Saturday, July 13, 2013

MFI Index Thoughts

As people know, this IS the MFI Diary.  So my original purpose was the track my own personal involvement in MFI along with how MFI has done in a broader sense.

It is really accelerating in it's performance of late.  You can see that in a smaller scale by looking at my portfolio, but you can also see it by looking at my MFI Index.  This is an Index I have created, kind of like the Russell 3000 Index.  I take the top 50 stocks over $100m at the start of each year and track for a year and then rebalance.  The table below shows how the index has done going back to 2006.  Note in many ways, this is just a subset (1/12th) of my monthly tracking portfolios.

Annual Inception to Date
Year      Russell          MFI  Russell ITD    MFI ITD
2006 11.40% 15.03% 11.40% 15.03%
2007 4.09% -6.69% 15.96% 7.34%
2008 -37.05% -37.97% -27.00% -33.42%
2009 32.51% 45.18% -3.27% -3.34%
2010 18.38% 22.77% 14.50% 18.67%
2011 -0.56% -10.47% 13.87% 6.25%
2012 16.38% 9.70% 32.52% 16.56%
2013 19.09% 26.26% 57.81% 47.17%

As you can see, MFI beat the R3K in 2006, 2009, 2010 and now 2013 (so far).  But looking at the Inception to date numbers, you'd be up 57% by having been in R3K since 2006 versus 47% for MFI.  But that gap is narrowing as the hangover from For Profit Education Stocks and Chinese Reverse Merger fades.

Here are the 50 stocks in the current MFI Index and how they have performed so far in 2013:

Stock Start Last Week Current YTD Change Weekly Change Shares
  APOL      20.92         17.94         18.49 -11.6% 3.1%         11.14
  AGX      18.00         15.38         16.30 -9.4% 6.0%         12.95
  BAH      13.92         17.96         18.64 33.9% 3.8%         16.75
  CA      21.98         28.76         30.42 38.4% 5.8%         10.61
  CPLA      28.23         42.15         43.86 55.4% 4.1%           8.26
  CF    203.16      175.85       184.54 -9.2% 4.9%           1.15
  CSCO      19.65         24.74         26.28 33.7% 6.2%         11.86
  DELL      10.14         13.11         13.48 32.9% 2.8%         22.99
  DLX      32.24         36.92         38.01 17.9% 3.0%           7.23
  DMRC      20.70         21.73         22.33 7.9% 2.8%         11.26
  DLB      29.33         33.92         34.50 17.6% 1.7%           7.95
  GME      25.09         43.59         43.77 74.5% 0.4%           9.29
  GNI      67.20         73.59         76.41 13.7% 3.8%           3.47
  GTAT         3.03           4.19            4.38 44.6% 4.5%         76.93
  HLF      32.94         48.99         49.63 50.7% 1.3%           7.08
  HFC      46.55         41.36         44.64 -4.1% 7.9%           5.01
  IDCC      41.09         38.82         40.13 -2.3% 3.4%           5.67
  INTX         9.48           9.37            9.45 -0.3% 0.9%         24.59
  ESI      17.31         24.30         26.89 55.3% 10.7%         13.47
  JCOM      30.60         43.15         44.26 44.6% 2.6%           7.62
  KLIC      11.99         11.23         11.26 -6.1% 0.3%         19.44
  LPS      24.62         32.60         32.31 31.2% -0.9%           9.47
  MANT      25.94         26.97         27.14 4.6% 0.6%           8.99
  MSFT      26.71         34.67         36.13 35.3% 4.2%           8.73
  NATR      14.48         17.58         18.00 24.3% 2.4%         16.10
  NSU         4.28           2.91            3.13 -26.9% 7.6%         54.47
  NTI      25.44         24.77         26.57 4.4% 7.3%           9.16
  NUS      37.05         64.31         78.60 112.1% 22.2%           6.29
  PDLI         7.04           8.20            8.48 20.5% 3.4%         33.11
  PETS      11.10         13.37         14.44 30.1% 8.0%         21.00
  PBI      10.64         14.94         14.52 36.5% -2.8%         21.91
  POOSF         1.42                -                  -   -100.0% #DIV/0!      164.63
  POZN         5.01           5.33            5.35 6.8% 0.4%         46.53
  QCOR      26.72         47.14         49.80 86.4% 5.6%           8.72
  RTN      57.56         66.39         70.57 22.6% 6.3%           4.05
  RPXC         9.04         16.76         17.76 96.5% 6.0%         25.79
  SAI      11.32         15.10         15.22 34.5% 0.8%         20.59
  STX      30.42         46.10         47.06 54.7% 2.1%           7.66
  SVLC         2.52           1.44            1.65 -34.5% 14.6%         92.51
  SAVE      17.73         32.35         33.45 88.7% 3.4%         13.15
  STRA      56.17         50.46         51.20 -8.8% 1.5%           4.15
  TNAV         7.99           5.40            5.84 -26.9% 8.1%         29.18
  TZOO      18.99         29.13         29.92 57.6% 2.7%         12.28
  UIS      17.30         23.24         24.63 42.4% 6.0%         13.47
  USMO      11.68         13.84         14.53 24.4% 5.0%         19.96
  USNA      32.93         73.99         77.73 136.0% 5.1%           7.08
  EGY         8.65           5.90            6.38 -26.2% 8.1%         26.95
  VCI      25.78         26.79         28.77 11.6% 7.4%           9.04
  VG         2.37           2.93            3.08 30.0% 5.1%         98.36
  WCRX      12.04         20.20         20.18 67.6% -0.1%         19.36
Total    11,656      14,100       14,717 26.3% 4.4%

So even with the PSOOF blow up, the index is up 26.3% for the year (would be 28.3% x PSOOF).  The MLM stocks (HLF, NUS and USNA) are really leading the charge.  They were way oversold on January 1st as Bill Ackman had just driven his bus over them

Is Herbalife A Ponzi Scheme? Bill Ackman Says Yes | MLM Observer

The performance of those stocks is so typical of what MFI is all about.  It ranked those stocks as buys, using a purely formulatic approach.  They were difficult to buy, if you were reading the trade press at the time. And the point of MFI is that some of these "cheap" companies will implode, but if you use a portfolio approach, you can outperform in aggregate.  It does take some courage, to put aside the noise and the visible hair on some of these stocks.

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