Sunday, February 22, 2015

MFI Index Update - 2/22/15

Index Update

I thought everyone might enjoy a quick MFI Index Update.  As my 35 readers know, I annually create a basket of 50 MFI that constitute my MFI Index.  I change them once a year (on Dec 31st).

MFI Index vs IWV

Here is a table going back to 2006 showing the index against the Russell 3000:

Annual Inception to Date
Year Russell MFI Russell ITD MFI ITD
2006 11.40% 15.03% 11.40% 15.03%
2007 4.09% -6.69% 15.96% 7.34%
2008 -37.05% -37.97% -27.00% -33.42%
2009 32.51% 45.18% -3.27% -3.34%
2010 18.38% 22.77% 14.50% 18.67%
2011 -0.56% -10.47% 13.87% 6.25%
2012 16.43% 9.70% 32.57% 16.56%
2013 33.01% 51.70% 76.34% 76.82%
2014 12.26% 12.07% 97.95% 98.15%
2015 3.07% 3.10% 100.96% 101.20%


As you can see, it is an absolute dead heat.  100.96% to 101.2%.  And 2015 is also a dead heat, 3.07% to 3.1%.  The encouraging thing is February was great for MFI, up 7.4%, which mirrors my MFI Select (up 7.7% this month) and my MFI Formula (up 8.6%).

Performance of All 50 Stocks For 2015 and February

Stock Start 30-Jan Current YTD Change Feb Change
  ADMS      17.37         16.83         17.28 -0.5% 2.7%
  AFOP      14.51         14.48         16.98 17.0% 17.3%
  ANIK      40.74         39.18         44.05 8.1% 12.4%
  APOL      34.11         25.26         26.76 -21.6% 5.9%
  AGX      33.64         30.41         33.01 -1.9% 8.5%
  AVID      14.21         12.96         14.74 3.7% 13.7%
  AWRE         4.54           4.88            4.59 1.1% -5.9%
  BCOR      13.85         13.52         13.33 -3.8% -1.4%
  BKE      52.52         50.79         52.66 0.3% 3.7%
  CA      30.45         30.30         32.83 7.8% 8.3%
  CSCO      27.82         26.37         29.80 7.1% 13.0%
  COH      37.56         37.19         41.54 10.6% 11.7%
  DLX      62.25         64.93         68.32 9.8% 5.2%
  DEPO      16.11         18.27         20.02 24.3% 9.6%
  EBIX      16.99         22.85         28.13 65.6% 23.1%
  FLR      60.63         53.59         59.33 -2.1% 10.7%
  GME      33.80         35.25         37.49 10.9% 6.4%
  GORO         3.38           3.50            3.40 0.6% -2.9%
  ONE         4.21           3.31            3.51 -16.6% 6.0%
  IQNT      19.63         16.82         17.94 -8.6% 6.7%
  IDCC      52.90         49.98         51.86 -2.0% 3.8%
  IILG      20.89         23.08         25.84 23.7% 12.0%
  ITRN      22.04         20.75         23.09 4.8% 11.3%
  KING      15.36         13.20         16.09 4.8% 21.9%
  LCI      42.88         47.43         63.23 47.5% 33.3%
  LFVN         1.30           1.27            1.00 -23.1% -21.3%
  LQDT         8.17           7.74            9.62 17.7% 24.3%
  MSB      17.28         17.08         18.12 4.9% 6.1%
  NHTC      11.45         12.00         13.50 17.9% 12.5%
  NSR      27.80         26.29         26.57 -4.4% 1.1%
  NUS      43.70         40.98         55.17 26.2% 34.6%
  PDLI         7.71           7.29            7.28 -5.6% 0.0%
  PFMT         6.65           4.96            5.93 -10.8% 19.6%
  PETS      14.37         15.70         15.53 8.1% -1.1%
  PBI      24.37         23.98         23.00 -5.6% -4.1%
  RPXC      13.78         12.35         14.10 2.3% 14.2%
  SPOK      17.36         17.12         18.93 9.0% 10.6%
  STRA      74.28         67.00         61.45 -17.3% -8.3%
  RGR      34.63         40.40         42.66 23.2% 5.6%
  TTWO      28.03         29.72         27.01 -3.7% -9.1%
  TDC      43.68         44.56         45.29 3.7% 1.6%
  TZOO      12.62           8.58            9.68 -23.3% 12.8%
  TPUB      22.90         21.00         19.56 -14.6% -6.9%
  UBNT      29.64         26.30         31.36 5.8% 19.3%
  UIS      29.48         21.93         23.19 -21.3% 5.7%
  USNA    102.59         98.04       102.40 -0.2% 4.4%
  VEC      27.40         27.84         32.11 17.2% 15.3%
  VIAB      75.25         64.42         69.71 -7.4% 8.2%
  WTW      24.84         16.56         19.04 -23.3% 15.0%
  WILN         2.99           2.73            2.67 -10.7% -2.2%
Total    19,816      18,943       20,431 3.1% 7.9%


Wow, should have bought EBIX, already up 65%.  You can compare the February results with my 2/1/15 MFI tranche:

2/1/2015 Start Current Dividend Pct Gain R3K Gain
VEC $28.00 $32.11 $0.00 14.7% 6.0%
QCOM $62.73 $71.52 $0.00 14.0% 6.0%
VIAB $63.91 $69.71 $0.00 9.1% 6.0%
UIS $22.03 $23.19 $0.00 5.3% 6.0%
NHTC $12.44 $13.50 $0.00 8.5% 6.0%
Totals 10.3% 6.0%


Note the numbers can be slightly different as I bought my shares intra day.

The Big Picture

Here is a quick look at all my open tracking Portfolios (12 of them):

Date MFI R3K Lead
2/28/2014 16.3% 14.3% 1
3/28/2014 8.3% 14.7% 0
4/25/2014 6.9% 14.7% 0
5/30/2014 8.8% 11.1% 0
6/27/2014 3.8% 8.6% 0
7/25/2014 6.7% 8.0% 0
8/29/2014 6.6% 6.1% 1
9/26/2014 13.4% 7.7% 1
10/31/2014 9.4% 5.6% 1
11/28/2014 5.2% 3.0% 1
12/31/2014 3.1% 3.1% 1
1/30/2015 7.3% 6.0% 1
Average 8.0% 8.6% 0

You can see the 12/31/14 portfolio at 3.1% matches my index above (that is good!). You can see the 1/30/15 portfolio is up 7.3%, which is close to the 7.9% for the index (the 50 stocks at 1/30/15 are not exactly the same 50 as in the index). I think the positive news in the most recent 6 open portfolios are all "winning".

Randomizer

As my readers may recall, I did create a "Randomizer" spreadsheet to help me randomly pick my 5 formula stocks.  Just for fun, here is what I would get if I started one today:

Here are the stocks that have a Yahoo yield > 2.4% and a market cap > 600m:

Number Ticker Market Cap Price Dividend Yield
1 BKE                  2,402         49.66                3.66 7.4%
2 CSCO              148,701         29.61                0.76 2.6%
3 COH                11,453         41.54                1.35 3.3%
4 GME                  4,098         37.49                1.32 3.5%
5 KING                  5,180         16.09                0.46 2.9%
6 MSFT              360,400         43.86                1.18 2.7%
7 PDLI                  1,215           7.28                0.60 8.2%
8 PPC                  7,160         27.65                5.77 20.9%
9 PBI                  4,623         23.00                0.75 3.3%
10 RGR                      828         42.66                1.62 3.8%

PPC is a strange one. They paid a huge special dividend.

Then if I run a\the Randomizer, picking 5 from these ten I get 

BKE CSCO GME COH RGR

That is a feature of this approach that can make one a bit nervous.  You can get more concentration in certain names (I have 4 of these in my open two tranches).

That is it for now.  Got another 5 or so inches of snow last night... great to be home.

4 comments:

John Carney said...

Marsh,
On the formula MFI it makes me more than nervous to have more than 5% in a stock. The book wanted 20 to 30 different names as I recall. Would you explain if you had 50% or 75% of all your money in this approach why you would want to double or triple your random bets.

I did the top 50 600M and gave them a random number. It produced 24 names.
I did the random sorter to give me 4 groups of 5 names. I did it four different times. The results was about 12 names vs 20 names. In a group of 20 I had 15% King, & COH, and 10% in PPC and HRB & CSCO, PDLI. and 5% in VIAB, TUP, OMC, MSFT, RTN, and EMR.
Why risk a over sized bet?

Marsh_Gerda said...

John - I hear you. Everyone has to make their own decision. I know by my back testing that if you exclude stocks that you already have bought, that reduces your overall return. I know it increases your risk, so you have to make the call for yourself. As we have discussed, the MFI Formula is only 1/2 my MFI investing, so I will not double up in the select side on stocks in my formula side.

But my limited experience of doubling up has been successful|

GME was down in first tranche 18% when I added to second tranche. It is up 8.7% in second tranche.

In 2/1/13 tranche I doubled down on AAPL, which was down 15% in prior tranche. It went up 13%.

In 8/15/15 I doubled down on KLIC, which was down slightly from May tranche buy. It ended up 26%.

In 11/15/13 tranche I doubled down on GA and it ended up 34%.

In 8/15/13 I doubled down on CF and it ended up 34%.

Finally in Febrtuary 2014 I doubled down on RPXC and that was a mistake, down 24%.

John Carney said...

Marsh,

Thanks for that background. My game for today was to use your 10 formula stocks. I also played like they would not change very much over a year. PDLI, MSFT, RGR GME and KING ect. will still be on the list.

I need to hold my nose on any one of these. The results for then is:
20% MSFT, 20% COH, 15% PPC, 10% in PBI, RGR, PDLI, and 5% in BKE, CSCO, and GME.

So now you only have 9 names. The average risk has grown.

My Gut tells me and that the MFI formula will work in real time and beat the index by over 8 points and more.

With my first study I was working with 24 names and got 12 to 14 stocks. With 10 stocks you are going to end up with about 9 or less.

Going forward it will be interesting to see if 9 to 14 names will be beating the index. Anyone of them could be a value trap.

My wife had a 75th birthday in Las Vegas and the whole family did four days. Risk for me was $20 on the crap table. I know the risk for the hard 8 but have always been lucky.

Second roll I cashed in and did not try again.



Marsh_Gerda said...

John,

thanks for sharing. A hard eight is typically a "suckers" bet. Glad you won! 75th birthday, great to hear you two are still active. I am a couple decades behind.