As I mentioned yesterday, my portfolio is in a serious tailspin. Three straight bad weeks have taken me from beating the benchmark to trailing it. Not the end of the world, I am still up decently in this year. But I'd rather do better than worse.
I did sell a lot in the week, so if the markets drop and if I drop proportional to the markets, I will actually gain ground due to large cash component. Of course if the markets go up, I am handicapped by being heavy in cash.
New Strategy
I will start implementing my new strategy of four new MFI tranches, corresponding with the start of the four quarters (So Oct 1st will be #1). The picks will be formula-driven:
- take MFI screen $100m and above
- Only use stocks $700m and greater market cap
- Identify those stocks with 2.5% yield or higher
- I can throw away one stock as "untouchable"
- Then pick random 5 stocks from that list.
- If the list has fewer than five stocks, take the next highest yielding stock.
Example
Current stocks on screen > $700 million:
| Ticker | Mkt Cap | Price | Yield |
| 127,487.10 | 25.16 | 2.9% | |
| VIAB | 34,139.18 | 79.52 | 1.6% |
| 31,842.48 | 100.77 | 2.3% | |
| 27,696.91 | 129.99 | 2.0% | |
| CA | 12,670.11 | 28.50 | 3.5% |
| 11,089.20 | 36.59 | 0.0% | |
| 10,116.43 | 36.96 | 3.6% | |
| 8,871.59 | 32.45 | 2.5% | |
| 4,989.14 | 43.61 | 2.9% | |
| 4,560.28 | 10.26 | 0.7% | |
| KING | 4,367.46 | 13.19 | 0.0% |
| BAH | 3,720.94 | 22.58 | 14.2% |
| MYGN | 3,080.29 | 36.53 | 0.0% |
| 3,000.12 | 27.27 | 0.0% | |
| 2,891.99 | 58.04 | 1.9% | |
| 2,614.54 | 41.50 | 3.0% | |
| 2,387.26 | 23.53 | 0.0% | |
| 2,322.06 | 47.92 | 4.3% | |
| NSR | 1,591.01 | 26.75 | 0.0% |
| 1,385.61 | 23.09 | 0.7% | |
| 1,368.96 | 9.57 | 7.6% | |
| IILG | 1,193.75 | 20.49 | 2.1% |
| UIS | 1,164.61 | 23.51 | 0.0% |
| USNA | 979.70 | 71.20 | 0.0% |
| RGR | 950.41 | 51.24 | 4.2% |
| PENN | 917.58 | 11.55 | 0.0% |
| DEPO | 874.20 | 14.57 | 0.0% |
| EXLS | 850.43 | 26.13 | 0.0% |
| RPXC | 829.45 | 14.74 | 0.0% |
Now only select those with 2.5% yield or better:
| Ticker | Mkt Cap | Price | Yield |
| BAH | 3,720.94 | 22.58 | 14.2% |
| 1,368.96 | 9.57 | 7.6% | |
| 2,322.06 | 47.92 | 4.3% | |
| 950.41 | 51.24 | 4.2% | |
| 10,116.43 | 36.96 | 3.6% | |
| CA | 12,670.11 | 28.50 | 3.5% |
| 2,614.54 | 41.50 | 3.0% | |
| 4,989.14 | 43.61 | 2.9% | |
| 127,487.10 | 25.16 | 2.9% | |
| 8,871.59 | 32.45 | 2.5% |
Note these yields are per Yahoo Finance, not always most reliable source. BAH has a regular yield around 2%, but has often also paid special dividends. I would include them. BKE is very similar, 1.9% yield but with common special dividends. So I would include this whole list. I would throw out PDLI in this case. Then pick 5 randomly from remaining 9.
Weekly Graph
Warning the image you are about to see contains graphic images.
MFI Portfolio
This portfolio has held up the best through my recent blood bath. probably another good reason to allocate more resources this direction:
| 11/15/13 Stocks | Start | Current | Dividend | Pct Gain | R3K Gain |
| AVG | $17.22 | $17.23 | $0.00 | 0.1% | 12.7% |
| $17.71 | $21.82 | $0.20 | 24.3% | 12.7% | |
| GA | $9.04 | $11.90 | $0.23 | 34.2% | 12.7% |
| RPXC | $17.04 | $14.52 | $0.00 | -14.8% | 12.7% |
| $48.01 | $78.66 | $0.00 | 63.8% | 12.7% | |
| Totals | 21.5% | 12.7% | |||
| 2/1/14 Stocks | Start | Current | Dividend | Pct Gain | R3K Gain |
| $17.13 | $21.82 | $0.20 | 28.5% | 12.7% | |
| $61.47 | $80.77 | $1.40 | 33.7% | 12.7% | |
| RPXC | $16.22 | $14.52 | $0.00 | -10.5% | 12.7% |
| $69.55 | $101.12 | $0.53 | 46.1% | 12.7% | |
| WNR | $39.11 | $43.79 | $0.78 | 14.0% | 12.7% |
| Totals | 22.4% | 12.7% | |||
| Start | Current | Dividend | Pct Gain | R3K Gain | |
| AVG | $19.57 | $17.23 | $0.00 | -12.0% | 7.3% |
| CA | $29.54 | $28.48 | $0.50 | -1.9% | 7.3% |
| $22.79 | $25.20 | $0.19 | 11.4% | 7.3% | |
| NSR | $25.82 | $25.59 | $0.00 | -0.9% | 7.3% |
| $28.78 | $29.23 | $0.23 | 2.4% | 7.3% | |
| Totals | -0.2% | 7.3% | |||
| 8/15/2014 | Start | Current | Dividend | Pct Gain | R3K Gain |
| CSCO | $24.40 | $25.20 | $0.00 | 3.3% | 2.7% |
| AGX | $36.71 | $35.57 | $0.00 | -3.1% | 2.7% |
| ITRN | $21.32 | $21.20 | $0.19 | 0.3% | 2.7% |
| $9.34 | $10.30 | $0.00 | 10.3% | 2.7% | |
| $58.25 | $61.23 | $0.00 | 5.1% | 2.7% | |
| Totals | 3.2% | 2.7% | |||
| Category/Tranche | August | November | February | May | Total |
| Initial Investment | 25,000 | 25,000 | 25,000 | 25,000 | 100,000 |
| Current Tranche | 3.2% | 21.5% | 22.4% | -0.2% | 11.9% |
| Previous Tranche | 41.4% | 43.7% | 78.3% | 33.0% | 49.4% |
| Tranche -2 | 14.1% | - | - | - | 3.5% |
| MFI Overall Gain | 66.4% | 74.7% | 118.1% | 32.8% | 73.0% |
| Current Balance | 41,612 | 43,675 | 54,532 | 33,191 | 173,010 |
| R3K Current Tranche | 19.4% | 12.7% | 12.7% | 7.3% | 13.0% |
| R3K Overall Gain | 49.8% | 54.0% | 36.6% | 27.5% | 42.0% |
| R3K Balance | 37,447 | 38,505 | 34,138 | 31,879 | 141,970 |
| Annualized IRR | 27.5% | 35.3% | 61.3% | 22.9% | 37.7% |
So beating the benchmark by 31%. But you can see that lead has recently been shrinking:
| 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 | |
| 25.66% | 158,116 | |
| 30.38% | 162,991 | |
| 29.65% | 162,428 | |
| 31.44% | 167,001 | |
| 39.23% | 177,971 | |
| 31.13% | 167,054 | |
| 35.90% | 177,792 | |
| Current | 31.04% | 173,010 |
I was up 39% on July 1st.
Dividend Portfolio
A lot of turnover here.
| Stock | Shares | Avg Cost | Current Price | Dividends Received | Pct Change | R3K Change | Diff |
| AOD | 14,186 | 8.03 | 8.80 | 12,519.36 | 20.5% | 23.8% | -3.2% |
| CSQ | 7,050 | 8.74 | 12.07 | 14,847.48 | 62.2% | 58.0% | 4.3% |
| EXETF | 6,000 | 7.82 | 7.69 | - | -1.7% | -0.1% | -1.6% |
| NADL | 8,366 | 9.34 | 6.93 | 2,727.85 | -22.3% | 3.8% | -26.2% |
| NTC | 6,784 | 12.02 | 12.38 | 3,058.21 | 6.8% | 8.1% | -1.4% |
| O | 603 | 21.12 | 42.12 | 9,570.23 | 174.6% | 118.9% | 55.8% |
| 4,147 | 5.00 | 6.06 | 8,261.12 | 61.0% | 130.3% | -69.3% | |
| TCMCF | 4,903 | 13.89 | 14.05 | - | 1.2% | 1.0% | 0.1% |
| TGONF | 7,000 | 10.27 | 11.35 | 3,452.50 | 15.3% | 22.0% | -6.7% |
| TIME | 2,000 | 22.89 | 23.77 | - | 3.8% | 2.5% | 1.4% |
| 700 | 146.54 | 141.64 | 1,555.00 | -1.8% | 3.5% | -5.3% | |
| Total Open | 55,992 | 13.6% | 19.3% | -5.7% | |||
| Closed | 12.0% | 10.7% | 1.2% | ||||
| Combined | 12.2% | 11.8% | 0.3% | ||||
| Annualized IRR Since 12/31/10 | 17.1% | ||||||
| 2014 Gain | 5.5% | ||||||
As I sold off a couple nice winners (like BBEP) and NADL taking an absolute swan dive this past week, the open component of this portfolio does not look so hot. Overall, it has frankly been a push.
Discretionary Portfolio
| Stock | Shares | Avg Cost | Current Price | Pct Change | R3K Change | Diff |
| AGX | 190 | 36.71 | 35.57 | -3.1% | 2.6% | -5.8% |
| BAC-WTA | 12,000 | 6.05 | 7.61 | 25.7% | 14.3% | 11.4% |
| GNW | 13,880 | 10.08 | 13.19 | 30.9% | 24.8% | 6.2% |
| GTAT | 14,000 | 9.15 | 12.24 | 33.7% | 12.3% | 21.4% |
| HIG-WT | 1,650 | 21.24 | 29.34 | 38.2% | 22.1% | 16.1% |
| Total Open | 30.9% | 18.0% | 13.0% | |||
| Closed | 3.0% | 1.4% | 1.5% | |||
| Combined | 4.8% | 2.5% | 2.3% | |||
Kind of like 10 little Indians. "And Then There Were None". I have been selling these off. I would suggest I am now down to my core positions.
Charlie Brown Philosophy
Charlie Brown used to say, "if you learn more from losing than you do from winning, I must be the smartest guy on the planet". I have been losing lately, though again I am still in the green for the year, I still have a strong capital posiion and a lot of cash on the sidelines. So the war is certainly not lost. But I do need to learn from my losses.
And thus, the change in direction that I have put into play this week. Have a great weekend everyone.
Posts
6 comments:
Hi Marsh- Are you going to hold GNW and BAC? Both got little write up in Barrons this week
http://online.barrons.com/home-page
Thanks for pointing out the GNW article. I had not seen it, though it is exactly the same argument I made on August 16th. It is a LT hold for me and I have also bought January 2016 options with a $17 strike price (a steal under 90 cents). I also plan to hold my BAC warrants until 2019. I expect BAC to be well north of $32 by then.
Marshall, I know you sold out of FSC, but in reading your posts on the BW&P Investing Club, I understand you still like FSC. I have shares of FSC and really like the yield and the monthly income and am even thinking of adding more. Do you have any concerns with this company? Thanks Robert
Robert - I do not have concerns on FSC.
I noticed on the new strategy example that you would "throw out" PDLI from the tranche. Reasoning? It seems to me that it might be one of the best for a year long hold since it has declined so much, so quickly. Would appreciate your thoughts.
Karl
Karl - PDLI depends on royalty income. I am not sure how sustainable that it.
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