CHCG is my most recent stock. I bought them on Monday as my firat foray into buying stocks new or relatively new to the 100>1m list. Timing is everything as they spiked up over 13% on this dreary day. It is an interesting company. Here is the 1st paragraph from recent press release (they are based in China):
ZHEJIANG PROVINCE, China, May 14 /PRNewswire-FirstCall/ -- China 3C Group (OTC Bulletin Board: CHCG - News), a rapidly growing retailer and distributor of consumer and business products in China, announced today that revenue for the first quarter of 2007 was $84.5 million versus $13.4 million in the comparable quarter last year, an increase of 530%. Net income for the quarter was $6.5 million, or $0.12 per basic and diluted share, up 607% from $913,548 or $0.02 earnings per share for the same quarter last year.
The numbers are pretty eye-popping. Here is their income statement form past 5 quarters:
| | Q1 2007 03/31/07 | Q4 2006 12/31/06 | Q3 2006 09/30/06 | Q2 2006 06/30/06 | Q1 2006 03/31/06 |
|---|---|---|---|---|---|
| Total Revenue | 84.523 | 63.576 | 42.574 | 28.618 | 13.451 |
| Cost of Goods Sold | 70.591 | 53.562 | 35.970 | 24.343 | 11.517 |
| Selling, General and Administrative Expenses | 3.726 | 2.484 | 1.652 | .904 | .505 |
| Operating Income Before Depreciation | N/A | 7.530 | 4.952 | 3.371 | 1.429 |
| Depreciation & Amortization | -- | .007 | .005 | .004 | .004 |
| Operating Income After Depreciation | 10.206 | 7.523 | 4.947 | 3.367 | 1.425 |
TLBTMTSM focuses on Operating Income after depreciation. Their EY was about 9%. Imagine what it will be if the Q2 2007 is anywhere close to 10m! As you can see, I am excited by their prospects. I was thrilled when they dipped at the end of last week creating a buying opportunity.
AEO had some good news as well today. Their May same store sales were up about 5% and this quarter in total they're up about 18% (American Eagle same-store sales rise 5% in May). I am very bullish on AEO.
PNCL, my high flier from 2006 has been gaining speed as well. Just 2 weeks ago it had dropped to just over $16. Today it closed over $3 higher at $19.29.
NOOF has been in a tail spin since announcing their earnings. For some reason their tax rate was an obscenely (ha-ha) high 46%. Nothing to do but grin and bear it.
One interesting note highlighted by CHCG, is that MFI does have foreign stocks. There is a mis-conception that MFI excludes foreign stocks. I actually subscribe to Global Investing for foreign stock ideas, but I may move away from that and start trying to have 15% of my MFI portfolio in foreign stocks. Hmmm, I keep finding more and more reasons to have more and more of my portfolio in MFI.
Looking at the most recent list, I wonder how many foreign stocks are there?
| Top 100 companies with a minimum market cap. of $1 million Companies are listed in alphabetical order | ||||||
| Name (in alphabetical order) | Ticker | Market Cap ($ Millions) | Pre Tax Earnings Yield | Pre Tax Return on Capital | Price From | Most Recent Quarter Data |
|---|---|---|---|---|---|---|
| AMEN Properties Inc | AMEN | 13.75 | 11% | > 100% | 06/05 | 12/31 |
| Aetrium Inc | ATRM | 44.87 | 13% | 50 - 75% | 06/05 | 03/31 |
| Alloy Inc | ALOY | 148.07 | 11% | > 100% | 06/05 | 01/31 |
| Amedisys Inc | AMED | 977.79 | 8% | > 100% | 06/05 | 03/31 |
| American Eagle Outfitters Inc. | AEO | 5,892.79 | 12% | 75 - 100% | 06/05 | 04/30 |
| AmerisourceBergen Corp | ABC | 9,756.61 | 9% | > 100% | 06/05 | 03/31 |
| Applied Materials Inc. | AMAT | 26,624.42 | 10% | 75 - 100% | 06/05 | 04/30 |
| Aventine Renewable Energy Holdings Inc | AVR | 715.73 | 16% | 25 - 50% | 06/05 | 03/31 |
| Avici Systems Inc | AVCI | 131.76 | 31% | > 100% | 06/05 | 03/31 |
| Axcan Pharma Inc | AXCA | 858.20 | 11% | > 100% | 06/05 | 03/31 |
| BJ Services Co | BJS | 8,909.72 | 13% | 50 - 75% | 06/05 | 03/31 |
| BP Prudhoe Bay Royalty Trust | BPT | 1,463.76 | 12% | > 100% | 06/05 | 03/31 |
| Barrett Business Services Inc | BBSI | 281.01 | 11% | > 100% | 06/05 | 03/31 |
| Best Buy Co. Inc. | BBY | 23,129.12 | 10% | 50 - 75% | 06/05 | 02/28 |
| CCA Industries Inc. | CAW | 63.94 | 15% | 50 - 75% | 06/05 | 02/28 |
| CLST Holdings Inc | CLHI | 54.30 | 12% | > 100% | 06/05 | 02/28 |
| CRA International Inc | CRAI | 524.22 | 10% | 50 - 75% | 06/05 | 02/28 |
| China 3C Group | CHCG | 320.75 | 8% | > 100% | 06/05 | 03/31 |
| Cox Radio Inc. | CXR | 1,407.64 | 9% | > 100% | 06/05 | 03/31 |
| Crown Crafts Inc | CRWS | 42.53 | 19% | 50 - 75% | 06/05 | 12/31 |
| Deluxe Corp | DLX | 2,260.54 | 8% | > 100% | 06/05 | 03/31 |
| Domino's Pizza Inc | DPZ | 1,241.69 | 10% | > 100% | 06/05 | 03/31 |
| Encore Wire Corp | WIRE | 686.34 | 23% | 25 - 50% | 06/05 | 03/31 |
| ExpressJet Holdings Inc. | XJT | 323.09 | 50% | 25 - 50% | 06/05 | 03/31 |
| Exxon Mobil Corp | XOM | 474,659.30 | 12% | 50 - 75% | 06/05 | 03/31 |
| FTD Group Inc | FTD | 514.57 | 9% | > 100% | 06/05 | 03/31 |
| Foamex International Inc | FMXL | 84.74 | 56% | 25 - 50% | 06/05 | 12/31 |
| Fording Canadian Coal Trust | FDG | 4,362.96 | 11% | 75 - 100% | 06/05 | 03/31 |
| Frontier Oil Corp. | FTO | 4,646.67 | 13% | 75 - 100% | 06/05 | 03/31 |
| Gannett Co Inc. | GCI | 13,974.28 | 11% | 50 - 75% | 06/05 | 03/31 |
| Great Northern Iron Ore Properties | GNI | 168.52 | 9% | > 100% | 06/05 | 12/31 |
| Harley-Davidson Inc. | HOG | 15,816.38 | 10% | 50 - 75% | 06/05 | 03/31 |
| Hasbro Inc. | HAS | 5,092.10 | 9% | > 100% | 06/05 | 03/31 |
| Headwaters Inc | HW | 776.86 | 13% | 50 - 75% | 06/05 | 03/31 |
| Heidrick & Struggles International Inc | HSII | 844.79 | 8% | > 100% | 06/05 | 03/31 |
| Herbalife Ltd | HLF | 2,883.49 | 9% | > 100% | 06/05 | 03/31 |
| Home Diagnostics Inc | HDIX | 198.53 | 11% | 50 - 75% | 06/05 | 03/31 |
| Hudbay Minerals Inc | HBMFF | 2,961.02 | 15% | 50 - 75% | 06/05 | 12/31 |
| Hurco Companies Inc | HURC | 304.68 | 10% | 50 - 75% | 06/05 | 04/30 |
| IBSG International Inc | IBIN | 12.73 | 36% | 25 - 50% | 06/05 | 12/31 |
| Image Sensing Systems Inc | ISNS | 58.20 | 9% | > 100% | 06/05 | 03/31 |
| Imperial Sugar Co | IPSU | 320.20 | 31% | 25 - 50% | 06/05 | 03/31 |
| Inplay Technologies Inc | NPLA | 17.95 | 35% | > 100% | 06/05 | 03/31 |
| Intevac Inc | IVAC | 412.95 | 17% | > 100% | 06/05 | 03/31 |
| JAKKS Pacific Inc | JAKK | 756.56 | 14% | 75 - 100% | 06/05 | 03/31 |
| K-Swiss Inc | KSWS | 1,004.07 | 12% | 75 - 100% | 06/05 | 03/31 |
| Keystone Consolidated Industries Inc. | KYCN | 205.50 | 29% | 25 - 50% | 06/05 | 12/31 |
| King Pharmaceuticals Inc. | KG | 5,276.71 | 13% | > 100% | 06/05 | 03/31 |
| Korn/Ferry International | KFY | 1,100.89 | 9% | > 100% | 06/05 | 01/31 |
| Lam Research Corp | LRCX | 7,380.61 | 11% | > 100% | 06/05 | 03/31 |
| Lexmark International Inc. | LXK | 4,872.42 | 12% | 50 - 75% | 06/05 | 03/31 |
| MOCON Inc | MOCO | 61.83 | 10% | 75 - 100% | 06/05 | 03/31 |
| Mannatech Inc | MTEX | 375.44 | 13% | 75 - 100% | 06/05 | 03/31 |
| Marathon Oil Corp | MRO | 43,644.32 | 18% | 25 - 50% | 06/05 | 03/31 |
| Metal Management Inc | MM | 1,325.62 | 12% | 25 - 50% | 06/05 | 12/31 |
| Methanex Corp | MEOH | 2,767.52 | 27% | 25 - 50% | 06/05 | 03/31 |
| Nathan's Famous Inc | NATH | 90.04 | 10% | > 100% | 06/05 | 12/31 |
| New Frontier Media Inc | NOOF | 213.78 | 11% | > 100% | 06/05 | 03/31 |
| Northgate Minerals Corp | NXG | 823.43 | 21% | 50 - 75% | 06/05 | 03/31 |
| Nucor Corp | NUE | 20,428.38 | 13% | 50 - 75% | 06/05 | 03/31 |
| Optimal Group Inc | OPMR | 182.24 | 9% | > 100% | 06/05 | 03/31 |
| PW Eagle Inc | PWEI | 383.24 | 19% | 50 - 75% | 06/05 | 03/31 |
| Pacer International Inc | PACR | 954.63 | 10% | > 100% | 06/05 | 03/31 |
| PainCare Holdings Inc. | PRZ | 21.39 | 18% | 50 - 75% | 06/05 | 03/31 |
| Pinnacle Airlines Corp | PNCL | 419.21 | 21% | 75 - 100% | 06/05 | 03/31 |
| Pre-Paid Legal Services Inc. | PPD | 874.29 | 10% | > 100% | 06/05 | 03/31 |
| Precision Drilling Trust | PDS | 3,313.72 | 16% | 25 - 50% | 06/05 | 12/31 |
| Prestige Brands Holdings Inc | PBH | 654.07 | 9% | > 100% | 06/05 | 03/31 |
| Psychemedics Corp | PMD | 99.50 | 8% | > 100% | 06/05 | 03/31 |
| Quest Diagnostics Inc | DGX | 9,415.14 | 9% | > 100% | 06/05 | 03/31 |
| Rio Narcea Gold Mines Ltd | RNO | 861.44 | 14% | 25 - 50% | 06/05 | 03/31 |
| Robert Half International Inc. | RHI | 5,848.01 | 8% | > 100% | 06/05 | 03/31 |
| STEC Inc | STEC | 314.19 | 15% | 25 - 50% | 06/05 | 03/31 |
| Select Comfort Corp | SCSS | 890.43 | 9% | > 100% | 06/05 | 03/31 |
| Southern Copper Corp | PCU | 27,010.91 | 12% | 75 - 100% | 06/05 | 03/31 |
| Supertex Inc | SUPX | 456.75 | 9% | > 100% | 06/05 | 03/31 |
| Taseko Mines Ltd | TGB | 482.98 | 11% | 50 - 75% | 06/05 | 12/31 |
| Teck Cominco Ltd | TCK | 18,618.00 | 20% | 75 - 100% | 06/05 | 03/31 |
| Tesoro Corp | TSO | 8,624.54 | 17% | 25 - 50% | 06/05 | 03/31 |
| Tiens Biotech Group USA Inc. | TBV | 283.20 | 12% | 50 - 75% | 06/05 | 03/31 |
| Timberland Co (The) | TBL | 1,708.20 | 11% | 50 - 75% | 06/05 | 12/31 |
| Travelzoo Inc | TZOO | 389.18 | 9% | > 100% | 06/05 | 03/31 |
| True Religion Apparel Inc | TRLG | 448.72 | 10% | > 100% | 06/05 | 03/31 |
| US Physical Therapy Inc | USPH | 158.50 | 9% | 50 - 75% | 06/05 | 03/31 |
| USANA Health Sciences Inc | USNA | 698.82 | 10% | > 100% | 06/05 | 03/31 |
| United-Guardian Inc. | UG | 64.75 | 9% | > 100% | 06/05 | 03/31 |
| Universal Compression Partners LP | UCLP | 474.63 | 14% | 50 - 75% | 06/05 | 03/31 |
| Utah Medical Products Inc | UTMD | 124.73 | 10% | 75 - 100% | 06/05 | 03/31 |
| Vaalco Energy Inc | EGY | 293.63 | 24% | 75 - 100% | 06/05 | 03/31 |
| Value Line Inc | VALU | 428.63 | 10% | > 100% | 06/05 | 01/31 |
| Vector Group Ltd | VGR | 1,127.29 | 10% | > 100% | 06/05 | 03/31 |
| Verigy Ltd | VRGY | 1,680.14 | 9% | > 100% | 06/05 | 04/30 |
| Versant Corp | VSNT | 83.30 | 8% | > 100% | 06/05 | 04/30 |
| ViroPharma Inc | VPHM | 1,033.62 | 15% | > 100% | 06/05 | 03/31 |
| Wayside Technology Group | WSTG | 74.59 | 10% | > 100% | 06/05 | 03/31 |
| Western Digital Corp | WDC | 4,261.21 | 12% | 50 - 75% | 06/05 | 03/31 |
| Westwood One Inc. | WON | 684.07 | 9% | > 100% | 06/05 | 03/31 |
| Williams Controls Inc | WMCO | 125.86 | 12% | 75 - 100% | 06/05 | 03/31 |
| Wpcs International Inc | WPCS | 80.19 | 10% | 75 - 100% | 06/05 | 01/31 |
| Xyratex Ltd | XRTX | 633.52 | 11% | 50 - 75% | 06/05 | 02/28 |
Clearly a bunch on Canadian Companies. Off the top of my head: VPHM, TCK, PDS, TGB, NXG, HBMFF, OPMR, AXCA, MEOH and FDG. RNO is Spanish. CHCG is Chinese. VRGY is from Singapore. XRTX is from the UK. PCU might as well be from Peru.
Stay tuned.
Posts
3 comments:
Hi! I've just recently been looking at your blog. I've been following the MFI strategy since 3/06 and have only recently thought to look to see what other people are doing. I've been following the method very strictly, buying lots of 5 every 2 months. Before I actually started, I ran a few "test" MFI portfolios using different strategies (including one where I added all new MFI listings daily, as you are talking about). The best results *always* came from randomly picking 5. Always. The point was that every time I tried to be clever, I missed out.
Have you considered that by trying to game the system and time the market you are actually missing out? You're fighting to match your benchmark. From 3/06 through today, I am 5 points ahead of my benchmark, which is VFINX with dividends included (I have to profess ignorance...I haven't been able to discern if an index reflects reinvested dividends, so I've been using Vanguard's S&P 500 fund with dividends reinvested to approximate this). I don't know about the Russell 3000 (what's the index symbol?), but I know the S&P 500 was fairly comparable to the Russell 2000 over the past year.
My two "closed" tranches beat my benchmark by a whopping 15 points.
I'm not saying any of this to brag. It's likely sheer luck, and only several years of MFI use will really tell what's a good method. You seem to get as excited about following the investments that MFI has identified as I do. I just wonder if breaking outside the MFI guidelines and trying to time the market is causing you to miss out on some of the significant benefits of MFI.
Thanks, and no offense meant at all. I'm enjoying your blog and just wanted to ask your thoughts on this since it's been nagging at me a little (and if this has already been discussed, apologies, because I haven't had the time to read all of your blog).
-A
It is a fair question and no offense taken. I have considered simply picking randomly. But to be honest, I just can't let go and do that with real money. I agree that my tracking portfolios have generally beaten the benchmarks while I am just a nose ahead. But I am not convinced that my par performance (remember it is not a disaster) is caused by my trying to do a little better as it is easily within "chance".
What I am saying is I think it is just as likely that I would have randomly picked stocks and been even with the benchmarks as the approach I am using. In about three years I'll know for sure! :)
I will say that none of my tracking portfolios have come close to your 15 points, so I'd respectfully suggest that you were fortunate.
Russell 3000 is IWV.
Yes, well, I agree, it could easily be luck (although if Western Refining holds at my current unrealized gain of 125% since 9/7/06 (even with the last two days of declines!), I will close on a gain for that tranche of approx. 40% vs. approx. 15% for the S&P 500). Most of my other tranches that are still open are slightly above or slightly below the benchmark.
As far as leaving the results to "chance", as Joel Greenblatt said in his book, once you're in the top 25, the ones you pick are not quite as important as just the fact that you are diversified.
I'm no actuary (as I see you are in your profile), but I would think that picking 5 out of 25 all on one day would make you more likely to pick the "good" ones than picking one or two from a day's list of 25, whether random or not. Thoughts?
By the way, I agree that meeting the benchmark is far from disaster. My view is even if after three years I settle down and end up even with the benchmark, that's ok. It will have been a heckuva lot more fun than investing in an index fund!
-A
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