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 pleased to report are now on a 3 month winning streak. It was close, up 15.4% versus 13.9% for R3K. Here are the 50 stocks in descending performance order:
| Stock | Initial Price | End Price | Percent Change | 52 week low | Mkt Cap |
| 10.71 | 19.19 | 79.2% | 7.35 | 336 | |
| 73.78 | 128.46 | 74.1% | 73.05 | 469,641 | |
| PRSC | 26.59 | 46.00 | 73.0% | 23.91 | 358 |
| 15.98 | 26.28 | 64.5% | 12.12 | 617 | |
| MO | 34.60 | 56.29 | 62.7% | 35.84 | 72,284 |
| 19.25 | 30.11 | 56.4% | 16.80 | 1,210 | |
| RAI | 48.58 | 75.62 | 55.7% | 50.54 | 27,349 |
| QCOR | 60.32 | 93.60 | 55.2% | 47.71 | 3,653 |
| BAH | 19.70 | 29.76 | 51.1% | 20.65 | 3,039 |
| SAIC | 36.36 | 54.68 | 50.4% | 34.04 | 1,828 |
| LO | 47.14 | 68.42 | 45.1% | 49.76 | 17,907 |
| 118.58 | 165.71 | 39.7% | 116.11 | 26,336 | |
| 21.14 | 29.51 | 39.6% | 21.27 | 113,164 | |
| CHE | 83.90 | 116.48 | 38.8% | 80.94 | 1,474 |
| 73.17 | 100.01 | 36.7% | 63.22 | 1,014 | |
| 51.89 | 70.14 | 35.2% | 51.86 | 7,632 | |
| 19.77 | 26.49 | 34.0% | 18.45 | 2,007 | |
| SPOK | 14.21 | 18.59 | 30.8% | 12.93 | 313 |
| XLS | 18.64 | 24.20 | 29.8% | 14.86 | 3,869 |
| 47.77 | 60.87 | 27.4% | 41.52 | 516 | |
| 19.17 | 23.32 | 21.6% | 17.73 | 13,448 | |
| KRFT | 52.84 | 64.06 | 21.2% | 53.33 | 32,988 |
| DHX | 7.36 | 8.76 | 19.0% | 6.73 | 402 |
| 42.32 | 50.30 | 18.9% | 41.96 | 2,193 | |
| 29.35 | 34.84 | 18.7% | 28.75 | 56,372 | |
| SWHC | 11.50 | 13.53 | 17.7% | 9.03 | 643 |
| 37.30 | 43.85 | 17.6% | 37.49 | 317,973 | |
| PETS | 13.14 | 15.39 | 17.1% | 12.07 | 279 |
| AGX | 27.97 | 32.43 | 15.9% | 26.09 | 406 |
| EGL | 41.73 | 47.50 | 14.4% | 30.22 | 719 |
| 95.57 | 108.77 | 13.8% | 89.17 | 30,842 | |
| IQNT | 13.43 | 14.75 | 9.8% | 10.06 | 450 |
| 73.34 | 79.93 | 9.0% | 73.03 | 16,736 | |
| 36.11 | 36.97 | 2.4% | 31.69 | 4,335 | |
| CA | 32.40 | 32.52 | 0.4% | 25.25 | 14,846 |
| 13.27 | 13.05 | -1.7% | 12.66 | 245 | |
| 36.21 | 34.07 | -5.9% | 31.56 | 3,012 | |
| 47.17 | 43.55 | -7.7% | 32.72 | 13,547 | |
| APEI | 35.42 | 32.40 | -8.5% | 26.24 | 623 |
| RPXC | 16.02 | 14.58 | -9.0% | 11.94 | 875 |
| 8.01 | 6.98 | -12.9% | 6.52 | 1,453 | |
| 61.94 | 51.96 | -16.1% | 33.60 | 1,233 | |
| 33.33 | 27.65 | -17.0% | 23.30 | 3,756 | |
| NSR | 35.82 | 26.52 | -26.0% | 23.82 | 2,185 |
| 2.51 | 1.71 | -31.9% | 1.63 | 147 | |
| PFMT | 7.91 | 5.25 | -33.6% | 3.65 | 382 |
| HLF | 66.60 | 31.01 | -53.4% | 27.60 | 6,733 |
| LQDT | 25.62 | 9.88 | -61.4% | 7.32 | 825 |
| 5.65 | 1.90 | -66.4% | 1.61 | 257 | |
| 31.03 | 7.40 | -76.2% | 3.66 | 725 |
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.
Here is a listing of every portfolio I have tracked:
| Date | R3K | Lead | |
| 16.0% | 10.9% | 1 | |
| 21.2% | 14.6% | 1 | |
| 13.0% | 9.6% | 1 | |
| 10.3% | 12.1% | 0 | |
| 20.4% | 18.6% | 1 | |
| 29.2% | 23.3% | 1 | |
| 22.4% | 20.0% | 1 | |
| 19.7% | 17.3% | 1 | |
| 13.0% | 13.3% | 0 | |
| 12.7% | 14.6% | 0 | |
| 10.3% | 12.0% | 0 | |
| -0.3% | 4.8% | 0 | |
| -6.9% | 3.4% | 0 | |
| -10.2% | -6.6% | 0 | |
| -3.7% | -1.0% | 0 | |
| -9.8% | -5.5% | 0 | |
| -10.9% | -5.0% | 0 | |
| -11.5% | -6.3% | 0 | |
| -30.0% | -15.6% | 0 | |
| -19.9% | -11.5% | 0 | |
| -12.5% | -8.7% | 0 | |
| -19.0% | -18.2% | 0 | |
| -40.4% | -34.3% | 0 | |
| -40.1% | -38.3% | 0 | |
| -36.3% | -40.0% | 1 | |
| -36.4% | -35.9% | 0 | |
| -51.7% | -41.5% | 0 | |
| -40.9% | -36.8% | 0 | |
| -25.6% | -31.0% | 1 | |
| -22.2% | -33.6% | 1 | |
| -11.7% | -25.3% | 1 | |
| -10.5% | -20.9% | 1 | |
| -13.8% | -17.9% | 1 | |
| -4.3% | -10.0% | 1 | |
| 18.7% | 13.9% | 1 | |
| 50.9% | 27.7% | 1 | |
| 48.9% | 32.3% | 1 | |
| 59.3% | 36.4% | 1 | |
| 92.8% | 55.6% | 1 | |
| 85.8% | 48.1% | 1 | |
| 69.7% | 45.8% | 1 | |
| 31.8% | 22.8% | 1 | |
| 21.3% | 24.0% | 0 | |
| 19.5% | 15.9% | 1 | |
| 7.4% | 8.8% | 0 | |
| 12.6% | 12.4% | 1 | |
| 22.7% | 18.3% | 1 | |
| 24.3% | 13.6% | 1 | |
| 23.7% | 18.1% | 1 | |
| 19.0% | 20.6% | 0 | |
| 18.6% | 23.6% | 0 | |
| 10.0% | 15.4% | 0 | |
| 7.1% | 11.4% | 0 | |
| 19.3% | 25.4% | 0 | |
| 16.7% | 25.7% | 0 | |
| 5.4% | 20.1% | 0 | |
| 7.3% | 10.1% | 0 | |
| -4.3% | 0.3% | 0 | |
| -2.9% | 10.4% | 0 | |
| -8.5% | 1.4% | 0 | |
| -11.4% | 0.1% | 0 | |
| -7.6% | 4.9% | 0 | |
| -5.5% | 5.0% | 0 | |
| -4.4% | 7.4% | 0 | |
| -16.0% | 3.2% | 0 | |
| -12.0% | -0.4% | 0 | |
| -9.5% | 5.0% | 0 | |
| -4.3% | 8.1% | 0 | |
| 12.0% | 21.6% | 0 | |
| 23.5% | 29.6% | 0 | |
| 0.4% | 11.5% | 0 | |
| 13.9% | 24.0% | 0 | |
| 9.9% | 15.9% | 0 | |
| 7.4% | 16.6% | 0 | |
| 7.8% | 13.3% | 0 | |
| 9.1% | 15.2% | 0 | |
| 10.5% | 15.3% | 0 | |
| 26.5% | 27.5% | 0 | |
| 26.1% | 24.6% | 1 | |
| 30.4% | 25.7% | 1 | |
| 26.0% | 19.8% | 1 | |
| 39.3% | 22.1% | 1 | |
| 48.3% | 28.9% | 1 | |
| 45.7% | 32.1% | 1 | |
| 52.3% | 33.0% | 1 | |
| 39.5% | 22.0% | 1 | |
| 46.5% | 26.4% | 1 | |
| 40.1% | 21.2% | 1 | |
| 35.0% | 20.5% | 1 | |
| 20.4% | 19.2% | 1 | |
| 26.9% | 24.1% | 1 | |
| 17.8% | 19.0% | 0 | |
| 17.5% | 24.6% | 0 | |
| 12.9% | 17.7% | 0 | |
| 11.8% | 15.4% | 0 | |
| 12.3% | 15.6% | 0 | |
| 12.7% | 11.9% | 1 | |
| 14.2% | 13.0% | 1 | |
| 15.4% | 13.9% | 1 | |
| 6.7% | 14.4% | 0 | |
| 5.2% | 14.3% | 0 | |
| 7.5% | 10.8% | 0 | |
| 2.1% | 8.2% | 0 | |
| 5.1% | 7.7% | 0 | |
| 5.4% | 5.8% | 0 | |
| 11.7% | 7.4% | 1 | |
| 9.2% | 5.3% | 1 | |
| 4.9% | 2.7% | 1 | |
| 2.5% | 2.8% | 0 | |
| 6.7% | 5.6% | 1 | |
| Average | 10.1% | 9.6% | 0 |
You can see my three month winning streak is at risk as 3/28/14 is trailing big time.
Subsets
I also have tracked 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. I am going to try to add a third one today, which I call "dogs". It is like the dogs of the Dow in that you take the worst five performing stocks from the prior year that renew or all those that dropped more that 29%. The dividend portfolio was solid, up about 18.9%. The new portfolio was just ok, up 10.7%. 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.
I also have tracked 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. I am going to try to add a third one today, which I call "dogs". It is like the dogs of the Dow in that you take the worst five performing stocks from the prior year that renew or all those that dropped more that 29%. The dividend portfolio was solid, up about 18.9%. The new portfolio was just ok, up 10.7%. 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 | 191,286 |
| Total Russell 3K | 197,634 |
| New | 201,075 |
| Dogs | 290,047 |
| Dividend | 458,148 |
The dogs approach is interesting. I wrote about it some yesterday, though I expanded it here to be bottom 5 as with just the -30% criteria, I had significant stretches with just 0 or 1 stock (while other stretches, say the March 2009 portfolio had many). The Dogs approach is more volatile. So only go that way if ye have a strong stomach.
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