MFI Merger Mania

When I first started investing in MFI, I had a number of stocks get bought out: NCOG, NSS and IVII to name a few names long gone. Funny thing. M&A dried up in the MFI space probably in the summer of 2007. Two years later, it seems to be coming back. Today, not only did Sprint make an offer for VM, but IBM offered to buy SPSS (IBM scoops up software maker SPSS in $1.2B deal). I think this is an extremely bullish signal for MFI stocks. Many companies on the screens are still quite cheap and have hefty cash on their balance sheets... a few bigger companies are sticking their toe in the M&A pool and finding the water is ok.

Not following the rules: I will admit that I have not followed the rules much in MFI. The one I break the most has been not holding for a year. I went back to see if that has hurt me. It was hard to measure, but I decided the best way was to take all the stocks I have sold early and figure out how they would have done had I held them the full year. What did I find? If I had held all the stocks I sold early a full year, they would have averaged being down 8%. As it was, they were down on average 5%... albeit over a period less than a year. I suspect if you annualize the 5% loss, it is probably very close to the 8% annual loss. So it has been a wash in my opinion... the big winner is Fidelity. I am committing to being better as I move my portfolio back to pure MFI. Here is my current portfolio, UTA was up over 20% today on high volume (note ICO and VM are gone):

FSUMF	155%
CKSW	285%
UTA	71%
WILC	87%
QXM	21%
CSKI	42%
CDII	51%
WH	40%
HCKT	34%
UEPS	19%
ENDP	20%
PFE	12%
FRX	13%
JTX	5%
GME	5%
AIRV	0%
RTN	0%
GIGM	-2%
CMED	-2%
GRVY	-4%
CHCG	-6%
KHD	-29%

I am actually 13% in cash, but I expect to start seeing a lot of stocks pop up in the Mechanical portfolios as earnings season plows on. Early August last year had huge turnover on the lists.

I will also note that the Decision Moose (DecisionMoose) just made the first move I have seen in the 8 months I have been watching it to stocks. What did it buy? EPP - that is the ETF for Asia excluding Japan. Look at my MFI portfolio: KHD, CHCG, GRVY, CMED, GIGM, WH, CDII, CSKI, QXM and UTA all fit into that bucket.

Finally, my Mechanical Portfolios continue to steamroll the opposition. Even stocks that I panned like QLTI, ONTY and INFI are all up sharply. Shows what I know.

Symbol	Date	Original	Current	Dividend	S&P O	S&P D	Stock Chg	S&P Chg	Diff
MSTR	8/1/08	60.56	58.56	-	126.16	2.49	-3.3%	-20.4%	17.1%
NVDA	8/8/08	11.00	13.04	-	129.37	2.49	18.5%	-22.4%	41.0%
SWIR	8/8/08	12.41	6.90	-	129.37	2.49	-44.4%	-22.4%	-22.0%
CF	8/8/08	134.65	79.35	0.10	129.37	2.49	-41.0%	-22.4%	-18.6%
SIGM	8/8/08	15.93	16.33	-	129.37	2.49	2.5%	-22.4%	24.9%
EGMI.OB	9/5/08	0.69	1.50	-	124.42	2.49	117.4%	-19.3%	136.7%
KHD	9/15/08	20.68	9.08	-	126.09	2.49	-56.1%	-20.4%	-35.7%
TTWO	9/22/08	16.57	9.37	-	124.12	2.49	-43.5%	-19.1%	-24.3%
SCMP	9/29/08	8.29	6.49	-	120.85	1.80	-21.7%	-17.5%	-4.2%
DTLK	9/29/08	4.34	3.36	-	120.85	1.80	-22.6%	-17.5%	-5.1%
TRA	9/29/08	28.42	28.86	0.20	120.85	1.80	2.3%	-17.5%	19.8%
MSB	10/10/08	10.12	9.65	0.40	88.50	1.80	-0.7%	12.6%	-13.3%
UEPS	10/10/08	14.58	14.95	-	88.50	1.80	2.5%	12.6%	-10.1%
TSCM	10/17/08	3.67	2.09	0.03	93.21	1.80	-42.4%	6.9%	-49.3%
EME	10/31/08	17.77	21.88	-	96.83	1.80	23.1%	3.0%	20.2%
CTCM	10/31/08	7.40	11.67	-	96.83	1.80	57.7%	3.0%	54.8%
PRGX	10/31/08	4.24	3.48	-	96.83	1.80	-17.9%	3.0%	-20.9%
HLF	11/7/08	20.17	32.47	0.40	93.86	1.80	63.0%	6.2%	56.8%
GHM	11/7/08	13.60	13.08	0.02	93.86	1.80	-3.7%	6.2%	-9.9%
BIDZ	11/21/08	2.39	4.22	-	79.52	1.80	76.6%	25.4%	51.2%
KBR	11/21/08	10.45	20.39	0.10	79.52	1.80	96.1%	25.4%	70.7%
OPTV	11/21/08	0.94	1.31	-	79.52	1.80	39.4%	25.4%	14.0%
IBAS	11/21/08	1.21	1.89	-	79.52	1.80	56.2%	25.4%	30.8%
Vclk	11/28/08	6.17	11.61	-	90.09	1.80	88.2%	10.7%	77.5%
DIVX	12/8/08	4.37	5.52	-	87.93	1.80	26.3%	13.4%	12.9%
MAXY	12/8/08	5.80	7.99	-	87.93	1.80	37.8%	13.4%	24.4%
ESIC	12/14/08	1.13	1.69	-	88.99	1.80	49.6%	12.0%	37.5%
MSO	12/29/08	2.80	3.35	-	87.16	1.08	19.6%	13.5%	6.1%
TRMS	12/29/08	1.03	2.02	-	87.16	1.08	96.1%	13.5%	82.6%
WFR	12/29/08	13.43	18.46	-	87.16	1.08	37.5%	13.5%	23.9%
AHCI	1/5/09	1.15	2.40	-	92.96	1.08	108.7%	6.5%	102.2%
CKSW	1/5/09	1.99	7.66	-	92.96	1.08	284.9%	6.5%	278.5%
COH	2/16/09	13.97	28.05	-	82.76	1.08	100.8%	19.6%	81.2%
DELL	2/23/09	8.41	13.97	-	77.42	1.08	66.1%	27.8%	38.3%
SOLR	2/23/09	4.22	6.31	-	77.42	1.08	49.5%	27.8%	21.7%
DECK	3/2/09	41.27	67.92	-	73.93	1.08	64.6%	33.9%	30.7%
FWLT	3/2/09	15.04	22.80	-	73.93	1.08	51.6%	33.9%	17.7%
HCKT	3/2/09	2.56	3.09	-	73.93	1.08	20.7%	33.9%	-13.2%
MWW	3/2/09	6.59	13.80	-	73.93	1.08	109.4%	33.9%	75.5%
PTIE	3/2/09	4.53	4.39	-	73.93	1.08	-3.1%	33.9%	-37.0%
TRLG	3/2/09	10.22	23.03	-	73.93	1.08	125.3%	33.9%	91.5%
qlti	3/9/09	1.41	3.30	-	68.92	1.08	134.0%	43.6%	90.4%
exbd	3/9/09	12.96	17.98	0.44	68.92	1.08	42.1%	43.6%	-1.5%
FIX	3/16/09	9.73	11.30		76.09	1.08	16.1%	30.1%	-13.9%
DBTK	3/16/09	6.65	8.65	-	76.09	1.08	30.1%	30.1%	0.0%
LOOP	3/16/09	5.77	7.94	-	76.09	1.08	37.6%	30.1%	7.5%
PRO	3/30/09	4.29	7.99	-	81.61	0.52	86.2%	20.6%	65.7%
ACN	4/13/09	27.71	35.27	-	85.81	0.52	27.3%	14.7%	12.6%
INFI	4/20/09	5.83	8.51	-	87.08	0.52	46.0%	13.0%	33.0%
RST	5/3/09	29.83	26.91	-	87.89	0.52	-9.8%	12.0%	-21.8%
ULCM.pk	5/3/09	2.18	1.90	-	87.89	0.52	-12.8%	12.0%	-24.8%
TYPE	5/3/09	3.80	7.44	-	87.89	0.52	95.8%	12.0%	83.8%
CRAY	5/3/09	3.98	8.25	-	87.89	0.52	107.3%	12.0%	95.3%
INT	5/10/09	41.90	42.96	-	92.98	0.52	2.5%	5.8%	-3.3%
IPHS	5/18/09	15.03	18.77	-	88.71	0.52	24.9%	10.9%	14.0%
GNI	6/1/09	86.75	87.50	-	92.53	0.52	0.9%	6.4%	-5.5%
UTA	6/1/09	7.90	13.47	-	92.53	0.52	70.5%	6.4%	64.2%
FRX	6/7/09	23.66	26.16	-	94.55	0.52	10.6%	4.1%	6.5%
ONTY	6/14/09	2.60	4.40	-	95.08	0.52	69.2%	3.5%	65.7%
VM	6/14/09	4.24	5.28	-	95.08	0.52	24.5%	3.5%	21.0%
BPI	6/21/09	16.74	18.12	-	92.04	-	8.2%	6.4%	1.9%
MTXX	6/28/09	5.77	5.93	-	91.84	-	2.8%	6.6%	-3.8%
JTX	6/28/09	5.74	5.75	-	91.84	-	0.2%	6.6%	-6.4%
GIGM	7/25/09	4.98	4.91	-	98.06	-	-1.4%	-0.2%	-1.2%
						Totals	19.8%	-4.0%	23.7%
70.5% of stocks beat the S&P 500 Benchmark						Closed	-19.5%	-35.1%	15.6%
S&P C			97.89			Open	37.6%	10.1%	27.4%