If you go back to the blog where I talk about Haugen, I mentioned that he did independently verify that MFI does outperform the indices. BUT he stated that the differential wasn't as great as JG inferred. I believe one difference is that Haugen ran his backtesting on just larger cap companies.Below is the most recent MFI list of stocks $40m or greater:
| Top 25 companies with a minimum market cap. of $40 million Companies are listed in alphabetical order | ||||||
| Name (in alphabetical order) | Ticker | Market Cap ($ Millions) | Pre Tax Earnings Yield | Pre Tax Return on Capital | Price From | Most Recent Quarter Data |
|---|---|---|---|---|---|---|
| Aduddell Industries Inc | ADDL | 75.91 | 21% | > 100% | 06/19 | 03/31 |
| Alpine Group Inc | APNI | 50.97 | 999% | > 100% | 06/19 | 03/31 |
| Bradley Pharmaceuticals Inc. | BDY | 203.84 | 11% | > 100% | 06/19 | 12/31 |
| CallWave Inc | CALL | 75.47 | 18% | 75 - 100% | 06/19 | 03/31 |
| Deluxe Corp | DLX | 1,063.49 | 13% | > 100% | 06/19 | 03/31 |
| EarthLink Inc | ELNK | 1,086.80 | 17% | > 100% | 06/19 | 03/31 |
| Ezenia Inc | EZEN | 41.97 | 11% | > 100% | 06/19 | 03/31 |
| Fording Canadian Coal Trust | FDG | 4,774.56 | 16% | > 100% | 06/19 | 03/31 |
| FreightCar America Inc | RAIL | 613.67 | 20% | > 100% | 06/19 | 03/31 |
| Intervideo Inc | IVII | 123.39 | 27% | > 100% | 06/19 | 03/31 |
| King Pharmaceuticals Inc. | KG | 3,882.42 | 17% | > 100% | 06/19 | 03/31 |
| Korn/Ferry International | KFY | 819.90 | 12% | > 100% | 06/19 | 04/30 |
| Mannatech Inc | MTEX | 299.01 | 18% | > 100% | 06/19 | 03/31 |
| NS Group Inc. | NSS | 1,062.98 | 19% | 75 - 100% | 06/19 | 03/31 |
| OmniVision Technologies Inc | OVTI | 1,211.09 | 12% | > 100% | 06/19 | 04/30 |
| Orckit Communications Ltd | ORCT | 152.29 | 13% | > 100% | 06/19 | 03/31 |
| PW Eagle Inc | PWEI | 359.43 | 29% | 75 - 100% | 06/19 | 03/31 |
| Patriot Scientific Corp | PTSC | 356.32 | 19% | > 100% | 06/19 | 02/28 |
| Pinnacle Airlines Corp | PNCL | 143.53 | 43% | > 100% | 06/19 | 03/31 |
| PortalPlayer Inc | PLAY | 246.60 | 82% | > 100% | 06/19 | 03/31 |
| Syneron Medical Ltd | ELOS | 474.69 | 13% | > 100% | 06/19 | 03/31 |
| United Online Inc | UNTD | 715.64 | 14% | > 100% | 06/19 | 03/31 |
| Vaalco Energy Inc | EGY | 432.04 | 17% | > 100% | 06/19 | 03/31 |
| ViroPharma Inc | VPHM | 611.80 | 19% | > 100% | 06/19 | 03/31 |
| World Air Holdings Inc | WLDA | 190.82 | 33% | > 100% | 06/19 | 09/30 |
It is interesting that only 6 of the 25 have market caps over $1b. This MFI approach is truly a small/micro cap approach. Equally as interesting is that 16 of my 28 MFI stocks in my portfolio have market caps over $1b. Why is that? I think that the answer is that I am risk averse. I really struggle with myself to buy the small companies.
Looking at my returns, under $1b companies are at -2.3% while companies > $1b are at a depressing -7.0%. I haven't seen much market news this morning. I did laugh last night when Cramer said about BHP:
"The stock, which he owned for his charitable trust, is under tremendous pressure, Cramer said, adding that he's glad he sold it because he doesn't like it as much as he used to."
Is there a stock out there that he will like for a period longer than six months?
Keeping with my small package theme, I had to laugh as the MSN Strategy Lab kicked off a new challenge the other day. They invited Thomas Ko, an amateur who won the SquawkBox challenge, to compete. While the "professionals" picked an array of companies with their hypothetical $50,000, Mr. Ko lay down a $50,000 wager on a 10m small cap company (PFACP). Well, if you were to look at yesterday's big movers you'd see PFACP going from $4.25 to $5.90. Mr. Ko is already 12.7% in a single day. Nice. (I wasn't sure whether PFACP moved because he endorsed it or whether there was a real story... quick update: the stock rose another 27% today). Journal Entry: 6/20/2006
Tales of the Tape
TGIS (becoming my favorite stock) announced today that they are increasing their dividend by 50% from 5 cents a share per quarter to 7.5 cents. Some people go ho-hum about such things, but to me it signals that TGIS feels that their FCF is strong and growing.
TGIS Increases Dividend
CHKE was my big gainer today (up 4.2%) despite a weird MF article about them.
MF Calls CHKE Dividend Dangerous
Off Topic: I was bummed that my Mavericks lost to the Heat last night. Dwayne Wade was the difference, though the officials really give him the superstar calls (to be fair, Dirk gets his share as well). I suppose I will have to utter the call of the Brooklyn Dodgers, "wait 'til next year!".
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