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!