MFI Meltdown: Today was yet another day where my MFI portfolio was crushed in comparison to the Russell 3000 benchmark. As staggering as it seems, I had about a $10k lead on the IWV February 23rd (such a heady day) and it has evaporated. I am trying not to take it personally. I know it isn’t just my basket of MFI stocks. All my tracking baskets of MFI stocks are struggling over the past 6 trading days as well. Why does this happen? I don’t know, I can only guess. I think a key issue is to understand what isn’t in MFI that is in the Russell 3000. Specifically Banks, Insurance Companies and Utilities.
Utility ETF: -2.0% (at noon)
Bank ETF: -5.0% (at noon)
Insurance ETF: -3.3% (at noon)
MFI Portfolio: -9.5%
I suspect in a flight to quality, utilities, banks and insurers may be looking better than the rest of the market. It is interesting as TLBTBTM does say that MFI not only produces better returns, but also is less risky. Of course JG is talking about a slightly longer horizon than 6 trading days. Oh well, just as likely we’ll bounce back tomorrow… I mean how many straight losing days can a portfolio have?
Not So Smart: A couple of stocks that I felt might be safer havens (FDG & PDS) haven’t been safe (thus far). FDG is down 7.4% today and PDS is off almost 3%. Not the first time I’ve been wrong.
My Blue Light Special Portfolio: Now up 2.5%. Still pretty solid considering the benchmark is down 2.4% in same stretch. One question is whether there would be any new Blue Light Special stocks given the recent sell-off? Again, I define a Blue Light Special as a stock in a previous monthly tracking portfolio that is down at least 20% from that price and is currently an MFI stock. Hmm, now that the definitive niceties are out of the way, let’s look!
Not so exciting, looks like the usual group of suspects. MTEX is the one new name I see:
- BVF
- EGY
- FDG
- HNR
- MTEX
- OVTI
- VCI
- WON
EGY Earnings: I see where they announced earnings midday. Let us see, here are some key points as I see them:
- Earnings were up 38% to 67 cents per share for 2006 (stock currently just north of $6).
- Much of that increase was simply from higher gas prices (up 21%) in 2006
- Proven reserves have dropped from 8,734 MBOE at December 2004 to 5,991.
- Two new horizontal wells producing 6,000 “gross” barrels of oil daily, which increases their total production to 20,000 per day.
- Sold about 1,552 MBOE in 2006, while also had a 1,590 negative revision.
This makes me less bullish on the stock. That 1,590 negative revision was huge. That is basically saying you had over-estimated your oil in the ground by 20%! It is true that they have increased production (I think) by about 40% with the 6,000 Mbbls per day increase. If you assume that translates into a 20% increase in MBOE, that means they’d sell 1,862 in 2007. While that is nice, they’d be dry after just 3 years. I am an MFI believer, but should an energy company be valued on what they pumped out of the ground in past 12 months or what they have left to pump??? I don’t know if I’ll have the stomach to hold EGY for the requisite year.
ANF 2nd Time: As I mentioned previously, I did buy more ANF today to bring it in line with new $$$ per MFI stock. I didn’t have to buy much as it ended up about 23% for me in year one. I got the new shares at $74.28. Hope that also goes up 23%!
Side Car Addition: I could not stand it any more! I added to my RAIL holdings in my side car. $47.16 is simply an insanely cheap price for RAIL. My side car is growing in total value, despite the equity drop. I now feel like I am playing craps and I have all the numbers covered and will start making $ on every roll… so long as a “7” doesn’t come. Hopefully a poor analogy as I invariably lose at craps.
I am posting my weekly graph updated for today, as it is so shocking. Hopefully the low water mark.
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6 comments:
MG,
I feel your pain. My gains are melting away much faster than the overall market but then they piled up while the market was sloughing around.
Interesting you mention the "craps" feeling. I made the same analaogy while discussing with a colleague, my intent to add to my original capital goal beginning in November. While I don't expect a "7", I do see a few more rolls coming before the covered numbers bear fruit. I too have more fun than I do make money at craps.
Hup1 - I saw your posting on the Yahoo board. Sounds like we have dropped about the same amounts. The correct thing is to take the long term view. Not much fun though, dropping almost 10% in 6 days.
MG
Why does your meltdown entry have all that gibberish? Like your blog.
J, The entry looks fine to me. Is anyone else having trouble with it?
MG
I see gibberish too. "if !supportEmptyParas" with a lot of html tag appears throughout the headings it looks like.
If the above are just .jpg pix links, I wouldn't worry. Thanks for the blog.
Wanted you to know that I opened up your blog in Firefox and it didn't have all that empty paras gibberish. Weird. the gibberish was double returns. I usually use Internet explorer. Anyway, thanks.
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