Lead Balloon

Talk about the wheels falling off! Another bleak day. Now in the past two weeks I have given back about 18K of my gains... and I went from being 10K in front of the benchmark to over 10K behind. Yes, my confidence in the formula is shaken. To add fuel to the raging fire:

IVAC was down 10% in AH trading (Intevac sees Q2 earnings below Wall Street view). Their earnings didn't "seem" bad. I suppose it was their backlog. Some good news would be welcomed.

Tomorrow is my 1 year anniversary of TGIS. It is not exactly at its Zenith. I am up about 7% with dividends (I recall being up close to 50% at one time). I will sell tomorrow per the rules. I will likely add NOOF. I hope things get better, but I expect May to be a rocky month in the markets... sigh. Good thing my insurance stocks in my non MFI portfolio are doing well! AXS posted solid numbers this evening!

Wah!

Wah! What a dreadful week for me and my MFI portfolio. It was so bad, I don't think I will post my weekly graph... yet. Down 1.3% today while benchmarks were flat. ISNS was down over 10% in a real head-scratcher. Yes, the markets just go nuts some time. I am sure I'll make it up over the next two weeks, but it is a wee bit frustrating. Wow, even BBSI was down 7.5%. I may have to buy some on Monday, that is ridiculous!

In other news, I sent a note to my buddy in California (a famous net personality). He has agreed to write Perl Script for me to pull 5 years of historical data from the Fidelity data bases for a universe of stocks. Once I have that, I can calculate historical ROICs and EYs and backtest the MF. Assuming it works, I can then use the data pulled to see if there are any leading indicators of better than average performance.

I do know it won't be quite perfect. I expect my data may have re-statements. I will also just be working with the universe of stocks today rather than what was there 5 years ago.

Randy in Yahoo Groups posted 2 great links to get data which feeds directly into an Excel spreadsheet:

http://ogres-crypt.com/php/fidelity-financials-all.php?sym=OPMR&per=a&wb=y
http://ogres-crypt.com/php/fidelity-financials-all.php?sym=OPMR&per=q&wb=y

http://ogres-crypt.com/php/advfn-financials-all.php?per=a&wb=y&sym=OPMR
http://ogres-crypt.com/php/advfn-financials-all.php?per=q&wb=y&sym=OPMR

Ok, time to watch my Mavericks!

More Formula Testing

I created a worksheet to automatically pull in the IS and BS from Fidelity Compustat for a given stock symbol. Worked great. I came very close on 43 of the 46 stocks to matching the MFI calculations. The next step will be to work with a Perl programmer to automate it. Then we'll see how many stocks in the top 100 between the lists match. Even if it isn't one for one (which I don't expect) I do think this will be a feasible alternative. Below is the list comparing the 46 or 47 stocks (three stocks: FDG, TGB and TCK... all Canadian errored out).

Stock	Market Cap	MFI EY	MFI ROIC	Date	My EY	My ROIC
AEO	6,713.96	10%	> 100%	24-Apr	10%	122%
ASPV	801.30	24%	> 100%	24-Apr	24%	388%
AVCI	115.15	41%	> 100%	24-Apr	45%	460%
AXCA	784.59	10%	> 100%	24-Apr	10%	155%
BBSI	285.51	10%	> 100%	24-Apr	9%	142%
CVCO	232.78	11%	75 - 100%	24-Apr	11%	132%
CLST.PK	54.30	16%	50 - 75%	24-Apr	38%	108%
EPIQ	429.32	12%	> 100%	24-Apr	18%	329%
ENDP	3,985.32	9%	> 100%	24-Apr	9%	583%
FTAR.OB	186.21	51%	75 - 100%	24-Apr	52%	95%
FCX	13,661.49	19%	75 - 100%	24-Apr	13%	14%
FTO	3,714.18	16%	75 - 100%	24-Apr	15%	87%
GVHR	476.50	10%	> 100%	24-Apr	12%	208%
JH	1,355.86	9%	> 100%	24-Apr	9%	163%
HOC	3,445.14	11%	75 - 100%	24-Apr	11%	89%
IVAC	512.33	12%	> 100%	24-Apr	11%	156%
JAKK	686.09	15%	75 - 100%	24-Apr	15%	98%
KSWS	1,018.83	13%	> 100%	24-Apr	12%	149%
KSW	39.73	18%	> 100%	24-Apr	19%	1885%
KG	5,081.86	14%	> 100%	24-Apr	14%	199%
KFY	1,017.81	10%	> 100%	24-Apr	11%	361%
MTEX	384.00	12%	> 100%	24-Apr	13%	107%
NATH	87.26	10%	> 100%	24-Apr	11%	148%
NOOF	208.03	11%	> 100%	24-Apr	12%	185%
NXG	918.39	20%	50 - 75%	24-Apr	19%	72%
OPTI.OB	64.57	14%	> 100%	24-Apr	14%	42867%
OVTI	744.50	13%	75 - 100%	24-Apr	14%	54%
OPMR	215.58	22%	> 100%	24-Apr	143%	1376%
PDII	132.48	42%	50 - 75%	24-Apr	54%	66%
PWEI	389.34	27%	75 - 100%	24-Apr	28%	92%
PACR	1,002.54	11%	> 100%	24-Apr	11%	140%
PNCL	375.82	20%	75 - 100%	24-Apr	20%	92%
PBH	656.07	9%	> 100%	24-Apr	9%	308%
PCU	24,396.09	12%	75 - 100%	24-Apr	13%	73%
SHOO	654.29	14%	75 - 100%	24-Apr	14%	94%
THO	2,335.28	11%	75 - 100%	24-Apr	12%	76%
USMO	577.97	13%	75 - 100%	24-Apr	14%	78%
UNTD	936.41	10%	> 100%	24-Apr	11%	256%
EGY	333.34	25%	> 100%	24-Apr	28%	105%
VCI	911.24	12%	75 - 100%	24-Apr	12%	105%
VALU	490.12	9%	> 100%	24-Apr	9%	741%
VGR	1,052.22	10%	> 100%	24-Apr	10%	138%
VRGY	1,441.11	10%	> 100%	24-Apr	10%	266%
VPHM	1,093.99	12%	> 100%	24-Apr	12%	3494%
WNR	2,497.26	14%	> 100%	24-Apr	12%	118%
WMCO	125.92	12%	75 - 100%	24-Apr	13%	96%

Note also there is a 2 day timing difference as my calcs were done today and MFI calcs were at close of 4/24.

Not exactly an uplifting day for me. I have now fallen about $4k behind the benchmark. All 3 of my stocks that reported yesterday (TGIS, BBSI and BLDR) were down sharply. GVHR also reported this morning before the bell and was lukewarm as well (Gevity HR Q1 earnings decline).

WSTG (my newest stock) reported their earnings this evening (Wayside Technology Group, Inc. Reports Fifteenth Consecutive Quarter of Double Digit Revenue Growth). They were spectacular! One thing about MFI, one or two stocks can really make a difference (like PNCL). Hopefully this will stem the tide. Their income before tax increased from $991K to $1.65M. That is a huge jump. They were up 3.5% in after dark trading.

Cooking With Gas

Mucho Gracias to Tony! I used his new and improved adjustments to the formulas (Magic Formula Investor Blog ) and basically matched the MFI website. I checked the fine print of my Fidelity financial statements in their research section and guess what? Their source is S&P Compustat! Now we're cooking with gas!

This solves a major worry for me. What if the MFI site disappears? It is ok now, because I can replicate (I believe) the list. I have a friend who is a most-excellent Perl programmer. I think I am going to engage him to write a program to mine the necessary data from Fidelity. Then sorting and ranking will be simple. Stay tuned.

I don't know if people have noticed, but there has been a lot of chatter about railroads lately. Warren Buffett bought a big stake in BNF. Cramer was talking about playing the boom in railroads by buying KOP. Hey, I own RAIL! What could be more railroad than that?

ASEI has been in a death spiral lately. Since April it has gone from almost $53 to $47.59 on no negative news I can see. It has also fallen off the MFI lists since November, but my calcs (thanks Tony!) show an 11% EY and 82% ROIC. It is a bit discouraging. I was about 10K ahead of the benchmark just 2 weeks ago. I am now trailing by $1,500, even with the timely jettison of AVCI. At least the sidecar is now up by $31K.

Earnings watch:

• PDS - had doom and gloom earnings this morning (Precision Drilling's Cautious Optimism). Stock did eke out small gains.
• TGIS had decent numbers after the bell (Thomas Group Announces First Quarter 2007 Results). It was up in AH trading. I actually sold my sidecar TGIS that I bought yesterday as it spiked up a $1 today. Talk about a quick 9% return!
• BBSI posted their numbers today (Barrett Business Q1 earnings rise). I'll tell you, BBSI is one well-run company. I am up about 40% and they keep churning out good numbers.
• BLDR had horrible earnings (Builders FirstSource Reports First Quarter 2007 Results). They were so bad that I think they're in danger of falling off the MFI screens. Their income before taxes was a paltry $369,000 compared with $31m from a year ago. Yikes! Sales down 30%. Then they say they expect negative conditions to remain through 2007 and possibly into 2008. Remind me again why i bought this stock?
  

Magic Formula's Formula

I tried some today to replicate the formula. Fidelity has some great financial statements with terrific detail in their reserach section. Of the 7 stocks I looked at, I was pretty much able to match JG's numbers exactly on 4. The others were off considerably in ROIC (I was generally close on EY). I am missing some adjustment to invested capital. I did some reading on calculation of invested capital, but there seem to be multiple definitions. Any insight on how one would calculate IC is welcomed. Try IPSU as an illustration.

Tony B mentioned on his website that a book favors slow moving industries. He said he had lost more on high tech firms. I can't say the same for me, though I have lost mucho $ on OVTI. Speaking of slow movers, I saw where recently sold DLX had a great quarter.

Looks like FDG had decent earnings (though I could not tell by reading their release) as they went up 1% today. Not a great day, I am now just a whisker ahead of the benchmark. BBSI was my best stock while PDS and TGB were down. Finally I did add TGIS at $11.88 to my sidecar. I saw where their internal review of stock options was released with little fanfare (Thomas Group Announces Conclusion and Reports Results of Voluntary Investigation of Stock Option Granting Practices).

Can't believe my Mavericks lost to the Warriors. I am not sure we can win.

Thanks!

Thanks to Jbosse. I have included 5 or 6 links to sample MFI portfolios (in left margin) I have set up in Marketocracy since September. I believe you can see the performance along with the holdings. Two are labeled "Phil Town". These were stocks somewhere on the MFI lists that have had strong eps and revenue growth over the past 5 years.

Enjoy!

Uneventful Day

Not much news today. Looking for a technical tip from my readers. I have 5 or 6 portfolios from the past 6 months in Marketocracy. Is there a way I can give people a link to see them?

FDG was supposed to report earnings tonight (Q1 2007 Fording Canadian Coal Trust Earnings Release - After Market Close). I never saw them, but I have low expectations. FDG has almost always disappointed.

EGY was up 18 cents today. It has really bounced back from its lows a month ago. On March 16th it closed at $4.61. It is now $5.80.

Interesting Financial Blog about OVTI (The Long Case for OmniVision: Like Buying a Dollar for Twenty Cents). Pretty says what I have said several times. They have a ton of cash and are dirt cheap. Sure I've lost 50% of my beginning value, but I am still long. It'll be a test of my belief in MFI though whether I renew my OVTI for another year at end of May and fill the tank with many more shares.

I see where coverage was intiated on HW by JPM (Coverage initiated on Headwaters by JP Morgan). It started at "neutral". I guess HW needs to do more banking business with JPM. (no, I am not THAT cynical... it was a joke). Ok, I'll keep the blog short, save a few electrons. Anyway, I need to see who won LA Apprentice! (gotta be the Donald's last season!).

Just Listed

I have decided to start a new tracking portfolio. I am calling it "Just Listed". It essentially uses the history JW sent to me of the 100 stocks > 1m back to May 31, 2006. I am defining a stock as "New to MFI" if it has not appeared on that list for the past year.

Logically it seems to me that if a stock is new to the list, that something must have happened to place it on the list. Either great quarterly earnings or a drop in price would get you on the list. I figure it may be like buying a home. Quite often houses that just come on the market are the most desirable. Perhaps the same holds true for MFI?

The 1st two stocks entering the portfolio will be WPCS and PDII. Stay tuned.

Quick catch up on a couple of other specialty tracking portfolios I started. My Blue Light Special Portfolio in Mid January (stocks that were down at least 15% from their price when previously on the MFI list and still on list) is up 10% vs the benchmark 4.6% (See image on left).

Then my Blue Light Special in Mid March is beating the benchmark IWV by a bit less that 1/2 a percentage point. (See image below):

Go Away in May

I suspect my graph is running parallel to last year. I remember having a great April. And then came May 12th. Just look at my chart a year ago. Will it happen again? Hope not.

PDS announced their monthly dividend/distribution (Precision Drilling Trust Announces April 2007 Cash Distribution). It has been a nice stock for me, up 15%.

Some people have a misconception about the AVCI dividend, that in some way they're getting a "free" $2. It doesn't work that way. If the stock is at $9 the day the stock goes x dividend, it will start at $7 and you'll have a $2 cash dividend.

Old Reliables

Anyone who has been following the MFI website knows that certain stocks seem to have been on the lists since the beginning of time. The following 16 stocks have been on the lists at least 200 of the 217 days that JW in Yahoo Groups has been tracking the top 100 greater than $1m:

WMCO

FCX

KSWS

PCU

FDG

KG

KFY

PNCL

MTEX

PWEI

CVCO

OVTI

BBSI

WON

VCI

CECO

Do you own any of these names? I know I do. Here is my weekly graph. I did fix it for omitting benchmark taxes during past 5 months:



Then here are my current holdings. I have a number of stocks about to mature: TGIS, FTO, CHKE, MTEX and PONR. All of them (except TGIS) are on the current lists. So I could simply "re-up" them for another year.

Current Portfolio
Stock	Purchase Date	Cost	Current	Gain
PNCL	05/04/06	$6.68	$17.39	160.3%
ISNS	07/07/06	$13.17	$18.70	41.9%
VPHM	09/11/06	$11.79	$15.44	30.9%
CHKE	05/16/06	$37.55	$46.19	30.2%
BBSI	09/06/06	$19.56	$25.01	28.6%
TGIS	05/01/06	$10.34	$12.37	23.0%
KG	05/31/06	$17.31	$21.08	21.8%
TGB	03/27/07	$2.64	$3.13	18.6%
PDS	03/01/07	$22.58	$25.96	15.7%
MTEX	05/22/06	$13.11	$14.83	15.6%
FTO	05/15/06	$28.76	$33.00	15.3%
ASEI	10/05/06	$45.85	$51.91	13.2%
LRCX	02/26/07	$46.66	$52.77	13.1%
ANF	03/05/07	$74.81	$83.51	11.6%
BLDR	09/18/06	$15.91	$17.40	9.4%
CREL	02/26/07	$12.50	$13.40	7.2%
GVHR	04/03/07	$19.17	$19.93	4.4%
THO	03/26/07	$40.30	$41.98	4.2%
JTX	04/09/07	$28.70	$29.67	3.4%
WSTG	04/16/07	$14.83	$14.89	0.4%
PACR	02/26/07	$28.26	$27.73	-1.3%
PONR	05/09/06	$30.48	$29.72	-2.5%
SHOO	01/17/07	$32.36	$31.26	-3.4%
DGX	02/26/07	$52.11	$49.97	-3.9%
HW	02/27/07	$24.00	$22.36	-6.8%
IVAC	03/06/07	$26.12	$24.09	-7.8%
TRLG	06/13/06	$17.02	$15.45	-9.2%
EGY	02/05/07	$6.42	$5.62	-12.5%
ORCT	06/02/06	$11.83	$10.30	-12.9%
RAIL	05/26/06	$58.18	$49.82	-14.1%
FDG	05/31/06	$34.03	$23.40	-22.5%
EZEN.OB	06/19/06	$2.84	$1.69	-40.4%
OVTI	05/31/06	$27.79	$12.95	-53.4%
Gain/Loss Open Positions ($):				$30,899
Gain/Loss Open Positions (%):				7.1%
Gain/Loss Closed Positions ($):				$31,113
Gain/Loss Closed Positions (%):				17.0%
Total Gain/Loss ($):				$62,012
Benchmark Gain/Loss ($):				$59,085
Annual IRR:				19.8%
Total Gain/Loss (%):				15.1%