MFI Index For 2013

As I have noted many times in the past couple of month, the Magic Formula Approach appears to be starting to work again.  I suspect part of that is that For profit Education Stocks seem to have bottomed and those have roughly been comprising 10% of the portfolio for the past two years (and it has been a tough slog for those stocks).  But it is clearly more than that as many other names are doing well.

1. I wish I had the answer of what causes MFI to have good and bad stretches as I would be The Richest Man in Babylon were I to crack that code.  All I know is that MFI has been extraordinarily streaky since I started tracking it in 2006.  "When it is good, it is very good, but when it is bad, it is horrid".  I did read an interesting hypothesis about MFI the other day.  It commented how MFI does not really penalize you if you have a poor balance sheet.  It is much more income statement focused.  So historically, stocks with leveraged balance sheets may have looked better.  But in the credit-tightened times we have been living through, that has hurt them (and perhaps hurt MFI as well as it does not discriminate against stocks with balance sheet issues).

Here is a table of how the stocks comprising my MFI Index have done for the past week and since the start of the year.

Index	Stock	Start	Last Week	Current	YTD Change	Weekly Change	Shares
1	APOL	20.92	19.99	21.30	1.8%	6.6%	11.14
2	AGX	18.00	16.25	16.67	-7.4%	2.6%	12.95
3	BAH	13.92	17.53	18.09	30.0%	3.2%	16.75
4	CA	21.98	27.82	29.64	34.8%	6.5%	10.61
5	CPLA	28.23	43.56	45.82	62.3%	5.2%	8.26
6	CF	203.16	191.36	194.82	-4.1%	1.8%	1.15
7	CSCO	19.65	24.29	24.66	25.5%	1.5%	11.86
8	DELL	10.14	13.44	13.57	33.8%	1.0%	22.99
9	DLX	32.24	37.90	37.09	15.0%	-2.1%	7.23
10	DMRC	20.70	23.23	22.79	10.1%	-1.9%	11.26
11	DLB	29.33	35.00	34.96	19.2%	-0.1%	7.95
12	GME	25.09	33.76	37.35	48.9%	10.6%	9.29
13	GNI	67.20	72.28	73.10	8.8%	1.1%	3.47
14	GTAT	3.03	4.45	4.26	40.6%	-4.3%	76.93
15	HLF	32.94	47.27	44.23	34.3%	-6.4%	7.08
16	HFC	46.55	50.80	48.56	4.3%	-4.4%	5.01
17	IDCC	41.09	46.17	46.45	13.0%	0.6%	5.67
18	INTX	9.48	9.43	9.25	-2.4%	-1.9%	24.59
19	ESI	17.31	23.97	26.82	54.9%	11.9%	13.47
20	JCOM	30.60	41.36	41.81	36.6%	1.1%	7.62
21	KLIC	11.99	12.40	11.94	-0.4%	-3.7%	19.44
22	LPS	24.62	33.29	33.44	35.8%	0.5%	9.47
23	MANT	25.94	27.30	27.97	7.8%	2.5%	8.99
24	MSFT	26.71	35.36	36.13	35.3%	2.2%	8.73
25	NATR	14.48	15.60	16.05	10.8%	2.9%	16.10
26	NSU	4.28	3.64	3.57	-16.6%	-1.9%	54.47
27	NTI	25.44	26.25	28.69	12.8%	9.3%	9.16
28	NUS	37.05	59.40	59.69	61.1%	0.5%	6.29
29	PDLI	7.04	8.40	8.10	15.1%	-3.6%	33.11
30	PETS	11.10	13.69	13.61	22.6%	-0.6%	21.00
31	PBI	10.64	15.24	15.20	42.9%	-0.3%	21.91
32	POOSF	1.42	0.01	0.00	-99.7%	-25.0%	164.63
33	POZN	5.01	5.30	5.50	9.8%	3.8%	46.53
34	QCOR	26.72	34.67	36.79	37.7%	6.1%	8.72
35	RTN	57.56	67.19	67.96	18.1%	1.1%	4.05
36	RPXC	9.04	15.34	15.69	73.6%	2.3%	25.79
37	SAI	11.32	14.62	15.06	33.0%	3.0%	20.59
38	STX	30.42	43.46	44.39	45.9%	2.1%	7.66
39	SVLC	2.52	1.89	1.81	-28.2%	-4.2%	92.51
40	SAVE	17.73	30.43	31.07	75.2%	2.1%	13.15
41	STRA	56.17	53.49	55.50	-1.2%	3.8%	4.15
42	TNAV	7.99	5.09	5.09	-36.3%	0.0%	29.18
43	TZOO	18.99	28.74	27.57	45.2%	-4.1%	12.28
44	UIS	17.30	20.65	20.74	19.9%	0.4%	13.47
45	USMO	11.68	13.73	13.83	18.4%	0.7%	19.96
46	USNA	32.93	70.09	68.06	106.7%	-2.9%	7.08
47	EGY	8.65	6.12	6.33	-26.8%	3.4%	26.95
48	VCI	25.78	26.30	26.59	3.1%	1.1%	9.04
49	VG	2.37	2.74	2.85	20.3%	4.0%	98.36
50	WCRX	12.04	19.20	19.52	62.1%	1.7%	19.36
	Total	11,656	13,955	14,136	21.3%	1.3%
	Total x Education				20.6%	0.8%

As you can see, the result is better if you include the FPE stocks.  But there are some other monster stocks in this list considering we are just 5/12ths through the year. USNA, SAVE and WRCX are all up over 60%!  And the overall 21.3% rise includes the PSOOF fiasco (they were alledgedly cooking the books).  Excluding PSOOF you'd be pushing a very sweet 24%.