Saturday, November 15, 2014

Weekend Update - November 15th, 2015 Tranche

Weekend Update

Another mediocre week for my stocks.  This will go down as my worst year (absolute and relative) since the 2008 crash.  Is it a bit demoralizing.  I have just made so many bad decisions.  It is just like Greenblatt said in his book, "an individual investor picking his own stocks is like running through a dynamite factory with a lit match". Ka-Boom.  Not the end of the world, as I have mentioned here before, I have more investments outside this blog than I discuss here and they have done much better - no individual stock picking for me in those investments.

So rationally, I know that everything is ok and I have just had an expensive lesson.  And it is a lesson I already knew, but was too mule-headed to accept.  I wrote in early September, before the wheels fell off that I knew my discretionary and dividend portfolios were not doing well and that I was going to change tactics. I have done that to some extent, but am still not 100% there.

MFI Portfolio

Ok, now that I have that out of my system. let me discuss my MFI portfolio a bit.  Recall I rebooted MFI (after getting a bit out of control the first time and rule-breaking too much) in August 2012.  I have been going with 5 stocks per tranche with four tranches picked per year.  I have been picking the five stocks myself - from both the official screen and my own Top 200 List.

I am going to call the approach my Selected MFI Portfolio.  I also have a second approach that I started September 30th.  That is the approach that is based upon a simple formula:


  1. Take 50 stocks greater than $100 million from official screen.
  2. Take a subset of stocks with a yield of 2.4% or greater and a market cap > $600 million.
  3. Discard one stock (if desired) of my chossing.
  4. Use Research Randomizer to pick 5 stocks from remainder (5 stocks do not remain, lower yield threshold).
I will call this approach my Simple Formula MFI Portfolio.  The next tranche for this will be selected 12/31. Recall that the plan is to winnow down my dividend and discretionary portfolios to fund what will eventually be 8 MFI tranches a year.  Hopefully I can get there before another explosion!

Selected MFI Portfolio

I did hit the anniversary date (today) of my 11/15/13 tranche.  I sold one stock (RPXC) yesterday (it was a loss, so wanted to sell short of a year for tax loss). I will sell other stocks on Monday (though GA was already sold as they were taken private - more on that later). Then I bought my five new stocks.

I was bummed that the 11/15/13 tranche was just barely edged out by Russell 3000 index. It was very close. So close that I went back and figured out if I had also "sold" 1/5 of my R3K component at the end of July (to correspond that I had dead money from GA sale at that point), then my tranche would have won.  But that is not a fair way to keep score.  Here are all six of my Selected MFI tranches that are all closed:


8/15/12 Stocks Start Current Dividend Pct Gain R3K Gain
DLB $34.43 $33.04 $4.00 7.6% 22.1%
KFY $13.98 $18.95 $0.00 35.6% 22.1%
MSFT $30.19 $31.92 $0.92 8.8% 22.1%
NSU $3.62 $3.33 $0.12 -4.6% 22.1%
UIS $19.96 $24.52 $0.00 22.8% 22.1%
Totals 14.1% 22.1%
11/15/12 Stocks Start Current Dividend Pct Gain R3K Gain
AAPL $537.62 $527.28 $8.75 -0.3% 36.7%
ABC $40.21 $69.23 $0.86 74.3% 36.7%
LPS $23.89 $34.26 $0.40 45.1% 36.7%
VIAB $49.12 $80.94 $1.15 67.1% 36.7%
WU $12.77 $16.40 $0.50 32.3% 36.7%
Totals 43.7% 36.7%
2/1/13 Stocks Start Current Dividend Pct Gain R3K Gain
AAPL $450.60 $500.66 $8.75 13.1% 21.1%
GA $6.10 $11.01 $0.65 91.2% 21.1%
STRZA $16.06 $27.98 $0.00 74.2% 21.1%
CA $25.07 $32.08 $1.00 32.0% 21.1%
NUS $41.94 $116.59 $1.20 180.8% 21.1%
Totals 78.3% 21.1%
5/6/2013 Start Current Dividend Pct Gain R3K Gain
KLIC $11.40 $14.44 $0.00 26.7% 18.9%
CYOU $29.24 $28.02 $0.00 -4.2% 18.9%
RDA $9.74 $16.79 $0.10 73.5% 18.9%
NVDA $13.85 $18.43 $0.32 35.4% 18.9%
CF $183.97 $243.22 $2.80 33.7% 18.9%
Totals 33.0% 18.9%
8/15/2013 Start Current Dividend Pct Gain R3K Gain
CF $187.26 $247.43 $4.50 34.5% 19.4%
FLR $66.06 $73.03 $0.53 11.4% 19.4%
AGX $15.60 $36.71 $0.75 140.1% 19.4%
KLIC $11.29 $14.26 $0.00 26.3% 19.4%
RPXC $15.92 $15.09 $0.00 -5.2% 19.4%
Totals 41.4% 19.4%
11/15/13 Stocks Start Current Dividend Pct Gain R3K Gain
AVG $17.22 $19.21 $0.00 11.6% 14.5%
ATVI $17.71 $20.10 $0.20 14.6% 14.5%
GA $9.04 $11.90 $0.23 34.2% 14.5%
RPXC $17.04 $13.91 $0.00 -18.4% 14.5%
SYNA $48.01 $61.90 $0.00 28.9% 14.5%
Totals 14.2% 14.5%


So you can see the 14.2% to 14.5% loss.  It was down to the wire, I led most of the year but gave up a lot of ground final two months. The good news is that my Selected MFI tranches that have been trailing are catching up these past two weeks.  Here are the open tranches:

2/1/14 Stocks Start Current Dividend Pct Gain R3K Gain
ATVI $17.13 $20.10 $0.20 18.5% 14.6%
KLAC $61.47 $80.33 $1.90 33.8% 14.6%
RPXC $16.22 $13.91 $0.00 -14.2% 14.6%
SNDK $69.55 $96.19 $0.83 39.5% 14.6%
WNR $39.11 $41.06 $1.04 7.6% 14.6%
Totals 17.0% 14.6%
5/6/2014 Start Current Dividend Pct Gain R3K Gain
AVG $19.57 $19.21 $0.00 -1.9% 9.0%
CA $29.54 $29.95 $0.50 3.1% 9.0%
CSCO $22.79 $26.32 $0.38 17.2% 9.0%
NSR $25.82 $27.06 $0.00 4.8% 9.0%
RCII $28.78 $32.48 $0.46 14.5% 9.0%
Totals 7.5% 9.0%
8/15/2014 Start Current Dividend Pct Gain R3K Gain
CSCO $24.40 $26.32 $0.19 8.6% 4.3%
AGX $36.71 $33.73 $0.70 -6.2% 4.3%
ITRN $21.32 $20.20 $0.19 -4.4% 4.3%
BRCD $9.34 $11.29 $0.04 21.3% 4.3%
CBI $58.25 $54.19 $0.07 -6.8% 4.3%
Totals 2.5% 4.3%
11/15/2014 Start Current Dividend Pct Gain R3K Gain
FLR $64.80 $64.70 $0.00 -0.2% 0.1%
IPCM $38.45 $39.98 $0.00 4.0% 0.1%
VIAB $72.29 $72.96 $0.00 0.9% 0.1%
NHTC $12.19 $11.93 $0.00 -2.1% 0.1%
AWRE $4.40 $4.36 $0.00 -0.9% 0.1%
Totals 0.3% 0.1%

Just three weeks ago, May was down over 6 points, now just 1.5 points. August has also closed a couple points (CSCO helped). You can see for the first time my November 15, 2014 tranche.  I do have two micro caps in there (interestingly, both off to a poor start).

Here is how Selected MFI has done in total:

Category/Tranche August November February May Total
Initial Investment      25,000       25,000     25,000      25,000    100,000
Current Tranche 2.5% 0.3% 17.0% 7.5% 6.8%
Previous Tranche 41.4% 14.2% 78.3% 33.0% 39.4%
Tranche -2 14.1% 43.7%            -               -   14.5%
MFI Overall Gain 65.3% 64.7% 108.6% 43.0% 70.4%
Current Balance      41,337       41,177     52,154      35,759    170,427
R3K Current Tranche 4.3% 0.1% 14.6% 9.0% 7.0%
R3K Overall Gain 52.2% 56.6% 38.7% 29.6% 44.3%
R3K Balance      38,054       39,147     34,687      32,393    144,281
Annualized IRR 25.0% 28.3% 50.9% 26.4% 32.8%

So if my 4 tranches had all started with $25,000 each (100k total), I'd be at $170,427. If I had just gone R3K I'd be at $144,281. These are not my actual investment amounts and I have invested additional amounts at start of new tranches (I bumped up November by about 20%).  Here is a table that shows month by month progression of the $100,000:

Date Differential Value
12/1/2012 -2.20%       99,765
1/1/2013 -1.78%      102,798
2/1/2013 -2.26%      102,594
3/1/2013 -2.23%      102,881
4/1/2013 -0.43%      106,804
5/1/2013 2.00%      110,423
6/1/2013 4.75%      115,831
7/1/2013 4.29%      114,888
8/1/2013 6.91%      124,799
9/1/2013 10.46%      124,536
10/1/2013 19.67%      138,655
11/1/2013 19.75%      143,514
12/1/2013 23.70%      150,105
1/1/2014 26.63%      157,138
2/1/2014 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
6/1/2014 31.44%      167,001
7/1/2014 39.23%      177,971
8/1/2014 31.13%      167,054
9/1/2014 35.90%      177,792
10/1/2014 29.38%      168,321
11/1/2014 26.14%      168,810
Current 26.15%      170,427


So no dynamite going ka-boom here.  from 157,138 at start of year to 170,427.  I could use more of that.

Simple Formula MFI

Little more boring here as just a single tranche so far that is about 45 days old. Still, off to a solid start, even with NUS cave-in a couple weeks ago:

10/1/2014 Stocks Start Current Dividend Pct Gain R3K Gain
BAH $23.52 $26.46 $0.11 13.0% 3.9%
BKE $45.55 $49.72 $0.22 9.6% 3.9%
CA $27.87 $29.95 $0.00 7.4% 3.9%
GME $41.70 $44.40 $0.00 6.5% 3.9%
NUS $44.56 $39.40 $0.00 -11.6% 3.9%
Totals 5.0% 3.9%

Trust me, that 5% gain since 10/1 is miles better than the rest of my stuff.  Are you seeing a consistent theme?

If I had used my simple formula rules to pick my most recent Selected MFI tranche, my choices would have been:

Stock Mkt Cap Yield
HRB 8,872 2.5%
BKE 2,446 4.2%
CA 13,126 3.3%
CSCO 130,095 2.8%
COH 9,563 3.8%
GME 5,015 2.8%
NUS 2,355 3.4%
PDLI 1,317 7.7%
RGR 721 4.3%
TSRA 1,661 2.9%

Dividend Portfolio

Wow, what a mess.  I guess the good news is that my reinvested dividends are getting more shares.  I am also generating quite a bit more income/yield (though I fully expect some dividends to get a haircut).

Stock Shares Avg Cost Current Price Dividends Received Pct Change R3K Change Diff
AOD        14,281         8.04          8.67               13,326.21 19.5% 25.2% -5.7%
CCUR          9,400         7.20          7.05                              -   -2.1% 6.3% -8.4%
CSQ          8,665         9.04        11.92               16,129.75 52.5% 49.2% 3.3%
EXETF          6,000         7.82          6.12                     480.00 -20.7% 1.1% -21.8%
KMF          2,000       34.07        36.69                              -   7.7% 9.5% -1.8%
NADL          9,572         9.11          4.28                 2,727.85 -49.9% 4.7% -54.6%
NTC          6,879       12.02        12.57                 3,842.42 9.2% 9.4% -0.2%
O              603       21.12        45.70                 9,791.02 193.3% 121.6% 71.7%
OIBAX          4,167         5.01          5.99                 8,381.18 59.8% 132.3% -72.6%
PBF          3,000       26.41        27.09                              -   2.6% 0.0% 2.6%
PGN        10,000         4.86          4.77                              -   -1.9% 4.2% -6.1%
TCMCF          4,903       13.89        10.25                 1,991.00 -23.3% 2.3% -25.6%
TGONF          7,000       10.27        10.44                 3,452.50 6.4% 23.5% -17.1%
TNH              823    144.82      136.69                 3,019.94 -3.1% 5.4% -8.5%
           
           
           
           
           
           
Total Open                     63,142 4.5% 16.6% -12.1%
Closed 11.6% 10.5% 1.1%
Combined 10.4% 11.5% -1.1%
Annualized IRR Since 12/31/10 14.4%
2014 Gain -3.6%

Hardly worth commenting on, trailing in open positions by 12 points (though closed positions are up).

Discretionary

I did have a nice recent gain with VEC (now on official MFI list) - but overall not so hot here either.  I will continue to hold core positions, but over next year the plan is more and more MFI and less and less discretion.


Stock Shares Avg Cost Current Price Pct Change R3K Change Diff
AGX             190       36.71               33.73 -8.1% 3.9% -12.0%
BAC-WTA       12,000         6.05                 7.09 17.1% 15.7% 1.4%
GNW       13,880       10.08                 9.41 -6.6% 26.3% -32.9%
HIG-WT         1,650       21.24               31.51 48.4% 23.6% 24.8%
HYH         2,000       36.27               37.40 3.1% 1.5% 1.7%
        
        
        
        
        
        
        
        
        
        
Total Open 6.7% 17.7% -11.0%
Closed 1.4% 1.5% -0.1%
Combined 1.7% 2.3% -0.6%




3 comments:

John Carney said...

Marsh,

Thinking about Simple Formula MFI you only have 10 picks and you own four of them. Also it comes down to 9 if you use RGR latest dividend times 4. Not much need for Mr. Random. I hope you could give some thought to maybe including 1.8% and higher stocks. I wonder how much it would change performance.

Also maybe give some thought to using 150 million to include IBM and then maybe all the way up to 300 million yo pick up OMC,K, and LO.

This would bring you 18 to 19 stocks and you own 5 of them.

You would still be picking out of the top 35 or so.

Of course these stocks are not as cheap but still seem to offer value when you think of the large size plus the dividend.

Any thoughts would be appreciated.

Corpraider said...

Seems like you are dinging yourself on the dividend portfolio benchmark, some of those are bond funds aren't they? I think oibax is the oppenheimer global bond fund. Maybe use a blend benchmark for that one?

Marsh_Gerda said...

John - I have thought about expanding my net for simple formula - either a lower market cap or a smaller dividend. But for time being I am not going to revamp. I am actually ok with getting same stock in different tranches, I wrote about that once in "The Anatomy of an MFI Stock".

CR - I guess I am beating myself up a bit on dividend side, I do have two bond funds. But still, my stock picks there have been poor of late.