Saturday, May 19, 2012

MFI Index Update - It Ain't Pretty

Weekend Update

First the good news.  It is a beautiful spring morning here in Connecticut.  I am sitting out on my back deck, in the early morning as the sun rises with a cup of coffee.  My deck is very secluded and looks out over woods.  I can hear the birds chirping and a woodpecker in the distance. 

Now the not so good news, the markets are essentially giving back all the gains of 2012 in what is looking like an instant replay of 2011.  And MFI is taking it on the chin more than the indices.  First,  here is a table of my MFI Index (the 50 stocks over $100m selected on January 1st each year back to 2006). 

 
IWV  Performance

ITD  Annual 
2006 9.65% 9.65%
2007 12.33% 2.45%
2008 -30.40% -38.04%
2009 -9.85% 29.53%
2010 4.84% 16.29%
2011 4.25% -0.56%
2012 7.67% 3.28%
MFI Index  Performance

ITD  Annual 
2006 15.03% 15.03%
2007 7.34% -6.69%
2008 -33.42% -37.97%
2009 -3.34% 45.18%
2010 18.67% 22.77%
2011 6.25% -10.47%
2012 6.23% -0.02%

Sadly, the index has gone into the red for 2012.  The chart shows that after 7 years, you'd be up a total of 6.23%.  Note that is not annualized, that is cumulative.  Here is a table of the 50 stocks in 2012:


Stock Start Last Week Current YTD Change Weekly Change
AFAM        16.58           22.51          21.22 28.0% -5.7%
AMED        10.91           10.54          10.00 -8.3% -5.1%
APOL        53.87           31.34          32.02 -40.6% 2.2%
AMAT        10.71           11.14          10.52 -1.8% -5.6%
ASTX          1.89             1.63            1.59 -15.8% -2.3%
CJES        20.93           19.20          16.70 -20.2% -13.0%
CPLA        36.05           29.45          30.44 -15.6% 3.4%
CECO          7.97             6.21            6.45 -19.1% 3.9%
CRAY          6.47           11.09          10.10 56.1% -8.9%
CPIX          5.38             6.79            6.59 22.5% -2.9%
DELL        14.63           15.42          14.74 0.8% -4.4%
DLX        22.76           24.39          23.24 2.1% -4.7%
DLB        30.51           44.92          44.11 44.6% -1.8%
XLS          9.05           11.22          10.56 16.7% -5.9%
EXPE        29.02           41.11          40.72 40.3% -0.9%
FRX        30.26           34.24          33.20 9.7% -3.0%
GTAT          7.24             5.52            4.30 -40.6% -22.1%
GME        24.13           20.63          19.37 -19.7% -6.1%
GTIV          6.75             6.55            6.48 -4.0% -1.1%
GNI       110.25           65.27          64.39 -41.6% -1.3%
ESI        56.89           62.18          60.61 6.5% -2.5%
KLAC        48.25           50.73          46.26 -4.1% -8.8%
KLIC          9.25           11.81          10.83 17.1% -8.3%
LRCX        37.02           41.42          37.57 1.5% -9.3%
LPS        15.07           24.89          22.43 48.8% -9.9%
MEDW        12.82           15.05          14.68 14.5% -2.5%
MANT        31.24           23.96          22.51 -27.9% -6.1%
MDF          7.47             8.79            8.09 8.3% -8.0%
MSFT        25.96           31.56          29.67 14.3% -6.0%
MNTA        17.39           14.26          13.83 -20.5% -3.0%
NSU          5.53             3.30            3.07 -44.5% -7.0%
NOC        58.48           60.91          59.08 1.0% -3.0%
NVMI          7.37             8.30            7.01 -4.9% -15.5%
PDLI          6.20             6.80            6.48 4.5% -4.7%
PETS        10.38           11.85          11.83 13.9% -0.2%
PWER          3.91             4.01            3.57 -8.7% -11.0%
RTN        48.38           52.65          50.44 4.3% -4.2%
SAI        12.29           11.32          10.50 -14.6% -7.2%
SNDK        49.21           35.70          31.52 -35.9% -11.7%
SAVE        15.60           22.61          20.16 29.2% -10.8%
TNAV          7.81             6.68            6.12 -21.6% -8.4%
TER        13.63           15.71          14.32 5.1% -8.8%
TSRA        16.75           15.28          14.21 -15.2% -7.0%
USMO        13.87           13.39          13.14 -5.3% -1.9%
USNA        30.37           38.59          38.83 27.9% 0.6%
UIS        19.71           18.26          16.20 -17.8% -11.3%
EGY          6.04             8.20            7.75 28.3% -5.5%
VECO        20.80           36.97          33.59 61.5% -9.1%
VPHM        27.39           20.67          19.24 -29.8% -6.9%
VG          2.45             1.76            1.70 -30.6% -3.4%
Totals       10,631          11,292        10,628 0.0% -5.9%

As you can see, some stocks had a "bad week", including GTAT which I had bought.  In total, the index was down almost 6%.

Finally,  here is a chart of how MFI has done day by day (sounds like a song).



You know, I hate to beat the drum, but it does make you wonder when we can declare that MFI doesn't work?  When I read Seth Klarman's "Margin of Safety", he said that there could be no formula to selecting stocks, one had to do the homework.  I am not saying that Greenblatt's book and list are not a great starting point, but there have been a large share of duds in his lists that have muted the performance.

Greenblatt Speaks

Not sue if people saw it about 10 days ago, but JG was on CNBC talking about his "formula" and individual stocks that he likes (Famed Value Investor Says 5 Stocks Too Cheap - Fast Money - CNBC
).  I always say ignore his stock picks at your peril, so here is what he liked:  AAPL, MSFT,HPQ, BBY and KSS.  I did buy Kohls post his interview and I am thinking about HPQ, which has gotten very cheap.

My Portfolio

I did make a couple changes to my dividend portfolio.  I sold USB (which had been great) and I bought JPM as I felt it was oversold.  I also bought KSS as discussed.  Some great dividends came in, KSW went x a 20 cent dividend (that is 10%), STO went x a $1.12 dividend and WBK went x a $4.20 dividend.  Overall on the year, the dividend portfolio is up 3%.

An interesting aside, on stock I own (TROX) had its earning yesterday an announced they were going to recommend a special one time $25 dividend (the stock sells close to $160) and they were going to implement a dividend policy (Tronox Incorporated Reports Record First Quarter Results).

Well, back to my java!

2 comments:

AndrewsDad said...

Have you looked at STX? Current PE is under 6, forward PE is under 3. Dividend yield is 3.6%. History of increasing dividends by 17% a year. Payout ratio of only 18%. Estimated 5 year growth rate 37%. What am I missing? I own some shares and have done very well but the stock seems to be even cheaper than when I first bought.

Marsh_Gerda said...

I haven't looked at STX in a while. I think the "missing" piece is the fear of people moving to the cloud and that reliance on hard drive storage will decrease.