Weekend Reading

Every weekend I try to read some.  I read magazines and books. Keeps the juices in the brain flowing.  Reading a terrific book right now, A Game of Thrones (A Song of Ice and Fire, Book 1).  I have watched the series (first two seasons); the book and series run pretty true to each other so far.

I also read Barron's and Kiplingers.  I have a new app on my Ipad called Zinio. It is pretty slick and essentially lets you read magazines digitally and save them.

Barron's was interesting.  They profiled a stock (Magna Could Be a $100 Stock) I recently sold (MGA).  After reading the article, I had some seller's remorse in my sale.  They are a supplier of parts to build new cars and they are reasonably priced and growing. Also they have a great balance sheet.  I will put them on watch list and if they do not pop too much or pullback I may add.

Kiplinger had a good article on stocks under $10 (Great Stocks Under $10-Kiplinger).  One that caught my eye was GSOL. They are insanely cheap, a $260m market cap with half of the book value in cash.  They trade at a trailing p/e of 7.  They are in Hong Kong (which in my mind is better than mainland China) and are involved in imports and exports (which are slowing down). Again, I have placed on watch list.  They could be an MFI stock in February (I always try to have a dark horse in the mix).

MFI Option Update

As my readers know, almost exactly a year ago I picked a handful of MFI stocks and monitored how you would do if you had bought options on them (generally a year out).  As MFI stocks went up about 50% in 2013, it is fair to say this strategy worked REALLY well.  The table below is my final one.

Stock	Start Price	Strike	Expire Dt	Option Price	Current/Final Option Price	Change
JCOM	32.02	30.00	6/21/13	3.00	11.17	272%
KLIC	12.45	12.00	6/21/13	1.65	-	-100%
LPS	23.38	24.00	6/21/13	2.10	7.66	265%
NSU	4.53	5.00	6/21/13	0.35	-	-100%
VG	2.50	2.00	6/21/13	0.65	0.79	22%
MANT	25.79	30.00	8/16/13	0.75	-	-100%
PDLI	7.10	7.00	8/16/13	0.50	0.99	98%
APOL	20.16	20.00	1/17/14	3.70	10.31	179%
GME	23.07	22.00	1/17/14	3.20	26.30	722%
IDCC	44.63	43.50	1/17/14	7.65	-	-100%
MSFT	27.04	27.00	1/17/14	2.11	8.87	320%
QCOR	25.53	25.00	1/17/14	5.60	27.00	382%
RTN	57.77	57.50	1/17/14	3.80	33.07	770%
STX	34.30	30.00	1/17/14	7.00	28.32	305%
UIS	17.67	17.00	1/17/14	3.20	15.07	371%
AAPL	506.09	500.00	1/17/14	64.00	31.85	-50%
CF	217.85	210.00	1/17/14	30.03	35.94	20%
CSCO	21.03	20.00	1/17/14	2.50	2.20	-12%
DELL	12.61	10.00	1/17/14	2.97	3.70	25%
HLF	45.06	45.00	1/17/14	8.45	36.70	334%
HFC	46.36	45.00	1/17/14	6.62	6.14	-7%
NUS	42.50	40.00	1/17/14	7.50	97.50	1200%
SAI	11.84	12.00	1/17/14	1.07	4.30	302%
WCRX	13.50	11.00	1/17/14	2.45	12.18	397%
Average						230%

Who doesn't like a 230% return? That being said, you do not see me running out and using this strategy.  Many of the options are ill liquid and obviously this is a leveraged approach that can cut both ways.  I am not entirely dismissing it, I just doubt that today is the day to try it.  Maybe in a 2009-type scenario it would be very interesting, so long as you had at least 18 months before expiration and you spread your bets.

I have set up a new group for the upcoming year:

Stock	Start Price	Strike	Expire Dt	Option Price	Current/Final Option Price	Change
AAPL	531.88	30.00	1/17/15	69.50	69.50	0%
APOL	30.38	27.00	1/17/15	6.80	6.80	0%
ATVI	18.16	17.00	1/17/15	2.75	2.75	0%
CA	33.88	30.00	1/17/15	4.70	4.70	0%
COH	56.00	52.50	1/17/15	7.60	7.60	0%
CRUS	19.09	18.00	1/17/15	4.40	4.40	0%
CSCO	22.20	20.00	1/17/15	3.00	3.00	0%
GME	45.38	40.00	1/17/15	9.45	9.45	0%
HLF	81.90	77.50	1/17/15	19.10	19.10	0%
LO	49.39	45.00	1/17/15	5.90	5.90	0%
MO	37.21	32.00	1/17/15	5.50	5.50	0%
MSFT	35.89	30.00	1/17/15	6.55	6.55	0%
MYGN	23.65	20.00	1/17/15	5.00	5.00	0%
NOC	116.19	100.00	1/17/15	18.50	18.50	0%
QCOR	52.15	45.00	1/17/15	15.60	15.60	0%
RAI	48.37	45.00	1/17/15	4.75	4.75	0%
RGR	80.75	75.50	1/17/15	9.27	9.27	0%
RTN	90.44	85.00	1/17/15	9.70	9.70	0%
SWHC	14.96	12.00	1/17/15	3.60	3.60	0%
UIS	32.01	30.00	1/17/15	6.00	6.00	0%
WTW	32.85	30.00	1/17/15	5.90	5.90	0%
FLR	79.04	75.00	1/17/15	10.40	10.40	0%
CF	246.08	210.00	1/17/15	47.00	47.00	0%
HPQ	27.52	25.00	1/17/15	4.50	4.50	0%
Average						0%

MFI Index Thus Far

The MFI index is not exactly high flying ten days in to 2014. I show that it is down 13 basis points (essentially flat) which is pretty much what the broader market has done.  Here are the 50 stocks.  GNI has not helped:

Index	Stock	Start	Last Quarter	Current	YTD Change	Quarterly Change	Shares
1	ATVI	17.83	17.83	18.18	2.0%	2.0%	13.07
2	MO	38.39	38.39	37.26	-2.9%	-2.9%	6.07
3	APOL	27.32	27.32	30.42	11.3%	11.3%	8.53
4	AAPL	561.02	561.02	532.94	-5.0%	-5.0%	0.42
5	AGX	27.56	27.56	30.10	9.2%	9.2%	8.46
6	BAH	19.15	19.15	19.15	0.0%	0.0%	12.17
7	BKE	52.56	52.56	50.86	-3.2%	-3.2%	4.44
8	CA	33.65	33.65	34.02	1.1%	1.1%	6.93
9	CACI	73.22	73.22	78.32	7.0%	7.0%	3.18
10	CHE	76.62	76.62	78.11	1.9%	1.9%	3.04
11	CRUS	20.43	20.43	19.08	-6.6%	-6.6%	11.41
12	CSCO	22.43	22.43	22.39	-0.2%	-0.2%	10.39
13	COH	56.13	56.13	56.08	-0.1%	-0.1%	4.15
14	CRTX	9.49	9.49	9.62	1.4%	1.4%	24.56
15	DLX	52.19	52.19	52.92	1.4%	1.4%	4.47
16	DHX	7.25	7.25	7.39	1.9%	1.9%	32.15
17	EBIX	14.71	14.71	14.06	-4.4%	-4.4%	15.85
18	EGL	33.40	33.40	39.50	18.3%	18.3%	6.98
19	GME	49.26	49.26	45.52	-7.6%	-7.6%	4.73
20	GTIV	12.41	12.41	12.05	-2.9%	-2.9%	18.78
21	GNI	68.10	68.10	22.92	-66.3%	-66.3%	3.42
22	HLF	78.70	78.70	81.81	4.0%	4.0%	2.96
23	IQNT	11.41	11.41	10.19	-10.7%	-10.7%	20.43
24	ESI	33.58	33.58	39.41	17.4%	17.4%	6.94
25	LPS	37.38	37.38	37.30	-0.2%	-0.2%	6.24
26	LQDT	22.66	22.66	21.21	-6.4%	-6.4%	10.29
27	LO	50.68	50.68	49.26	-2.8%	-2.8%	4.60
28	MSFT	37.41	37.41	36.04	-3.7%	-3.7%	6.23
29	MYGN	20.98	20.98	23.64	12.7%	12.7%	11.11
30	NATR	17.32	17.32	17.64	1.8%	1.8%	13.46
31	NOC	114.61	114.61	116.37	1.5%	1.5%	2.03
32	PDLI	8.44	8.44	8.88	5.2%	0.0%	27.62
33	PFMT	10.30	10.30	11.04	7.2%	7.2%	22.63
34	PETS	16.63	16.63	15.74	-5.4%	-5.4%	14.02
35	PRSC	25.72	25.72	24.77	-3.7%	-3.7%	9.06
36	QCOR	54.45	54.45	52.95	-2.8%	-2.8%	4.28
37	RTN	90.70	90.70	90.66	0.0%	0.0%	2.57
38	RAI	49.99	49.99	48.31	-3.4%	-3.4%	4.66
39	RPXC	16.90	16.90	17.20	1.8%	1.8%	13.79
40	SAIC	33.07	33.07	36.08	9.1%	9.1%	7.05
41	SWHC	13.49	13.49	14.99	11.1%	11.1%	17.28
42	STRA	34.47	34.47	38.34	11.2%	11.2%	6.76
43	RGR	73.09	73.09	80.55	10.2%	10.2%	3.19
44	UIS	33.57	33.57	31.74	-5.5%	-5.5%	6.94
45	UNTD	13.76	13.76	13.34	-3.1%	-3.1%	16.94
46	USMO	14.28	14.28	13.84	-3.1%	-3.1%	16.32
47	USNA	75.58	75.58	71.91	-4.9%	-4.9%	3.08
48	VCI	34.25	34.25	34.05	-0.6%	-0.6%	6.81
49	VGR	16.37	16.37	16.38	0.1%	0.1%	14.24
50	WTW	32.93	32.93	32.91	-0.1%	-0.1%	7.08
	Total	17,682	17,682	17,659	-0.1%	-0.1%

As we saw some in 2013, the FPES are actually a plus again.  Funny how that works.  Timing is everything as I discussed here (Anatomy of A MFI Stock).  That is one of the hardest parts of MFI, you get you lunch handed to you and then most people would say, "I will never ever buy another education stock!", or in TS language:  we are never ever getting back together .  Then ironically, that is the time to dive in.