Saturday, July 26, 2014

Monthly Tracking Portfolio - July 29th, 2013

Monthly Tracking Portfolio Analysis, July 29th, 2013

Another month has zipped by. As my faithful readers know, I have been tracking the Magic Formula Stocks as described by Joel Greenblatt in The Little Book That Beats the Stock Market since January 2006.  Every month I take the top 50 stocks over $100m market cap from his website and track how that portfolio of stocks fares versus the Russell 3000 for the next 12 months.  It has been an uphill struggle as the tracking portfolios have under-performed, driven in part by Chinese reverse merger fiascos, for-profit education stocks and home health care stocks all being proverbial albatrosses.

Before I get into the numbers, I do have several pictures that I will comment on (captive audience). I got up
early on this beautiful Connect-the-dots summer day and took a 27 mile bike ride. It was the first extended bike ride I have taken since my ACL surgery on May 8th. It was grand. I am sure there are prettier places to ride a bike in the country, but the Farmington River Trail, just a stone's throw from my house is pretty special. There is something so peaceful about riding a bike on a trail parallel to a river.

Onward

 Fearless readers will recall we had a 29 month "losing streak"..  Then we had a 13 month winning streak.  I am disheartened to report that that winning streak has ended. :( It was close, up 18.4% versus 19.0% for R3K. Here are the 50 stocks in descending performance order:

Stock  Initial Price   End Price  Percent Change 52 week low  Mkt Cap 
AGX              15.46           35.88 132.1%          15.32           224
QCOR              50.15           96.93 93.3%          47.51         3,038
PBI              14.24           27.11 90.4%          14.26         2,966
ENDP              37.91           69.34 82.9%          36.17         4,666
GTIV              10.98           18.18 65.6%           7.35           343
APOL              18.30           29.27 59.9%          18.00         2,065
AAPL              62.46           97.03 55.3%          62.05     406,791
STX              39.23           59.58 51.9%          37.17       14,468
LO              41.39           60.83 47.0%          41.56       16,256
MSFT              30.64           44.40 44.9%          30.84     262,665
NOC              89.31         127.92 43.2%          89.73       21,093
CHE              71.30         101.00 41.7%          64.16         1,337
HPQ              25.13           35.04 39.4%          20.25       49,363
RTN              69.15           93.55 35.3%          69.36       22,846
CRUS              18.52           24.09 30.1%          16.81         1,175
FLR              59.70           77.43 29.7%          59.98         9,821
BAH              16.53           21.24 28.5%          16.61         2,614
CF            199.28         254.56 27.7%        178.48       12,255
UTHR              72.63           92.33 27.1%          70.34         3,620
SWHC              11.07           13.80 24.7%          10.25           712
PDLI                7.62             9.45 24.0%           7.38         1,140
VCI              27.43           34.00 24.0%  N/A          1,087
RGR              47.09           58.13 23.4%          48.52           943
CPLA              48.06           59.20 23.2%          48.32           606
NSU                3.17             3.75 18.3%           3.00           657
LPS              32.59           37.30 14.5%            N/A          2,784
STRA              43.99           49.73 13.0%          33.51           478
MSB              17.15           19.35 12.8%          17.90           237
HLF              59.74           65.85 10.2%          49.35         6,239
EBIX              11.70           12.70 8.5%           8.31           439
DELL              12.80           13.86 8.3%           N/A        22,587
VG                3.40             3.64 7.1%           2.99           726
AUXL              18.10           19.24 6.3%          16.36           892
CSCO              24.56           25.83 5.2%          20.22     134,629
SAI              14.95           15.67 4.8%           N/A          5,113
GME              44.11           46.10 4.5%          33.10         5,401
CACI              66.78           69.64 4.3%          62.86         1,539
CA              28.80           29.64 2.9%          27.84       13,400
SPOK              15.02           14.57 -3.0%          #N/A           337
NATR              16.52           16.00 -3.1%          12.91           294
DHX                8.52             7.97 -6.5%           6.50           504
USNA              78.94           69.58 -11.9%          55.01         1,060
SPPI                8.37             7.10 -15.2%           6.36           502
DXM              15.01           12.59 -16.1%           4.30           153
CPIX                5.59             4.66 -16.6%           4.20           104
ESI              27.25           14.85 -45.5%          14.70           637
LQDT              28.34           14.08 -50.3%          12.05           895
WTW              46.02           20.10 -56.3%          19.09         2,600
INTX                8.95             3.84 -57.1%           3.78           173
GNI              51.47           19.58 -62.0%          16.80           103

I did find another site that has been tracking since 2006 this week.  It uses a different approach, just 5 stocks picked randomly every quarter. They have had better results than me (TrackJGreenblatt's Stock Picks). I found it very interesting and would encourage people to take a looksee.

AGX was number one, I am glad to report I have gotten to ride that wave personally. QCOR was number two. One of my worst sales ever as I once bought them around $18 and sold at $22, happy with a quick 20% gain.  For profit Education Stocks were a minor drag.  The 4 of them were up on average by a sub-par 12.7%.  ESI, really took a nose dive recently.  GNI has been a real lead ("iron-ore") weight.

Here is a listing of every portfolio I have tracked:

Average of Percent Change  
Date Total IWV
1/6/2006 16.0% 10.9%
2/17/2006 21.2% 14.6%
3/29/2006 13.0% 9.6%
4/7/2006 10.3% 12.1%
5/12/2006 20.4% 18.6%
5/31/2006 29.2% 23.3%
6/30/2006 22.4% 20.0%
7/31/2006 19.7% 17.3%
8/31/2006 13.0% 13.3%
9/28/2006 12.7% 14.6%
10/27/2006 10.3% 12.0%
11/29/2006 -0.3% 4.8%
12/28/2006 -6.9% 3.4%
1/26/2007 -10.2% -6.6%
2/27/2007 -3.7% -1.0%
3/26/2007 -9.8% -5.5%
4/27/2007 -10.9% -5.0%
5/29/2007 -11.5% -6.3%
7/3/2007 -30.0% -15.6%
7/30/2007 -19.9% -11.5%
8/30/2007 -12.5% -8.7%
9/27/2007 -19.0% -18.2%
11/2/2007 -40.4% -34.3%
11/28/2007 -40.1% -38.3%
12/28/2007 -36.3% -40.0%
1/25/2008 -36.4% -35.9%
2/26/2008 -51.7% -41.5%
3/24/2008 -40.9% -36.8%
4/25/2008 -25.6% -31.0%
5/28/2008 -22.2% -33.6%
7/2/2008 -11.7% -25.3%
7/29/2008 -10.5% -20.9%
8/29/2008 -13.8% -17.9%
9/26/2008 -4.3% -10.0%
10/31/2008 18.7% 13.9%
11/26/2008 50.9% 27.7%
12/26/2008 48.9% 32.3%
1/23/2009 59.3% 36.4%
2/27/2009 92.8% 55.6%
3/27/2009 85.8% 48.1%
4/24/2009 69.7% 45.8%
5/29/2009 31.8% 22.8%
6/29/2009 21.3% 24.0%
7/29/2009 19.5% 15.9%
8/28/2009 7.4% 8.8%
9/25/2009 12.6% 12.4%
10/30/2009 22.7% 18.3%
11/27/2009 24.3% 13.6%
12/31/2009 23.7% 18.1%
1/22/2010 19.0% 20.6%
2/26/2010 18.6% 23.6%
3/25/2010 10.0% 15.4%
4/23/2010 7.1% 11.4%
5/28/2010 19.3% 25.4%
6/29/2010 16.7% 25.7%
7/29/2010 5.4% 20.1%
9/2/2010 7.3% 10.1%
9/24/2010 -4.3% 0.3%
10/29/2010 -2.9% 10.4%
11/26/2010 -8.5% 1.4%
1/3/2011 -11.4% 0.1%
1/28/2011 -7.6% 4.9%
2/25/2011 -5.5% 5.0%
3/24/2011 -4.4% 7.4%
4/21/2011 -16.0% 3.2%
5/27/2011 -12.0% -0.4%
6/24/2011 -9.5% 5.0%
7/29/2011 -4.3% 8.1%
8/26/2011 12.0% 21.6%
9/30/2011 23.5% 29.6%
10/28/2011 0.4% 11.5%
11/25/2011 13.9% 24.0%
12/29/2011 9.9% 15.9%
1/27/2012 7.4% 16.6%
2/24/2012 7.8% 13.3%
3/23/2012 9.1% 15.2%
4/27/2012 10.5% 15.3%
5/25/2012 26.5% 27.5%
6/22/2012 26.1% 24.6%
7/27/2012 30.4% 25.7%
8/24/2012 26.0% 19.8%
9/28/2012 39.3% 22.1%
10/26/2012 48.3% 28.9%
11/23/2012 45.7% 32.1%
12/31/2012 52.3% 33.0%
1/25/2013 39.5% 22.0%
2/22/2013 46.5% 26.4%
3/28/2013 40.1% 21.2%
4/26/2013 35.0% 20.5%
5/24/2013 20.4% 19.2%
6/28/2013 26.9% 24.1%
7/29/2013 18.4% 19.0%
8/30/2013 15.0% 22.4%
9/27/2013 13.0% 17.4%
10/25/2013 7.0% 12.7%
11/29/2013 4.9% 10.2%
12/31/2013 5.6% 7.2%
1/31/2014 10.4% 10.8%
2/28/2014 7.1% 5.8%
3/28/2014 1.8% 6.2%
4/25/2014 1.6% 6.1%
5/30/2014 1.5% 2.8%
6/27/2014 -1.1% 0.5%

As noted, this ends a 13 month winning streak, which was proceeded by 29 straight months of lossest! (that is hard to do... it ain't random).  It is be a bad omen that the 10 of the 11 newest portfolios are all trailing.  Still some time to go.

Subsets

I also keep 2 subsets of the larger portfolios:  (1) dividend stocks (those with a yield per Yahoo of at least 2.6%) and (2) new stocks (those new to the tracking portfolios in past 12 months.  The dividend portfolio was solid, up about 35%.  The new portfolio terrible, down 8% - as LQDT was off by 50%. Finally, I like to track cash as it is more "honest" than percentages as if you go up by 25% and then down by 25%, that is a different result than up by 5% then down by 5%.  So I track what you would have to day if you had spread $100,000 over the first twelve portfolios evenly.
  
Category Value
Total     177,173
Total Russell 3K     183,520
New     182,129
Dividend     397,971
I will note that while dividend/MFI stocks have been stupendous, the open portfolios of dividend stocks are trailing on average by about 3 points (GNI hasn't helped).

One last picture.