MFI Tracking Portfolio - June 22nd 2012: Losing Streak Ends at 29!!!

June 22nd 2012 Tracking Portfolio

Another month has zipped by (in this case a month + a week). 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 Russell 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 broke a 29 month losing streak, going up an excellent 26.1 %,edging the R3K, which was up a less excellent 24.1%!  Here are the 50 stocks in descending performance order:

Stock	Initial Price	End Price	Percent Change	52 week low	Mkt Cap
GME	16.96	42.03	147.8%	15.32	2,424
UNTD	3.76	7.58	101.6%	3.63	380
TPX	22.03	43.90	99.3%	22.08	1,486
HRB	14.90	27.75	86.2%	15.53	4,668
USNA	40.39	72.38	79.2%	30.51	616
ICON	16.65	29.41	76.6%	16.13	1,238
IDCC	25.50	44.65	75.1%	22.66	1,330
JCOM	24.54	42.51	73.2%	23.55	1,205
SNDK	36.36	61.10	68.0%	32.08	8,887
BODY	8.44	13.32	57.8%	7.46	145
BKE	34.27	52.02	51.8%	36.80	1,896
VG	1.88	2.83	50.5%	1.63	454
VIAB	46.43	68.03	46.5%	35.13	24,930
CSCO	16.67	24.34	46.0%	14.96	92,426
DLX	23.78	34.65	45.7%	25.02	1,272
KFY	13.10	18.74	43.1%	12.73	688
UIS	15.67	22.07	40.8%	15.04	856
SAI	10.63	13.93	31.0%	10.69	4,145
PDLI	5.99	7.72	28.9%	6.14	926
CSGS	17.03	21.78	27.9%	14.17	590
RTN	52.89	66.12	25.0%	52.24	18,731
CPLA	33.42	41.65	24.6%	25.81	472
VCI	19.78	24.59	24.3%	19.25	933
VPHM	23.16	28.65	23.7%	19.02	2,035
FRX	34.09	41.00	20.3%	31.28	9,294
KLIC	9.20	11.06	20.2%	8.05	660
MANT	21.99	26.12	18.8%	19.74	865
NATR	13.79	16.35	18.6%	12.66	236
KLAC	47.01	55.73	18.5%	43.21	8,241
EXPR	17.76	20.97	18.1%	10.47	1,607
MSFT	29.79	34.55	16.0%	26.26	256,956
DELL	11.87	13.33	12.3%	8.69	22,030
AGX	13.91	15.60	12.1%	13.20	191
USMO	12.13	13.57	11.9%	10.34	285
GNI	62.97	68.90	9.4%	61.11	113
CJES	18.58	19.37	4.3%	17.37	961
VECO	34.07	35.41	3.9%	26.15	1,332
CF	176.31	171.50	-2.7%	170.53	12,707
AFAM	19.79	19.09	-3.5%	17.87	210
DLB	37.07	33.45	-9.8%	28.66	4,438
TNAV	5.83	5.23	-10.3%	5.05	254
MNTA	17.01	15.06	-11.5%	10.05	694
NSU	3.34	2.95	-11.7%	2.65	650
EXEL	5.30	4.54	-14.3%	4.19	821
GTAT	4.96	4.15	-16.3%	2.61	625
POZN	6.26	5.01	-20.0%	4.55	187
UTSI	3.51	2.66	-24.2%	2.05	181
EGY	7.65	5.72	-25.2%	5.16	495
APOL	33.55	17.72	-47.2%	15.98	4,103
ESI	55.53	24.40	-56.1%	11.69	1,466

As you can see, the Education stocks were (again) laggards. If you pull them out, you were up 29.5%. And there were three stocks up right at 100%.  I do think things are changing.  You can see that in the next table!

Here is a listing of every 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	0.4%	11.5%
11/25/2011	13.9%	24.0%
12/29/2011	9.9%	15.9%
1/27/2012	7.4%	16.6%
2/24/2012	7.8%	13.3%
3/23/2012	9.1%	15.2%
4/27/2012	10.5%	15.3%
5/25/2012	26.5%	27.5%
6/22/2012	26.1%	24.6%
7/27/2012	21.0%	19.9%
8/24/2012	16.5%	17.6%
9/28/2012	21.0%	14.9%
10/26/2012	26.0%	16.9%
11/23/2012	21.0%	16.8%
12/31/2012	19.5%	14.3%
1/25/2013	12.0%	8.3%
2/22/2013	12.1%	7.2%
3/28/2013	8.8%	3.1%
4/26/2013	8.5%	2.5%
5/24/2013	-0.4%	-1.8%

As noted, this is the first portfolio to win in the past 30! (that is hard to do... it ain't random).  However ALL 11 open portfolios are leading the Russell 3000 (by an average of almost 4 points).  This is the first time I have seen this in centuries.  Ok, that isn't true, but it feels like centuries!

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 most excellent, up about 34.7%.  The new portfolio was solid okay, up 13.5%.  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	136,931
Total New	140,334
Total Dividend	313,822
Total Russell 3K	147,401

Here are the dividend stocks and the new stocks from a year ago:

Stock	Initial Price	End Price	Percent Change	Yield
UNTD	3.76	7.58	101.6%	10.6%
HRB	14.90	27.75	86.2%	5.0%
JCOM	24.54	42.51	73.2%	3.4%
BKE	34.27	52.02	51.8%	8.9%
DLX	23.78	34.65	45.7%	4.2%
PDLI	5.99	7.72	28.9%	10.0%
MANT	21.99	26.12	18.8%	3.8%
KLAC	47.01	55.73	18.5%	3.0%
USMO	12.13	13.57	11.9%	8.2%
GNI	62.97	68.90	9.4%	23.8%
NSU	3.34	2.95	-11.7%	3.0%

I don't know about you, but those are some pretty stellar results!  39.5% on average.  I should have had more faith and been picking more from this group.

Stock	Initial Price	End Price	Percent Change
TPX	22.03	43.90	99.3%
BKE	34.27	52.02	51.8%

Wow!  Only two stocks, but up 75%!  Maybe a change here as well.  Of the 11 open new portfolios, they are up an average of 20% versus 11% for open Russell 3000.

I will post more later this weekend.