Looks like a beautiful fall weekend in Connecticut as I sit here sipping my coffee (Major Dickason's Blend by Peets for those that want to know). As my faithful readers know, I have been tracking the Magic Formula Stocks as described by Joel Greenblatt in The Little Book That Beats the Stock Market since January 2006. Every month I take the top 50 stocks over $100m market cap from his website and track how that portfolio of stocks fares versus the Ruseell 3000 for the next 12 months. It has been an uphill struggle as the tracking portfolios have under-performed, driven in part by Chinese reverse merger fiascos, for-profit education stocks and home health care stocks all being proverbial albatrosses.
This month-end was sadly no different, going up a snappy23.5%, but getting beaten by the R3K, which was up a more respectable 29.6%! Here are the 50 stocks in descending performance order:
| Stock | Initial Price | End Price | Percent Change | 52 week low | Mkt Cap |
| CRAY | 5.31 | 12.71 | 139.4% | 4.96 | 200 |
| LPS | 13.44 | 27.89 | 107.5% | 12.91 | 1,205 |
| GTIV | 5.52 | 11.32 | 105.0% | 2.81 | 177 |
| PRX | 26.62 | 49.98 | 87.8% | 25.74 | 983 |
| EGY | 4.86 | 8.55 | 75.9% | 4.57 | 277 |
| OSK | 15.74 | 27.43 | 74.3% | 14.07 | 1,500 |
| AGX | 10.18 | 17.45 | 71.4% | 9.36 | 143 |
| DLX | 17.86 | 30.56 | 71.1% | 17.65 | 995 |
| USNA | 27.50 | 46.47 | 69.0% | 25.69 | 426 |
| VPHM | 18.07 | 30.19 | 67.1% | 17.25 | 1,396 |
| MDP | 21.53 | 35.00 | 62.6% | 21.10 | 1,041 |
| ASTX | 1.92 | 3.08 | 60.4% | 1.51 | 115 |
| PDLI | 5.07 | 7.70 | 51.9% | 5.15 | 807 |
| NVMI | 5.37 | 7.80 | 45.3% | 5.30 | 135 |
| KLIC | 7.46 | 10.41 | 39.5% | 6.71 | 572 |
| HRB | 12.65 | 17.33 | 37.0% | 12.81 | 4,198 |
| UIS | 15.69 | 20.82 | 32.7% | 13.77 | 721 |
| TER | 11.01 | 14.22 | 29.2% | 10.37 | 2,078 |
| KLAC | 37.18 | 47.71 | 28.3% | 36.62 | 6,523 |
| AFAM | 16.63 | 21.28 | 28.0% | 12.50 | 153 |
| MNTA | 11.50 | 14.57 | 26.7% | 10.77 | 593 |
| PWER | 4.50 | 5.59 | 24.1% | 3.51 | 504 |
| CPLA | 28.38 | 35.06 | 23.5% | 25.81 | 459 |
| VECO | 24.40 | 30.00 | 23.0% | 20.35 | 1,115 |
| MSFT | 24.22 | 29.76 | 22.9% | 24.26 | 213,169 |
| PRSC | 10.65 | 12.99 | 22.0% | 9.36 | 135 |
| CHKE | 12.03 | 14.56 | 21.0% | 10.15 | 112 |
| DLB | 27.44 | 32.75 | 19.4% | 25.70 | 3,155 |
| PETS | 8.53 | 10.04 | 17.7% | 8.51 | 195 |
| TSRA | 11.78 | 13.68 | 16.1% | 11.13 | 628 |
| FRX | 30.79 | 35.61 | 15.7% | 28.47 | 8,530 |
| AMAT | 10.06 | 11.17 | 11.0% | 9.70 | 13,992 |
| LTXC | 5.29 | 5.75 | 8.7% | 4.81 | 269 |
| LHCG | 17.06 | 18.47 | 8.3% | 12.34 | 308 |
| SNDK | 40.36 | 43.43 | 7.6% | 30.99 | 9,717 |
| CMTL | 27.08 | 27.64 | 2.1% | 26.27 | 684 |
| USMO | 12.35 | 11.87 | -3.9% | 10.71 | 303 |
| AMED | 14.82 | 13.82 | -6.7% | 9.12 | 448 |
| STRA | 73.23 | 64.35 | -12.1% | 62.53 | 935 |
| VG | 2.60 | 2.28 | -12.3% | 1.63 | 587 |
| LRCX | 37.98 | 31.78 | -16.3% | 31.17 | 4,736 |
| MANT | 30.22 | 24.00 | -20.6% | 19.74 | 1,168 |
| GTAT | 7.02 | 5.45 | -22.4% | 3.92 | 915 |
| APOL | 39.61 | 29.05 | -26.7% | 25.77 | 5,642 |
| DELL | 14.03 | 9.86 | -29.8% | 9.78 | 27,272 |
| TNAV | 8.87 | 5.97 | -32.7% | 5.05 | 353 |
| DV | 36.60 | 22.76 | -37.8% | 18.15 | 2,627 |
| MPAA | 8.23 | 4.85 | -41.1% | 3.96 | 106 |
| ESI | 57.58 | 32.23 | -44.0% | 30.37 | 1,620 |
| CECO | 13.05 | 3.76 | -71.2% | 3.05 | 1,046 |
If you took out the education stocks, it would be a more respectable show of +29.6%, which would essentially be a tie. So it just ain't the education stocks.. Here is a listing of every monthly portfolio I have tracked.
| Average of Percent Change | ||
| 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 | 12.0% | 21.6% |
| 9/30/2011 | 23.5% | 29.6% |
| 10/28/2011 | 5.6% | 13.5% |
| 11/25/2011 | 22.1% | 26.0% |
| 12/29/2011 | 12.4% | 15.4% |
| 1/27/2012 | 4.9% | 9.9% |
| 2/24/2012 | 3.3% | 5.6% |
| 3/23/2012 | 1.1% | 3.5% |
| 4/27/2012 | 5.8% | 2.9% |
| 5/25/2012 | 9.9% | 9.5% |
| 6/22/2012 | 10.1% | 8.4% |
| 7/27/2012 | 7.6% | 4.4% |
| 8/24/2012 | 3.8% | 2.3% |
| Grand Total | 5.4% | 5.6% |
You will note the sad fact that this is the 21st straight portfolio to lose (that is hard to do... it ain't random) and the next six portfolios are all losing as well.
Subsets
I also keep 2 subsets of the larger portfolios: (1) dividend stocks (those with a yield per Yahoo of at least 2.6%) and (2) new stocks (those new to the tracking portfolios in past 12 months. The dividend portfolio was solid, up about 32%. The new portfolio was a mess, down about 25% (just VG and DV)! Finally, I like to track cash as it is more "honest" than percentages as if you go up by 25% and then down by 25%, that is a different result than up by 5% then down by 5%. So I track what you would have to day if you had spread $100,000 over the first twelve portfolios evenly.
| Category | Value |
| Total | 118,522 |
| Total New | 110,925 |
| Total Dividend | 249,649 |
| Total Russell 3K | 127,458 |
New Portfolio
Here are stocks in new portfolio that meet the dividend criteria. I have added CSCO as I know they just bumped their dividend and now yield about 3%:
| Date | Stock | Initial Price | Mkt Cap | Yield |
| 9/28/2012 | CSCO | 19.10 | 99,576 | 2.9% |
| 9/28/2012 | DLX | 30.56 | 1,549 | 3.3% |
| 9/28/2012 | GME | 21.00 | 2,605 | 4.8% |
| 9/28/2012 | GNI | 80.40 | 124 | 18.0% |
| 9/28/2012 | HRB | 17.33 | 4,698 | 4.6% |
| 9/28/2012 | INTX | 10.54 | 190 | 7.6% |
| 9/28/2012 | KLAC | 47.71 | 7,985 | 3.0% |
| 9/28/2012 | MANT | 24.00 | 893 | 4.4% |
| 9/28/2012 | MSFT | 29.76 | 252,771 | 3.1% |
| 9/28/2012 | PDLI | 7.70 | 1,073 | 7.8% |
| 9/28/2012 | PETS | 10.04 | 204 | 6.0% |
| 9/28/2012 | RTN | 57.16 | 19,103 | 3.3% |
| 9/28/2012 | STRA | 64.35 | 782 | 6.2% |
| 9/28/2012 | STX | 30.96 | 12,397 | 3.2% |
| 9/28/2012 | USMO | 11.87 | 266 | 7.4% |
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