I had mentioned over the weekend that I was thinking about winding down my mfi blog. I was frustrated by the sub-par results and the fact that the cut and paste from the official website no longer worked. I also felt that my readership had been diminishing over time.
The good news is that I have figured out a way to pull in the data without typing. It is a bit convoluted, but workable once a month. So I am going to continue (for the time being) creating tracking portfolios.
I am also reconsidering moving money back into the mfi space. I am traveling right now, but I did do a little research over the weekend that showed that subsets of the mfi space are working okay ( essentially dividend stocks and stocks approaching one billion in market cap). So my thought is to take a fixed amount per quarter (say $75,000 as an example) and then buy a basket of the larger dividend stocks in the mfi screen with the latitude to exclude one stock. I would simply track these baskets within my broader dividend portfolio with naming convention 2013a, 2013b and so n.
One "risk" of this approach is that I will likely get overweight certain stocks as some stocks are very regularly on such a scen (such as DLX).
Anyway, that is a basic plan. Not sure if I will start in the fourth quarter or in 2013.
We will see.
Tuesday, July 31, 2012
Saturday, July 28, 2012
Winding Down
I have been blogging for over 6 years. I have over 1,000 posts. But I think it is time to begin officially winding down. I am not actively in the MFI space any longer. And the official website (Magic Formula Investing) is making it more difficult for me to track things.
July 2011 Tracking Portfolio
My plan is to keep blogging until all my tracking portfolios have hit their one year anniversary. But I will not be adding new portfolios. I may retain my MFI Index (which is a once a year thing), but I haven't decided. With that intro, the July 29th 2011 tracking portfolio (50 stocks > 100m in market cap) hit their one year anniversary this weekend. It was one of the worst portfolios every, losing to the Russell 3000 by about 12 points. For education schools and nursing homes torpedoed the portfolio. It is ironic, these were sectors being targeted by short sellers such as Einhorn and Chanos a year or two ago and they were absolutely right. Ignore these guys at your peril.
| Stock | Initial Price | End Price | Percent Change | Mkt Cap |
| CRAY | 6.04 | 12.48 | 106.6% | 219 |
| PRX | 32.39 | 50.09 | 54.6% | 1,172 |
| AGX | 10.37 | 15.54 | 49.9% | 141 |
| NSR | 26.04 | 35.66 | 36.9% | 1,925 |
| LPS | 18.44 | 24.83 | 34.7% | 1,587 |
| VPHM | 18.08 | 23.49 | 29.9% | 1,372 |
| RTN | 43.07 | 55.67 | 29.3% | 15,861 |
| RIGL | 8.69 | 11.20 | 28.9% | 454 |
| LO | 101.24 | 127.45 | 25.9% | 14,765 |
| DLX | 22.53 | 27.90 | 23.8% | 1,210 |
| ARO | 16.85 | 20.35 | 20.8% | 1,360 |
| ADI | 33.34 | 39.37 | 18.1% | 10,307 |
| HRB | 14.23 | 16.21 | 13.9% | 4,568 |
| MDP | 28.42 | 32.26 | 13.5% | 1,359 |
| NOC | 58.34 | 65.80 | 12.8% | 16,821 |
| PRSC | 11.85 | 13.33 | 12.5% | 154 |
| MSFT | 26.67 | 29.76 | 11.6% | 229,502 |
| TER | 13.49 | 14.97 | 11.0% | 2,499 |
| EGY | 6.66 | 7.35 | 10.4% | 380 |
| NVMI | 8.54 | 8.96 | 4.9% | 217 |
| cmtl | 25.98 | 27.25 | 4.9% | 703 |
| KLIC | 9.20 | 9.61 | 4.4% | 661 |
| CSCO | 15.72 | 15.69 | -0.2% | 87,851 |
| SNDK | 42.53 | 42.44 | -0.2% | 10,136 |
| IPXL | 21.18 | 20.77 | -1.9% | 1,378 |
| TSRA | 15.60 | 15.05 | -3.5% | 803 |
| CHKE | 14.86 | 14.27 | -4.0% | 135 |
| PETS | 10.43 | 9.70 | -7.0% | 233 |
| MRX | 36.80 | 33.36 | -9.3% | 2,215 |
| AFAM | 25.27 | 22.41 | -11.3% | 237 |
| USMO | 15.37 | 13.44 | -12.6% | 365 |
| MNTA | 17.66 | 14.79 | -16.3% | 897 |
| LTXC | 7.19 | 5.99 | -16.7% | 356 |
| ASTX | 3.06 | 2.47 | -19.3% | 185 |
| GNI | 90.82 | 72.87 | -19.8% | 157 |
| UNTD | 5.52 | 4.28 | -22.5% | 526 |
| DEPO | 7.56 | 5.65 | -25.3% | 406 |
| DELL | 16.24 | 12.03 | -26.0% | 30,840 |
| GME | 23.24 | 16.14 | -30.6% | 3,332 |
| STRA | 116.66 | 77.09 | -33.9% | 1,461 |
| PWER | 7.21 | 4.61 | -36.1% | 747 |
| CPLA | 42.75 | 26.24 | -38.6% | 656 |
| TNAV | 10.03 | 5.95 | -40.7% | 419 |
| APOL | 50.83 | 28.39 | -44.1% | 7,002 |
| MANT | 39.67 | 21.88 | -44.8% | 1,498 |
| ESI | 85.67 | 43.43 | -49.3% | 2,315 |
| amed | 25.86 | 12.19 | -52.9% | 761 |
| GTAT | 13.64 | 5.02 | -63.2% | 1,714 |
| MPAA | 12.91 | 4.58 | -64.5% | 156 |
| CECO | 22.69 | 4.99 | -78.0% | 1,762 |
That made this the 19th straight monthly portfolio to "lose".Of the remaining 11 open portfolios, only one is winning. Here are all the portfolios ever:
| Date | Total | IWV |
| 1/6/2006 | 16.0% | 10.9% |
| 2/17/2006 | 21.2% | 14.6% |
| 3/29/2006 | 13.0% | 9.6% |
| 4/7/2006 | 10.3% | 12.1% |
| 5/12/2006 | 20.4% | 18.6% |
| 5/31/2006 | 29.2% | 23.3% |
| 6/30/2006 | 22.4% | 20.0% |
| 7/31/2006 | 19.7% | 17.3% |
| 8/31/2006 | 13.0% | 13.3% |
| 9/28/2006 | 12.7% | 14.6% |
| 10/27/2006 | 10.3% | 12.0% |
| 11/29/2006 | -0.3% | 4.8% |
| 12/28/2006 | -6.9% | 3.4% |
| 1/26/2007 | -10.2% | -6.6% |
| 2/27/2007 | -3.7% | -1.0% |
| 3/26/2007 | -9.8% | -5.5% |
| 4/27/2007 | -10.9% | -5.0% |
| 5/29/2007 | -11.5% | -6.3% |
| 7/3/2007 | -30.0% | -15.6% |
| 7/30/2007 | -19.9% | -11.5% |
| 8/30/2007 | -12.5% | -8.7% |
| 9/27/2007 | -19.0% | -18.2% |
| 11/2/2007 | -40.4% | -34.3% |
| 11/28/2007 | -40.1% | -38.3% |
| 12/28/2007 | -36.3% | -40.0% |
| 1/25/2008 | -36.4% | -35.9% |
| 2/26/2008 | -51.7% | -41.5% |
| 3/24/2008 | -40.9% | -36.8% |
| 4/25/2008 | -25.6% | -31.0% |
| 5/28/2008 | -22.2% | -33.6% |
| 7/2/2008 | -11.7% | -25.3% |
| 7/29/2008 | -10.5% | -20.9% |
| 8/29/2008 | -13.8% | -17.9% |
| 9/26/2008 | -4.3% | -10.0% |
| 10/31/2008 | 18.7% | 13.9% |
| 11/26/2008 | 50.9% | 27.7% |
| 12/26/2008 | 48.9% | 32.3% |
| 1/23/2009 | 59.3% | 36.4% |
| 2/27/2009 | 92.8% | 55.6% |
| 3/27/2009 | 85.8% | 48.1% |
| 4/24/2009 | 69.7% | 45.8% |
| 5/29/2009 | 31.8% | 22.8% |
| 6/29/2009 | 21.3% | 24.0% |
| 7/29/2009 | 19.5% | 15.9% |
| 8/28/2009 | 7.4% | 8.8% |
| 9/25/2009 | 12.6% | 12.4% |
| 10/30/2009 | 22.7% | 18.3% |
| 11/27/2009 | 24.3% | 13.6% |
| 12/31/2009 | 23.7% | 18.1% |
| 1/22/2010 | 19.0% | 20.6% |
| 2/26/2010 | 18.6% | 23.6% |
| 3/25/2010 | 10.0% | 15.4% |
| 4/23/2010 | 7.1% | 11.4% |
| 5/28/2010 | 19.3% | 25.4% |
| 6/29/2010 | 16.7% | 25.7% |
| 7/29/2010 | 5.4% | 20.1% |
| 9/2/2010 | 7.3% | 10.1% |
| 9/24/2010 | -4.3% | 0.3% |
| 10/29/2010 | -2.9% | 10.4% |
| 11/26/2010 | -8.5% | 1.4% |
| 1/3/2011 | -11.4% | 0.1% |
| 1/28/2011 | -7.6% | 4.9% |
| 2/25/2011 | -5.5% | 5.0% |
| 3/24/2011 | -4.4% | 7.4% |
| 4/21/2011 | -16.0% | 3.2% |
| 5/27/2011 | -12.0% | -0.4% |
| 6/24/2011 | -9.5% | 5.0% |
| 7/29/2011 | -4.3% | 8.1% |
| 8/26/2011 | 9.0% | 19.2% |
| 9/30/2011 | 17.2% | 24.1% |
| 10/28/2011 | -0.7% | 8.8% |
| 11/25/2011 | 15.3% | 20.7% |
| 12/29/2011 | 5.4% | 10.5% |
| 1/27/2012 | -2.9% | 5.2% |
| 2/24/2012 | -6.5% | 1.2% |
| 3/23/2012 | -8.8% | -0.9% |
| 4/27/2012 | -1.6% | -1.4% |
| 5/25/2012 | 5.1% | 4.9% |
| 6/22/2012 | 2.8% | 3.9% |
None of the three approaches were effective in this portfolio, but overall the dividend approach continues to do well (and is beating the R3000 in 5 of remaining 11 open portfolios):
| Category | Value |
| Total | 110,572 |
| Total New | 101,916 |
| Total Dividend | 235,497 |
| Total Russell 3K | 122,371 |
My New Approach
My revised approach, which is based on reinvested dividends is working pretty well. My portfolio is up 12.2% this year (my MFI Index is up 5.3%). It has been a much more stable portfolio. I have sold some stocks, but they have generally been good moves. My most recent material buy has been ENH, which is Endurance Insurance Company. They have a 3.6% dividend yield and have dropped from $41 to $34 since mid-May. The catalyst for their drop has been their crop insurance book, which obviously has the potential to be adversely impacted by the recent drought. But here are a few facts to keep in mind:
- Ace has the largest crop book of any company, and in their earnings call they think it will still actually make a bit of money. So I think the street is over-reacting.
- I saw a schedule of ENH state spread the other day, and 36% of their business is in Texas. That state is fine this year.
- ENH also is a very large property cat writer, and while their have been localized cats (such as tornados); there hasn't been anything large (such as last year's quakes and Tsunamis).
- They trade at 73% of book value; while most of their peers are around 90%.
| Stock | Shares | Avg Cost | Current Price | Dividends Received | Pct Change | R3K Change | Diff |
| BHK | 2,994 | 12.59 | 15.22 | 2,466 | 27.4% | 3.0% | 24.4% |
| CPL | 1,530 | 22.61 | 23.50 | 877 | 6.5% | 13.9% | -7.5% |
| CSCO | 4,230 | 17.19 | 15.69 | 825 | -7.6% | 3.4% | -11.0% |
| CSQ | 5,293 | 8.22 | 9.93 | 3,368 | 28.6% | 18.6% | 10.0% |
| ENH | 2,000 | 34.80 | 34.20 | - | -1.7% | 1.3% | -3.0% |
| FCX | 1,021 | 37.54 | 33.47 | 749 | -8.9% | 7.4% | -16.3% |
| FSC | 2,677 | 9.78 | 10.21 | 755 | 7.3% | 1.5% | 5.8% |
| HFC | 1,069 | 33.80 | 36.43 | 1,117 | 10.9% | 0.1% | 10.7% |
| INTC | 1,291 | 19.69 | 26.02 | 1,269 | 37.2% | 20.5% | 16.7% |
| JPM | 1,661 | 35.18 | 36.89 | 494 | 5.7% | 3.3% | 2.4% |
| JQC | 4,717 | 8.86 | 9.32 | 3,736 | 14.1% | 5.5% | 8.6% |
| KMF | 1,817 | 21.86 | 27.85 | 2,847 | 34.6% | 14.8% | 19.7% |
| KSS | 909 | 47.61 | 49.27 | 289 | 4.1% | 3.0% | 1.2% |
| KSW | 13,673 | 3.78 | 3.70 | 6,633 | 10.8% | 17.8% | -7.1% |
| LNC | 2,443 | 24.30 | 20.32 | 789 | -15.1% | 13.0% | -28.0% |
| MPC | 575 | 43.84 | 47.04 | 142 | 7.9% | 1.1% | 6.8% |
| MSFT | 959 | 26.80 | 29.76 | 1,036 | 15.0% | 12.4% | 2.7% |
| O | 546 | 18.93 | 41.29 | 6,969 | 185.5% | 64.8% | 120.7% |
| OIBAX | 3,838 | 4.90 | 6.44 | 6,273 | 64.9% | 64.2% | 0.7% |
| PGR | 2,000 | 20.48 | 19.78 | - | -3.4% | 1.8% | -5.3% |
| PM | 444 | 46.38 | 90.30 | 2,621 | 107.5% | 27.9% | 79.6% |
| PRE | 1,023 | 61.86 | 74.81 | 1,552 | 23.4% | 7.5% | 15.8% |
| PVD | 417 | 64.11 | 87.20 | 2,737 | 46.3% | 15.0% | 31.2% |
| SAI | 3,929 | 13.04 | 11.16 | 821 | -12.8% | -2.1% | -10.7% |
| SBS | 857 | 40.65 | 83.85 | 4,441 | 119.0% | 20.1% | 99.0% |
| STO | 1,040 | 23.82 | 24.28 | 1,121 | 6.5% | 16.7% | -10.2% |
| TROX | 2,022 | 24.13 | 24.79 | 500 | 3.7% | 1.6% | 2.2% |
| VIVHY | 2,896 | 17.01 | 19.20 | 4,841 | 22.7% | 0.0% | 22.7% |
| WBK | 508 | 105.89 | 121.95 | 6,166 | 26.6% | 12.8% | 13.9% |
| XOM | 223 | 52.56 | 87.45 | 1,084 | 75.6% | 19.0% | 56.7% |
| Total Open | 66,517 | 17.7% | 9.4% | 8.2% | |||
| Closed | 6.1% | 7.5% | -1.4% | ||||
| Combined | 11.1% | 8.3% | 2.8% | ||||
| IRR Since 12/31/10 | 12.0% | ||||||
| 2012 Gain | 12.2% | ||||||
| Estimated Dividends for Next 12 Months | |||||
| Stock | Shares | Ann Dividend / Share | Yield | Projected Dividend | Sector |
| BHK | 2,994 | $ 0.88 | 5.8% | 2,623 | Bond |
| CPL | 1,530 | $ 1.76 | 7.5% | 2,693 | Utility |
| CSCO | 4,230 | $ 0.32 | 2.0% | 1,353 | Tech |
| CSQ | 5,293 | $ 0.84 | 8.5% | 4,446 | Hybrid |
| ENH | 2,000 | $ 1.24 | 3.6% | 2,480 | Insurance |
| FCX | 1,021 | $ 1.24 | 3.7% | 1,266 | Resources |
| FSC | 2,677 | $ 1.15 | 11.3% | 3,077 | Hybrid |
| HFC | 1,069 | $ 0.90 | 2.5% | 962 | Resources |
| INTC | 1,291 | $ 0.92 | 3.5% | 1,187 | Tech |
| JPM | 1,661 | $ 1.20 | 3.3% | 1,993 | Finance |
| JQC | 4,717 | $ 0.80 | 8.6% | 3,774 | Hybrid |
| KMF | 1,817 | $ 1.72 | 6.2% | 3,125 | Pipelines |
| KSS | 909 | $ 1.28 | 2.6% | 1,163 | Consumer |
| KSW | 13,673 | $ 0.20 | 5.4% | 2,735 | Construction |
| LNC | 2,443 | $ 0.32 | 1.6% | 782 | Insurance |
| MPC | 575 | $ 1.00 | 2.1% | 575 | Resources |
| MSFT | 959 | $ 0.80 | 2.7% | 767 | Tech |
| O | 546 | $ 1.72 | 4.2% | 939 | Services |
| OIBAX | 3,838 | $ 0.34 | 5.3% | 1,301 | Bond |
| PGR | 2,000 | $ 0.41 | 2.1% | 820 | Insurance |
| PM | 444 | $ 3.08 | 3.4% | 1,366 | Consumer |
| PRE | 1,023 | $ 2.56 | 3.4% | 2,619 | Insurance |
| PVD | 417 | $ 5.13 | 5.9% | 2,140 | Finance |
| SAI | 3,929 | $ 0.48 | 4.3% | 1,886 | Services |
| SBS | 857 | $ 3.03 | 3.6% | 2,597 | Utility |
| STO | 1,040 | $ 0.98 | 4.0% | 1,019 | Insurance |
| TROX | 2,022 | $ 1.25 | 5.0% | 2,527 | Insurance |
| VIVHY | 2,896 | $ 1.30 | 6.8% | 3,765 | Consumer |
| WBK | 508 | $ 8.13 | 6.7% | 4,126 | Finance |
| XOM | 223 | $ 2.28 | 2.6% | 508 | Resources |
| Total | 4.6% | 60,615 | |||
Finally, upcoming dividends (money in my pocket):
| Upcoming Dividends | |||||
| Stock | Shares | x Date | Div/Share | Est New Shares | Amount |
| OIBAX | 3,838 | 7/30/12 | $ 0.02 | 12.0 | 81 |
| O | 546 | 7/30/12 | $ 0.15 | 1.0 | 80 |
| INTC | 1,291 | 8/3/12 | $ 0.23 | 11.0 | 290 |
| CSQ | 5,293 | 8/9/12 | $ 0.07 | 37.0 | 370 |
| XOM | 223 | 8/10/12 | $ 0.57 | 1.0 | 127 |
| BHK | 2,994 | 8/12/12 | $ 0.07 | 14.0 | 219 |
| FSC | 2,677 | 8/13/12 | $ 0.10 | 25.0 | 256 |
| JQC | 4,717 | 8/13/12 | $ 0.07 | 33.0 | 316 |
| MPC | 575 | 8/14/12 | $ 0.25 | 3.0 | 144 |
| MSFT | 959 | 8/15/12 | $ 0.20 | 6.0 | 192 |
| PRE | 1,023 | 8/17/12 | $ 0.62 | 8.0 | 634 |
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