Up early on what looks to be a bit of a washout 4th of July in New England. It is hard to believe, but a hurricane is working up the coast and is projected to give up a very rainy/sticky day (sultry was a word used). But it is expected to clear out this evening and we will have a spectacular weekend.
Do not tell my wifola, but I am thinking about trying to ride my bike tomorrow! I am 8 weeks out of surgery and am starting to get a lot more strength and flexibility in left knee. I have been on stationary bike a lot, but I'd really enjoy an outdoor ride.
Very Good Week
It was a very good week, up 2.2%. Of course it always helps when GTAT does well at 10% of my holdings. Here is a table showing how all stocks did during the week. You will note one new stock, DAL. I have been thinking about an airline stock for a long time, and they took a 5% dip mid-week. I used that as an opportunity to buy. I am not sure how long I will hold. While airlines have pricing power right now, they are dependent on fuel prices, unions etc. I should note that June was a very good month. I was up overall 6.2%.
| Index | Stock | Current | Weekly Change | Share | |
| 1 | GTAT | 18.26 | 19.55 | 7.1% | 10.3% |
| 2 | GNW | 17.32 | 17.62 | 1.7% | 7.3% |
| 3 | 14.24 | 14.49 | 1.8% | 4.9% | |
| 4 | AOD | 8.94 | 8.99 | 0.6% | 4.8% |
| 5 | BBEP | 22.13 | 22.27 | 0.6% | 4.8% |
| 6 | RPXC | 17.47 | 18.12 | 3.7% | 3.9% |
| 7 | 21.92 | 22.67 | 3.4% | 3.4% | |
| 8 | 41.23 | 42.00 | 1.9% | 3.2% | |
| 9 | NTC | 12.62 | 12.43 | -1.5% | 3.2% |
| 10 | CSQ | 11.92 | 11.98 | 0.5% | 3.1% |
| 11 | TPVG | 16.15 | 16.20 | 0.3% | 3.1% |
| 12 | FSC | 9.80 | 9.95 | 1.5% | 3.1% |
| 13 | RIOM | 2.24 | 2.29 | 2.2% | 3.0% |
| 14 | TGONF | 10.05 | 10.05 | 0.0% | 2.6% |
| 15 | AVG | 19.80 | 20.16 | 1.8% | 2.5% |
| 16 | 10.59 | 10.52 | -0.7% | 2.4% | |
| 17 | 102.74 | 106.76 | 3.9% | 2.3% | |
| 18 | 38.09 | 38.60 | 1.3% | 2.2% | |
| 19 | 89.38 | 92.68 | 3.7% | 2.2% | |
| 20 | BAC-WTA | 6.85 | 7.14 | 4.2% | 2.2% |
| 21 | AGX | 36.88 | 36.77 | -0.3% | 2.0% |
| 22 | NADL | 10.50 | 10.65 | 1.4% | 2.0% |
| 23 | TSL | 12.59 | 12.51 | -0.6% | 1.9% |
| 24 | TIME | 24.25 | 24.48 | 0.9% | 1.8% |
| 25 | 70.97 | 74.62 | 5.1% | 1.8% | |
| 26 | 15.09 | 15.56 | 3.1% | 1.8% | |
| 27 | HIG-WT | 27.06 | 28.28 | 4.5% | 1.8% |
| 28 | GA | 11.85 | 11.88 | 0.3% | 1.6% |
| 29 | WNR | 38.38 | 39.79 | 3.7% | 1.5% |
| 30 | 24.70 | 25.19 | 2.0% | 1.2% | |
| 31 | NSR | 25.48 | 27.04 | 6.1% | 1.2% |
| 32 | 28.80 | 29.03 | 0.8% | 1.1% | |
| 33 | CA | 28.55 | 29.36 | 2.8% | 1.1% |
| 34 | CF | 240.27 | 245.42 | 2.1% | 1.1% |
| 35 | 76.88 | 78.99 | 2.7% | 1.0% | |
| 36 | O | 44.22 | 44.23 | 0.0% | 1.0% |
| 37 | OIBAX | 6.19 | 6.18 | -0.2% | 1.0% |
| 38 | EDV | 104.56 | 101.31 | -0.2% | 0.5% |
| 39 | 2.2% |
So while everything appears to be working - we had a great job report on Thursday; I also think we need to maintain caution. I did write earlier this week that I felt our economy was improving and that the drop in bond rates was caused more by exterior factors than the US; but I am still nervous. I read a very thoughtful piece by John Hussman yesterday (The Delusion of Perpetual Motion). Now while Hussman has been a bear since 2011 (he was early); it is always a good idea to read all views. The gist of his argument is that while the Federal Reserve has created an environment where stocks are the best option right now, that does not mean that we are not borrowing from future returns. He believes the expected return over the next decade is 0%, kind of where we were at the start of 2000.
That is a good reason to stay 20 to 30% cash.
Enough Gloom & Doom!
This portfolio has just been going up, up and up. What is the saying, "Buy Helium Stocks, They Are Always Going Up!"? MFI feels that way of late. My MFI portfolio is up 15.3% this Since my re-boot in August 2012 (recall the reboot consisted of 4 equal tranches spread over a year); I am getting closer and closer to a double. My hypothetical $100,000 start is now over $181,000! Whoa. Greenblatt devoted an entire chapter on what to do once the Magic Formula made you wealthy. If this keeps up, I may have to re-read that chapter! My annualized IRR since the reboot is 48.8%.
As my readers know, I am always thinking about the next MFI tranche (which is scheduled for August 15th). In early June, I put together what my five stocks would have been that day. They have done very well (sadly, purely hypothetical):
| Stock | Start | Current | Change |
| BCOR | 19.30 | 18.83 | -2.4% |
| 105.98 | 112.38 | 6.0% | |
| NSR | 24.46 | 27.04 | 10.5% |
| TIME | 23.06 | 24.48 | 6.2% |
| TARO | 110.60 | 141.70 | 28.1% |
I am seriously considering moving my August tranche to August 1st. I feel like I'd rather buy before a lot of the earnings reports come out. Also, it will sync up better with my monthly tracking reports, which are typically done the last Friday of the month. Obviously, I would still hold the current tranche through August 15th for tax reasons. But for bookkeeping, I would cut off August 1st. We will see.
| Start | Current | Dividend | Pct Gain | R3K Gain | |
| CF | $187.26 | $245.42 | $3.00 | 32.7% | 21.4% |
| $66.06 | $78.99 | $0.53 | 20.4% | 21.4% | |
| AGX | $15.60 | $36.77 | $0.75 | 140.5% | 21.4% |
| $11.29 | $14.49 | $0.00 | 28.3% | 21.4% | |
| RPXC | $15.92 | $18.12 | $0.00 | 13.8% | 21.4% |
| Totals | 47.1% | 21.4% | |||
| 11/15/13 Stocks | Start | Current | Dividend | Pct Gain | R3K Gain |
| AVG | $17.22 | $20.16 | $0.00 | 17.1% | 11.6% |
| $17.71 | $22.67 | $0.20 | 29.1% | 11.6% | |
| GA | $9.04 | $11.88 | $0.23 | 34.0% | 11.6% |
| RPXC | $17.04 | $18.12 | $0.00 | 6.3% | 11.6% |
| $48.01 | $92.68 | $0.00 | 93.0% | 11.6% | |
| Totals | 35.9% | 11.6% | |||
| 2/1/14 Stocks | Start | Current | Dividend | Pct Gain | R3K Gain |
| $17.13 | $22.67 | $0.20 | 33.5% | 11.7% | |
| $61.47 | $74.62 | $0.90 | 22.9% | 11.7% | |
| RPXC | $16.22 | $18.12 | $0.00 | 11.7% | 11.7% |
| $69.55 | $106.76 | $0.23 | 53.8% | 11.7% | |
| WNR | $39.11 | $39.79 | $0.52 | 3.1% | 11.7% |
| Totals | 25.0% | 11.7% | |||
| Start | Current | Dividend | Pct Gain | R3K Gain | |
| AVG | $19.57 | $20.16 | $0.00 | 3.0% | 6.2% |
| CA | $29.54 | $29.36 | $0.25 | 0.2% | 6.2% |
| $22.79 | $25.19 | $0.19 | 11.4% | 6.2% | |
| NSR | $25.82 | $27.04 | $0.00 | 4.7% | 6.2% |
| $28.78 | $29.03 | $0.23 | 1.7% | 6.2% | |
| Totals | 4.2% | 6.2% | |||
| Category/Tranche | August | November | February | May | Total |
| Initial Investment | 25,000 | 25,000 | 25,000 | 25,000 | 100,000 |
| Current Tranche | 47.1% | 35.9% | 25.0% | 4.2% | 28.7% |
| Previous Tranche | 14.1% | 43.7% | 78.3% | 33.0% | 40.8% |
| MFI Overall Gain | 67.8% | 95.4% | 122.8% | 38.6% | 81.2% |
| Current Balance | 41,957 | 48,844 | 55,701 | 34,653 | 181,155 |
| R3K Current Tranche | 21.4% | 52.6% | 11.7% | 6.2% | 23.0% |
| R3K Overall Gain | 48.3% | 52.6% | 35.3% | 26.3% | 38.8% |
| R3K Balance | 37,084 | 38,147 | 33,818 | 29,722 | 138,772 |
| Annualized IRR | 31.6% | 50.7% | 75.8% | 32.4% | 48.8% |
| Date | Differential | Value |
| -2.20% | 99,765 | |
| -1.78% | 102,798 | |
| -2.26% | 102,594 | |
| -2.23% | 102,881 | |
| -0.43% | 106,804 | |
| 2.00% | 110,423 | |
| 4.75% | 115,831 | |
| 4.29% | 114,888 | |
| 6.91% | 124,799 | |
| 10.46% | 124,536 | |
| 19.67% | 138,655 | |
| 19.75% | 143,514 | |
| 23.70% | 150,105 | |
| 26.63% | 157,138 | |
| 24.70% | 150,619 | |
| 3/1/2014 | 25.66% | 158,116 |
| 4/1/2014 | 30.38% | 162,991 |
| 5/1/2014 | 29.65% | 162,428 |
| 32.14% | 167,001 | |
| 40.63% | 177,971 | |
| Current | 42.38% | 181,155 |
Discretionary Portfolio
As I mentioned, I added DAL this week. I also sold my TZA, which at the end of the day was a bad buy.
| Stock | Shares | Avg Cost | Current Price | Pct Change | R3K Change | Diff |
| BAC-WTA | 8,000 | 5.73 | 7.14 | 24.6% | 19.7% | 4.9% |
| 1,500 | 38.09 | 38.60 | 1.3% | 0.5% | 0.8% | |
| EDV | 139 | 101.20 | 101.31 | 0.1% | 8.4% | -8.3% |
| GNW | 11,000 | 9.16 | 17.62 | 92.4% | 32.1% | 60.3% |
| GTAT | 14,000 | 8.64 | 19.55 | 126.3% | 11.5% | 114.8% |
| HIG-WT | 1,650 | 21.24 | 28.28 | 33.2% | 20.9% | 12.2% |
| 3,000 | 15.32 | 15.56 | 1.6% | 0.8% | 0.8% | |
| 7,000 | 11.48 | 14.49 | 26.3% | 16.3% | 9.9% | |
| RIOM | 25,000 | 2.01 | 2.29 | 13.7% | 6.3% | 7.3% |
| 6,000 | 10.66 | 10.52 | -1.3% | 1.8% | -3.2% | |
| TSL | 4,000 | 11.13 | 12.51 | 12.4% | 1.1% | 11.3% |
| Total Open | 46.0% | 12.5% | 33.5% | |||
| Closed | 2.4% | 1.3% | 1.1% | |||
| Combined | 8.4% | 2.9% | 5.6% | |||
A seeking alpha writer opined that GNW has seen its best days and it was time to sell (Genworth Financial: A Good Return But Time To Sell). While one should always read and think about opposing views, I do disagree. GNW is still well under TBV. So I believe they still have substantial catalysts to unlock further value. These would include: (1) higher interest rates (I believe they are coming), which will drive better investment results for a life insurer, (2) capital management, including either reinstatement of dividend or buyback of shares (immediately accretive when under BV) or (3) potential split-up of company, say the mortgage piece from life insurance (John Paulson is pushing for this Genworth CEO Rejects Paulson’s Breakup Plan).
Dividend Stocks
With the closure of the second quarter, I thought I would trot out my quarterly dividend chart (with multiplier). Admittedly I have shrunk this portfolio a bit, but you can see it is cranking out the dividends:
To be clear, this is all dividends, inclusive of MFI stocks and Discretionary. But I am sure 90% (at least) are dividend stocks.
| Stock | Shares | Avg Cost | Current Price | Dividends Received | Pct Change | R3K Change | Diff |
| AOD | 14,096 | 8.03 | 8.99 | 10,119.88 | 20.9% | 22.7% | -1.8% |
| BBEP | 5,713 | 16.74 | 22.27 | 8,736.99 | 42.2% | 16.2% | 26.0% |
| CSQ | 6,954 | 8.69 | 11.98 | 13,141.31 | 59.5% | 57.6% | 2.0% |
| FSC | 8,324 | 9.57 | 9.95 | 2,368.90 | 7.0% | 6.4% | 0.6% |
| 2,000 | 40.55 | 42.00 | - | 3.6% | 5.3% | -1.8% | |
| NADL | 5,109 | 9.62 | 10.65 | 1,200.00 | 13.2% | 3.9% | 9.3% |
| NTC | 6,753 | 12.01 | 12.43 | 1,899.93 | 5.8% | 7.1% | -1.3% |
| O | 598 | 20.92 | 44.23 | 9,350.71 | 186.1% | 118.9% | 67.3% |
| 4,136 | 5.00 | 6.18 | 8,195.12 | 63.2% | 128.5% | -65.2% | |
| TGONF | 7,000 | 10.27 | 10.05 | 2,367.50 | 1.1% | 20.8% | -19.7% |
| TIME | 2,000 | 22.89 | 24.48 | - | 6.9% | 1.5% | 5.4% |
| TPVG | 5,128 | 15.54 | 16.20 | 1,958.70 | 6.7% | 4.6% | 2.1% |
| Total Open | 59,339 | 20.9% | 19.4% | 1.5% | |||
| Closed | 12.0% | 10.9% | 1.1% | ||||
| Combined | 13.4% | 12.2% | 1.2% | ||||
| Annualized IRR Since 12/31/10 | 18.1% | ||||||
| 2014 Gain | 7.2% | ||||||
This portfolio has been totally average, up 7.2% this year. But that is ok. The main purpose of this portfolio is to build out an ever increasing income stream to help me and wifola as we steer towards retirement. You can see PM is gone. While I think I was right to sell them, it was a strong dividend income stock. So I need to be on the lookout for a replacement or opportunity to buy more of something I already have. But no rush. I would prefer to wait for a pullback or some compelling individual issue.
Well, my coffee is finished and I think I have said what needed to be said. I will surely write more this weekend. I will definitely take a quick look at MFI stocks and Barron's. Perhaps I will also take stock or think more about August tranche!
Have a great Independence Day everyone! I will try to find some Dogfish beer.
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