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%