May 24th 2013 Monthly Tracking Portfolio

May 24th, 2013 Monthly Tracking Portfolio

Another month has zipped by. 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.

 Fearless readers will recall we had a 29 month "losing streak"..  This month-end extended the winning streak to 12 (but just barely as the winds seem to be shifting)! It went up an excellent 20.4 %,edging the R3K, which was up a less excellent 19.2%! Here are the 50 stocks in descending performance order:

Stock	Initial Price	End Price	Percent Change	52 week low	Mkt Cap
QCOR	34.20	90.13	163.5%	33.00	2,102
ENDP	33.88	70.59	108.4%	35.81	4,219
AGX	15.27	30.65	100.7%	14.94	222
PBI	14.62	27.63	89.0%	13.63	3,034
SWHC	9.08	15.88	74.9%	9.00	583
NOC	79.41	121.55	53.1%	80.64	18,959
RTN	64.91	97.57	50.3%	64.48	21,627
LO	41.36	62.17	50.3%	41.56	16,469
DLX	37.36	56.09	50.1%	33.37	1,907
AUXL	15.18	22.38	47.4%	14.74	752
AAPL	434.62	633.00	45.6%	388.87	415,653
VG	2.70	3.80	40.7%	2.65	574
GTIV	9.85	13.63	38.4%	7.35	311
HLF	47.00	64.83	37.9%	42.09	4,970
VCI	24.81	34.00	37.0%	N/A	981
ATVI	15.46	20.78	34.4%	13.27	17,357
CF	183.94	243.31	32.3%	169.33	11,442
CPLA	43.66	57.24	31.1%	39.58	537
CHE	67.41	88.08	30.7%	64.16	1,271
STX	41.71	53.73	28.8%	37.17	15,403
APOL	20.99	26.80	27.7%	16.89	2,348
UIS	18.99	23.47	23.6%	19.73	836
RGR	49.27	60.62	23.0%	44.76	986
MSFT	33.29	40.94	23.0%	30.84	285,118
GME	31.22	37.85	21.2%	32.62	4,285
PDLI	7.80	9.37	20.1%	7.38	1,167
LPS	32.69	37.30	14.1%	N/A	2,792
TNAV	5.07	5.59	10.3%	5.02	200
CA	26.53	28.69	8.1%	27.09	12,257
ABT	37.02	40.01	8.1%	32.70	58,426
CSCO	22.83	24.62	7.8%	20.22	124,956
SAI	14.09	15.07	7.0%	N/A	5,185
USNA	67.33	71.91	6.8%	55.01	920
NATR	13.84	14.73	6.4%	12.91	245
RPXC	15.38	16.25	5.7%	14.44	807
BCOR	17.99	18.97	5.4%	16.65	723
NSU	3.22	3.37	4.7%	2.65	699
EGY	6.27	6.50	3.7%	5.03	356
MSB	18.69	19.29	3.2%	17.07	265
STRA	56.24	54.64	-2.8%	33.51	609
SPPI	8.33	7.79	-6.5%	6.36	513
IDCC	44.66	37.99	-14.9%	26.25	1,890
ENZN	1.13	0.90	-20.2%	0.78	138
EBIX	19.62	15.64	-20.3%	8.21	735
ESI	24.80	17.22	-30.6%	16.58	585
EXPR	19.20	12.61	-34.3%	11.80	1,670
DXM	19.95	9.92	-50.3%	4.30	201
INTX	9.19	4.43	-51.8%	4.15	183
WTW	44.15	20.83	-52.8%	19.50	2,550
GNI	55.40	17.47	-68.5%	16.80	102

QCOR was number one. One of my worst sales ever as I once bought them around $18 and sold at $22, happy with a quick 20% gain.  For profit Education Stocks were a drag.  The 4 of them were up on average by a sub-par 6%.  ESI, really took a nose dive the past 30 days.

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	30.4%	25.7%
8/24/2012	26.0%	19.8%
9/28/2012	39.3%	22.1%
10/26/2012	48.3%	28.9%
11/23/2012	45.7%	32.1%
12/31/2012	52.3%	33.0%
1/25/2013	39.5%	22.0%
2/22/2013	46.5%	26.4%
3/28/2013	40.1%	21.2%
4/26/2013	35.0%	20.5%
5/24/2013	20.4%	19.2%
6/28/2013	23.7%	21.3%
7/29/2013	15.5%	15.8%
8/30/2013	13.4%	19.0%
9/27/2013	12.3%	14.2%
10/25/2013	6.1%	9.6%
11/29/2013	3.3%	7.2%
12/31/2013	3.7%	4.3%
1/31/2014	8.0%	7.7%
2/28/2014	4.5%	2.9%
3/28/2014	0.4%	3.2%
4/25/2014	0.2%	3.2%

As noted, this is the twelfth straight portfolio to win after 29 straight losses! (that is hard to do... it ain't random).  It may be a bad omen that the 9 of the 11 newest portfolios are all trailing (was 6 of 11 last month).  Still some time to go.

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 21.2%.  The new portfolio stunk, down 8% - as DXM and WTW were water-logged.  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	174,371
Total Russell 3K	178,459
New	185,800
Dividend	391,168

You can see that the dividend approach is doing well.  But overall, MFI is starting to lag just the R3K again.  I have written some blogs on what has caused that (Why Has MFI Performed Poorly?).  Onward! Time to create the new portfolio.