91%          99,774            101,200
6/1/2016 -0.42%        103,145            103,568
7/1/2016 -0.19%        103,022            103,216
8/1/2016 2.56%        109,419            106,857
9/1/2016 -0.34%        106,704            107,048
10/1/2016 -0.85%        106,377            107,230
11/1/2016 0.42%        105,421            105,003
12/1/2016 1.62%        110,705            109,088
1/1/2017 1.57%        113,406            111,832
2/1/2017 1.32%        114,809            113,486
3/1/2017 -5.09%        112,930            118,024
4/1/2017 -1.86%        116,227            118,091
5/1/2017 1.11%        120,403            119,296
6/1/2017 -2.65%        117,824            120,472
7/1/2017 -2.40%        119,144            121,545
8/1/2017 -1.96%        121,873            123,828
9/1/2017 -6.09%        117,879            123,973
Current -5.76%        119,823            125,581

10/3/2016  Start   Current   Dividend   Pct Gain   R3K Gain 
 CPLA  $58.15 $68.20 $1.64 20.1% 17.4%
 LDOS  $43.01 $56.40 $1.28 34.1% 17.4%
 GME  $27.70 $20.29 $1.51 -21.3% 17.4%
 PBI  $18.15 $12.98 $0.75 -24.4% 17.4%
 CSCO  $31.72 $32.44 $1.10 5.7% 17.4%
 Totals  2.9% 17.4%
12/30/2016  Start   Current   Dividend   Pct Gain   R3K Gain 
 GILD  $71.69 $82.36 $1.56 17.1% 12.2%
 HPQ  $15.00 $19.47 $0.53 33.3% 12.2%
 TGNA  $21.33 $20.97 $0.28 -0.4% 12.2%
 CA  $31.99 $33.10 $0.77 5.9% 12.2%
 SYNT  $19.79 $18.09 $0.00 -8.6% 12.2%
 Totals  9.5% 12.2%
4/1/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 BKE  $18.45 $15.75 $0.50 -11.9% 6.4%
 CSCO  $33.76 $32.44 $0.58 -2.2% 6.4%
 GILD  $67.50 $82.36 $1.04 23.6% 6.4%
 OMC  $85.53 $73.04 $0.55 -14.0% 6.4%
 SYNT  $16.76 $18.09 $0.00 7.9% 6.4%
 Totals  0.7% 6.4%
7/1/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 CSCO  $30.98 $32.44 $0.00 4.7% 3.3%
 GME  $20.95 $20.29 $0.38 -1.3% 3.3%
 HPQ  $17.60 $19.47 $0.13 11.4% 3.3%
 RGR  $60.70 $47.30 $0.23 -21.7% 3.3%
 SYNT  $16.21 $18.09 $0.00 11.6% 3.3%
 Totals  0.9% 3.3%
 Category/Tranche   October   January   April   July   Total 
 Initial Investment      249,820        249,939     250,180      249,728         999,667
 Current Tranche  2.9% 9.5% 0.7% 0.9% 3.6%
 Previous Tranche  5.5% 9.3% 25.2% 26.7% 16.1%
 Tranche -2  0.5% 11.0% -0.2% -12.5% -0.3%
 MFI Overall Gain  9.0% 32.8% 25.7% 11.9% 19.9%
 Current Balance      272,351        331,845     314,496      279,534      1,198,225
 R3K Current Tranche  17.4% 12.2% 6.4% 3.3% 9.8%
 R3K Overall Gain  32.6% 25.4% 24.2% 20.3% 25.6%
 R3K Balance      331,338        313,541     310,602      300,308      1,255,788
 Annualized IRR  3.0% 11.0% 9.7% 5.2% 7.2%

Note I only have a couple weeks left on 10/3 tranche.  You will also note that all four of my tranches are trailing the benchmark.  Hence the word "struggle".  You will also note that the disparity between my four tranche start date performances is not as wide as MFI Select:  high is 314,496 vs low 272,351.  But I am also trying to keep these "close" by how I allocate new money.


Dividends and Misc

Besides the BCRH foot fault, my dividend portfolio continues to hum along.


 Stock   Initial   Current   Div/Sh   Gain/Loss   Yield 
 EVG          14.46          14.45            0.10 0.6% 6.4%
 FDEU          18.40          18.95            0.48 5.6% 7.7%
 KCLI          49.31          49.25            0.22 0.3% 2.4%
 LADR          13.01          13.56            0.30 6.6% 8.8%
 NS          41.04          40.66                 -   -0.9% 10.8%
 PSXP          47.39          48.84            0.38 3.9% 5.0%
 RLJ-PA          28.45          27.66                 -   -2.8% 7.1%
 OIBAX             5.85             6.01            0.40 9.5% 4.0%
 JQC             8.20             8.38            0.65 10.1% 7.5%
 FSFR             8.68             8.85            0.19 4.2% 8.6%
 TK             5.24             8.83            0.06 69.4% 2.5%
 DSL          19.47          21.02            1.20 14.1% 8.6%
 RILY          15.58          17.00            0.13 10.0% 1.5%
 ISBC          13.15          13.29            0.08 1.7% 2.4%
 GLDI             9.29             9.40            0.03 1.6% 8.8%
 VTIBX          10.92          10.91            0.01 0.0% 1.1%
 CPLP             3.57             3.54                 -   -0.8% 9.0%
 SBRA          23.53          23.46            0.65 2.5% 6.1%
 TGONF          10.91          12.44            1.76 30.2% 5.6%
 NRZ          16.22          16.53            0.38 4.3% 12.1%
 DHF             3.34             3.48            0.12 7.6% 8.1%
 BKE          14.15          15.75                 -   11.3% 6.3%
 O          25.26          59.90         20.53 218.4% 4.2%


I have really added a lot of $ to this portfolio in 2017 as I entered world of retirement and it does include some bond or bond-like investments (VTIBX, OIBAX, JQC, RLI-PA, EVG, DSL and DHF).  Since I have added so much and made so many changes this year - I am planning to rethink how I present and measure the performance of this portfolio here.  That will likely be an initiative for start of 2018.