Monthly Tracking Portfolio - July 29th, 2013

Monthly Tracking Portfolio Analysis, July 29th, 2013

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.

Before I get into the numbers, I do have several pictures that I will comment on (captive audience). I got up

early on this beautiful Connect-the-dots summer day and took a 27 mile bike ride. It was the first extended bike ride I have taken since my ACL surgery on May 8th. It was grand. I am sure there are prettier places to ride a bike in the country, but the Farmington River Trail, just a stone's throw from my house is pretty special. There is something so peaceful about riding a bike on a trail parallel to a river.

Onward

 Fearless readers will recall we had a 29 month "losing streak"..  Then we had a 13 month winning streak.  I am disheartened to report that that winning streak has ended. :( It was close, up 18.4% versus 19.0% for R3K. Here are the 50 stocks in descending performance order:

Stock	Initial Price	End Price	Percent Change	52 week low	Mkt Cap
AGX	15.46	35.88	132.1%	15.32	224
QCOR	50.15	96.93	93.3%	47.51	3,038
PBI	14.24	27.11	90.4%	14.26	2,966
ENDP	37.91	69.34	82.9%	36.17	4,666
GTIV	10.98	18.18	65.6%	7.35	343
APOL	18.30	29.27	59.9%	18.00	2,065
AAPL	62.46	97.03	55.3%	62.05	406,791
STX	39.23	59.58	51.9%	37.17	14,468
LO	41.39	60.83	47.0%	41.56	16,256
MSFT	30.64	44.40	44.9%	30.84	262,665
NOC	89.31	127.92	43.2%	89.73	21,093
CHE	71.30	101.00	41.7%	64.16	1,337
HPQ	25.13	35.04	39.4%	20.25	49,363
RTN	69.15	93.55	35.3%	69.36	22,846
CRUS	18.52	24.09	30.1%	16.81	1,175
FLR	59.70	77.43	29.7%	59.98	9,821
BAH	16.53	21.24	28.5%	16.61	2,614
CF	199.28	254.56	27.7%	178.48	12,255
UTHR	72.63	92.33	27.1%	70.34	3,620
SWHC	11.07	13.80	24.7%	10.25	712
PDLI	7.62	9.45	24.0%	7.38	1,140
VCI	27.43	34.00	24.0%	N/A	1,087
RGR	47.09	58.13	23.4%	48.52	943
CPLA	48.06	59.20	23.2%	48.32	606
NSU	3.17	3.75	18.3%	3.00	657
LPS	32.59	37.30	14.5%	N/A	2,784
STRA	43.99	49.73	13.0%	33.51	478
MSB	17.15	19.35	12.8%	17.90	237
HLF	59.74	65.85	10.2%	49.35	6,239
EBIX	11.70	12.70	8.5%	8.31	439
DELL	12.80	13.86	8.3%	N/A	22,587
VG	3.40	3.64	7.1%	2.99	726
AUXL	18.10	19.24	6.3%	16.36	892
CSCO	24.56	25.83	5.2%	20.22	134,629
SAI	14.95	15.67	4.8%	N/A	5,113
GME	44.11	46.10	4.5%	33.10	5,401
CACI	66.78	69.64	4.3%	62.86	1,539
CA	28.80	29.64	2.9%	27.84	13,400
SPOK	15.02	14.57	-3.0%	#N/A	337
NATR	16.52	16.00	-3.1%	12.91	294
DHX	8.52	7.97	-6.5%	6.50	504
USNA	78.94	69.58	-11.9%	55.01	1,060
SPPI	8.37	7.10	-15.2%	6.36	502
DXM	15.01	12.59	-16.1%	4.30	153
CPIX	5.59	4.66	-16.6%	4.20	104
ESI	27.25	14.85	-45.5%	14.70	637
LQDT	28.34	14.08	-50.3%	12.05	895
WTW	46.02	20.10	-56.3%	19.09	2,600
INTX	8.95	3.84	-57.1%	3.78	173
GNI	51.47	19.58	-62.0%	16.80	103

I did find another site that has been tracking since 2006 this week.  It uses a different approach, just 5 stocks picked randomly every quarter. They have had better results than me (TrackJGreenblatt's Stock Picks). I found it very interesting and would encourage people to take a looksee.

AGX was number one, I am glad to report I have gotten to ride that wave personally. QCOR was number two. 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 minor drag.  The 4 of them were up on average by a sub-par 12.7%.  ESI, really took a nose dive recently.  GNI has been a real lead ("iron-ore") weight.

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	26.9%	24.1%
7/29/2013	18.4%	19.0%
8/30/2013	15.0%	22.4%
9/27/2013	13.0%	17.4%
10/25/2013	7.0%	12.7%
11/29/2013	4.9%	10.2%
12/31/2013	5.6%	7.2%
1/31/2014	10.4%	10.8%
2/28/2014	7.1%	5.8%
3/28/2014	1.8%	6.2%
4/25/2014	1.6%	6.1%
5/30/2014	1.5%	2.8%
6/27/2014	-1.1%	0.5%

As noted, this ends a 13 month winning streak, which was proceeded by 29 straight months of lossest! (that is hard to do... it ain't random).  It is be a bad omen that the 10 of the 11 newest portfolios are all trailing.  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 35%.  The new portfolio terrible, down 8% - as LQDT was off by 50%. 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	177,173
Total Russell 3K	183,520
New	182,129
Dividend	397,971

I will note that while dividend/MFI stocks have been stupendous, the open portfolios of dividend stocks are trailing on average by about 3 points (GNI hasn't helped).

One last picture.