Saturday, September 27, 2014

MFI Monthly Tracking Portfolio - September 27th, 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.

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 we appear to be starting a new losing streak, as we lost for thirdstraight month.. :( It wasn't close, up 12.9% versus 17.7% for R3K. Here are the 50 stocks in descending performance order:

Stock  Initial Price   End Price  Percent Change  52 week low   Mkt Cap 
UTHR              78.72         135.74 72.4%                77.22         3,923
HPQ              20.77           35.37 70.3%                20.25       41,049
QCOR              55.93           93.60 67.4%                47.71         3,414
CNVR              20.66           34.34 66.2%                18.62         1,535
AGX              21.06           33.85 60.7%                20.55           306
CHE              67.72         102.52 51.4%                64.16         1,269
AAPL              67.44         100.75 49.4%                67.77     438,550
MYGN              25.92           37.89 46.2%                20.02         2,282
EBIX                9.71           14.17 45.9%                 9.76           364
GTIV              11.82           17.20 45.5%                 7.35           370
PBI              17.53           25.21 43.8%                17.91         3,645
BAH              16.28           23.37 43.6%                16.61         2,707
MSFT              32.34           46.41 43.5%                32.59     277,073
STRA              41.61           59.23 42.3%                33.51           452
NOC              94.16         131.93 40.1%                92.51       22,215
DLX              40.34           56.36 39.7%                40.47         2,077
MO              33.05           45.81 38.6%                33.80       69,587
LO              43.29           59.95 38.5%                44.12       16,961
IQNT                9.30           12.47 34.1%                 9.30           309
RTN              76.74         101.52 32.3%                73.81       25,354
ATVI              16.66           21.25 27.6%                16.06       11,606
APOL              20.45           25.39 24.2%                19.86         2,307
HRB              25.68           31.27 21.8%                25.98         7,219
VCI              28.43           34.00 19.6%                  N/A          1,115
LPS              33.08           37.30 12.8%                  N/A          2,830
CSCO              22.62           25.00 10.5%                20.22     125,725
IDCC              36.72           40.41 10.0%                26.25         1,532
VG                3.15             3.28 4.1%                 3.02           665
CACI              69.21           71.21 2.9%                66.09         1,607
CRTX                9.39             9.48 1.0%                 7.77           249
SPOK              13.65           13.67 0.1%                12.58           303
MSB              20.57           20.35 -1.1%                18.49           289
PDLI                7.73             7.59 -1.8%                 7.38         1,397
DHX                8.58             8.40 -2.1%                 6.50           507
CA              29.09           27.89 -4.1%                27.84       13,544
CRUS              22.97           21.40 -6.8%                16.81         1,458
NATR              16.88           15.51 -8.1%                12.91           306
UIS              25.13           22.68 -9.7%                19.96         1,098
PETS              15.59           13.80 -11.5%                12.13           329
SWHC              11.23             9.68 -13.8%                 9.35           708
USNA              87.20           71.98 -17.5%                55.01         1,185
RGR              61.51           48.32 -21.4%                45.76         1,229
WTW              37.81           27.64 -26.9%                19.09         2,124
APEI              38.15           27.60 -27.7%                27.27           673
COH              52.61           36.33 -30.9%                33.39       15,290
HLF              67.58           43.80 -35.2%                38.63         7,026
CREG                2.44             1.38 -43.4%                 0.78           123
INTX                8.44             3.91 -53.7%                 3.32           161
GNI              55.92           23.45 -58.1%                16.80           109
ESI              30.97             4.34 -86.0%                 4.07           724


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.

UTHR was number one, I know I thought about buying them and QCOR a half-dozen times.. ESI, really took a nose dive recently.  GNI has been a real lead ("iron-ore") weight - as has weight watchers (too easy).

Here is a listing of every portfolio I have tracked:

Date MFI R3K Lead
1/6/2006 16.0% 10.9% 1
2/17/2006 21.2% 14.6% 1
3/29/2006 13.0% 9.6% 1
4/7/2006 10.3% 12.1% 0
5/12/2006 20.4% 18.6% 1
5/31/2006 29.2% 23.3% 1
6/30/2006 22.4% 20.0% 1
7/31/2006 19.7% 17.3% 1
8/31/2006 13.0% 13.3% 0
9/28/2006 12.7% 14.6% 0
10/27/2006 10.3% 12.0% 0
11/29/2006 -0.3% 4.8% 0
12/28/2006 -6.9% 3.4% 0
1/26/2007 -10.2% -6.6% 0
2/27/2007 -3.7% -1.0% 0
3/26/2007 -9.8% -5.5% 0
4/27/2007 -10.9% -5.0% 0
5/29/2007 -11.5% -6.3% 0
7/3/2007 -30.0% -15.6% 0
7/30/2007 -19.9% -11.5% 0
8/30/2007 -12.5% -8.7% 0
9/27/2007 -19.0% -18.2% 0
11/2/2007 -40.4% -34.3% 0
11/28/2007 -40.1% -38.3% 0
12/28/2007 -36.3% -40.0% 1
1/25/2008 -36.4% -35.9% 0
2/26/2008 -51.7% -41.5% 0
3/24/2008 -40.9% -36.8% 0
4/25/2008 -25.6% -31.0% 1
5/28/2008 -22.2% -33.6% 1
7/2/2008 -11.7% -25.3% 1
7/29/2008 -10.5% -20.9% 1
8/29/2008 -13.8% -17.9% 1
9/26/2008 -4.3% -10.0% 1
10/31/2008 18.7% 13.9% 1
11/26/2008 50.9% 27.7% 1
12/26/2008 48.9% 32.3% 1
1/23/2009 59.3% 36.4% 1
2/27/2009 92.8% 55.6% 1
3/27/2009 85.8% 48.1% 1
4/24/2009 69.7% 45.8% 1
5/29/2009 31.8% 22.8% 1
6/29/2009 21.3% 24.0% 0
7/29/2009 19.5% 15.9% 1
8/28/2009 7.4% 8.8% 0
9/25/2009 12.6% 12.4% 1
10/30/2009 22.7% 18.3% 1
11/27/2009 24.3% 13.6% 1
12/31/2009 23.7% 18.1% 1
1/22/2010 19.0% 20.6% 0
2/26/2010 18.6% 23.6% 0
3/25/2010 10.0% 15.4% 0
4/23/2010 7.1% 11.4% 0
5/28/2010 19.3% 25.4% 0
6/29/2010 16.7% 25.7% 0
7/29/2010 5.4% 20.1% 0
9/2/2010 7.3% 10.1% 0
9/24/2010 -4.3% 0.3% 0
10/29/2010 -2.9% 10.4% 0
11/26/2010 -8.5% 1.4% 0
1/3/2011 -11.4% 0.1% 0
1/28/2011 -7.6% 4.9% 0
2/25/2011 -5.5% 5.0% 0
3/24/2011 -4.4% 7.4% 0
4/21/2011 -16.0% 3.2% 0
5/27/2011 -12.0% -0.4% 0
6/24/2011 -9.5% 5.0% 0
7/29/2011 -4.3% 8.1% 0
8/26/2011 12.0% 21.6% 0
9/30/2011 23.5% 29.6% 0
10/28/2011 0.4% 11.5% 0
11/25/2011 13.9% 24.0% 0
12/29/2011 9.9% 15.9% 0
1/27/2012 7.4% 16.6% 0
2/24/2012 7.8% 13.3% 0
3/23/2012 9.1% 15.2% 0
4/27/2012 10.5% 15.3% 0
5/25/2012 26.5% 27.5% 0
6/22/2012 26.1% 24.6% 1
7/27/2012 30.4% 25.7% 1
8/24/2012 26.0% 19.8% 1
9/28/2012 39.3% 22.1% 1
10/26/2012 48.3% 28.9% 1
11/23/2012 45.7% 32.1% 1
12/31/2012 52.3% 33.0% 1
1/25/2013 39.5% 22.0% 1
2/22/2013 46.5% 26.4% 1
3/28/2013 40.1% 21.2% 1
4/26/2013 35.0% 20.5% 1
5/24/2013 20.4% 19.2% 1
6/28/2013 26.9% 24.1% 1
7/29/2013 17.8% 19.0% 0
8/30/2013 17.5% 24.6% 0
9/27/2013 12.9% 17.7% 0
10/25/2013 5.7% 13.0% 0
11/29/2013 3.8% 10.5% 0
12/31/2013 5.4% 7.5% 0
1/31/2014 8.4% 11.1% 0
2/28/2014 4.1% 6.1% 0
3/28/2014 -2.1% 6.5% 0
4/25/2014 -3.0% 6.4% 0
5/30/2014 -2.3% 3.1% 0
6/27/2014 -5.6% 0.7% 0
7/25/2014 -3.2% 0.3% 0
8/29/2014 -5.4% -1.5% 0

As noted, we recently ended a 13 month winning streak, which was proceeded by 29 straight months of losses! (that is hard to do... it ain't random).  It is be a bad omen that the 11 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 just ok (relatively), up about 14%.  The new portfolio was terrible, down almost 11% - as CREG and APEI were both poor. 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 today if you had spread $100,000 over the first twelve portfolios evenly.

Category Value
Total     172,707
Total Russell 3K     184,019
New     182,688
Dividend     412,480

You can see with the recent struggles, that pure MFI since 2006 is starting to fall back some.  Have a great weekend everyone!



3 comments:

John Carney said...

Marsh,

A quick look at the latest tracking portfolio has the +1 billion beating the index by 10 points or so. The dividends greater than +2.0 also did over 10 points.

Calpers moved 4 billion out of hedge funds recently. Another sign that nobody can beat the indexes over time.

Are we just dreamers?

I hope not.

Marsh_Gerda said...

John - hedge funds cannot beat the indexes because they have the 2 & 20 rule. They take every year 2% of your assets and then 20% of profits (but not losses) beyond a given hurdle rate. That is a severe albatross for anyone trying to beat the index.

We have a much better chance.

John Carney said...

Marsh,

It hard to move 300 billion around and beat the index.

It just not hedge fund fees. 87% of all funds can't beat the market over time as they have fees higher than an index.

A Little guy has a good chance. I have done a number of different things to beat the index. It always seems that you get four years and then it stop working.

What I worry about is that we get four years or so. Then your site get popular and it stop working.

I for one would pay an annual price to you just limit it to a few.

Your work is worth a lot of money and if I had your data I would just go private and not share with the world.

Just me!

I am in October 1st 2014 with 25%.

Thanks,

John