Thursday, November 27, 2008

Most Recent Tranche

As I have mentioned several times on these pages, I keep a mechanical portfolio that simply takes new stocks to the top 25 that appear over the weekend. I then track this portfolio against the S&P 500 and (for fun) Steve Alexander's Magic Diligence portfolio.

So far, my portfolio has not exactly been great shakes, I trail the S&P by about 2 points. However, I added 4 stocks over the weekend and they have been pocket rockets in the first three trading days this week:

BIDZ from $2.39 to $4.19
KBR from $10.45 to $13.72
OPTV from 0.94 to $1.20 and
IBAS from $1.21 to $1.38.

I don't have my calculator handy, but I think the 4 stocks are up an AVERAGE of 36%. I thought the action on EGY on Wednesday was very positive. On what should be a light volume day, they traded 72% more shares than normal and the stock was up 24%. I wondered whether there was some rumor about some oil being found through their exploration wells. They keep hyping in their press releases about the potential for discoveries. I'd feel better about that if there was some inside buying going on... but perhaps the trading windows have been closed for insiders of late as they have material non-public info.

My big non-MFI buys of late were a split decision - STP (my Chinese Solar company) warned of lower upcoming production and they crashed one day, but have moved up some since. Then VR has gone from $18 to pushing $23... which was a very profitable move for me, and I collected a 20 cent dividend to boot. Wednesday I bought a ton of FSUMF, which was selling for a paltry $1.25. Again, this is a basic resource play, but they have a huge competitive advantage with their proximity to China, which saves them a ton in shipping costs compared with their South American rivals. Jim Jubak is big on this company, as is Ian Cumming.


The Sage said...

I didn't see IBAS on the top 100 list. Did you choose the stocks randomly or did you do some additional research?

Marsh_Gerda said...

My picks for my mechanical portfolio do not use research. My personal picks use research... but to be honest it deosn't seem to help

The Sage said...

How long have you been using the magic formula? When you run it are you randomly selecting from the top 25, 50, or 100? Thanks!

The Sage said...

In reading your previous year-end posts it seems you've been at it for almost 3 years. I noticed that your return has been close to the major indexes, which as you stated isn't bad. I'm just curious as to why you haven't done better? In reading the book it seemed like they consistently and dramatically beat the market. Any ideas? Did they skew the result to sell more books?

Marsh_Gerda said...

I haven't done better because I suppose I have picked some bad stocks. I have also picked more smaller cap stocks during a stretch when smaller cap stocks got crushed well before larger cap stocks (July-Dec 2007).

Regarding, the author skewing the results to sell more books, that seems extremely unlikely. Greenblatt is quite wealthy and doesn't really need book sales to pad his account.

I think the past year has been a once in 50 years stretch for the financial markets and all fundamentals are essentially thrown out the window. Arguably, the markets will eventually rebound and this may be a once a lifetime investment opportunity. I have stopped bemoaning the drops in my portfolio values and will patiently await the recovery.

StanMan said...

Hey Marsh,

I really enjoy your blog...through my research with MFI your site was mentioned. I visit it weekly!! You commented that you just "stocked" up on Fortescue???... it's hard to find information about it.. why did it take a huge drop in 2008... at one point Jubak's target for it was $60but it's no where near that now. Could you share some of your wealth of information??? Thanks!