Well, another week in the books. I am not sure if it is actually correct, but it seems like the markets have been swinging up and down a bit more of late. I continue to hold a lot of cash and have decided to use a chunk of that to pay down my house instead of more $ in the market.
I am now up 5.8% on the year. compared with 3.5% for the R3K. So on a relative basis I have been giving back some of my lead. A chunk of that give back was in my MFI Select tranches.
MFI Select
If you go back a week, you'd see my lead over R3K was 29.7 percentage points and my total value (assume $100K in initial four tranches) was a hair under $177K. Here is the current position:
| Date | Differential | MFI Value | R3K Value |
| -2.20% | 99,765 | 101,965 | |
| -1.78% | 102,798 | 104,575 | |
| -2.26% | 102,594 | 104,856 | |
| -2.23% | 102,881 | 105,114 | |
| -0.43% | 106,804 | 107,234 | |
| 2.00% | 110,423 | 108,423 | |
| 4.75% | 115,831 | 111,085 | |
| 4.29% | 114,888 | 110,597 | |
| 6.91% | 124,799 | 117,889 | |
| 10.46% | 124,536 | 114,079 | |
| 19.67% | 138,655 | 118,990 | |
| 19.75% | 143,514 | 123,764 | |
| 12/1/2013 | 23.70% | 150,105 | 126,405 |
| 1/1/2014 | 26.63% | 157,138 | 130,503 |
| 2/1/2014 | 24.70% | 150,619 | 125,918 |
| 25.66% | 158,116 | 132,458 | |
| 30.38% | 162,991 | 132,616 | |
| 29.65% | 162,428 | 132,779 | |
| 31.44% | 167,001 | 135,559 | |
| 39.23% | 177,971 | 138,740 | |
| 31.13% | 167,054 | 135,922 | |
| 35.90% | 177,792 | 141,892 | |
| 29.38% | 168,321 | 138,944 | |
| 26.14% | 168,810 | 142,666 | |
| 30.22% | 176,420 | 146,198 | |
| 28.17% | 174,306 | 146,140 | |
| 20.63% | 162,833 | 142,201 | |
| 25.15% | 175,476 | 150,324 | |
| Current | 26.85% | 178,153 | 151,298 |
R3K actually went up about $4,000 versus my $1,000 gain. A lot of it was VEC which started the week up 14% and ended it down 11%. Ouch!
| Start | Current | Dividend | Pct Gain | R3K Gain | |
| AVG | $19.57 | $22.28 | $0.00 | 13.8% | 14.2% |
| CA | $29.54 | $32.90 | $1.00 | 14.7% | 14.2% |
| $22.79 | $28.44 | $0.57 | 27.3% | 14.2% | |
| NSR | $25.82 | $21.90 | $0.00 | -15.2% | 14.2% |
| $28.78 | $28.10 | $0.70 | 0.1% | 14.2% | |
| Totals | 8.2% | 14.2% | |||
| Start | Current | Dividend | Pct Gain | R3K Gain | |
| $24.40 | $28.44 | $0.38 | 18.1% | 9.4% | |
| AGX | $36.71 | $33.95 | $0.70 | -5.6% | 9.4% |
| ITRN | $21.32 | $22.14 | $0.71 | 7.2% | 9.4% |
| $9.34 | $12.37 | $0.11 | 33.6% | 9.4% | |
| $58.25 | $45.29 | $0.14 | -22.0% | 9.4% | |
| Totals | 6.3% | 9.4% | |||
| Start | Current | Dividend | Pct Gain | R3K Gain | |
| $64.80 | $57.29 | $0.42 | -10.9% | 4.9% | |
| IPCM | $38.45 | $46.82 | $0.00 | 21.8% | 4.9% |
| VIAB | $72.29 | $69.76 | $0.66 | -2.6% | 4.9% |
| NHTC | $12.19 | $17.36 | $0.03 | 42.7% | 4.9% |
| $4.40 | $4.48 | $0.00 | 1.8% | 4.9% | |
| Totals | 10.5% | 4.9% | |||
| Start | Current | Dividend | Pct Gain | R3K Gain | |
| VEC | $28.00 | $24.98 | $0.00 | -10.8% | 6.4% |
| $62.73 | $70.04 | $0.42 | 12.3% | 6.4% | |
| VIAB | $63.91 | $69.76 | $0.33 | 9.7% | 6.4% |
| $22.03 | $23.67 | $0.00 | 7.4% | 6.4% | |
| NHTC | $12.44 | $17.36 | $0.02 | 39.7% | 6.4% |
| Totals | 11.7% | 6.4% |
| Category/Tranche | August | November | February | May | Total |
| Initial Investment | 25,000 | 25,000 | 25,000 | 25,000 | 100,000 |
| Current Tranche | 6.3% | 10.5% | 11.7% | 8.2% | 9.2% |
| Previous Tranche | 41.4% | 14.2% | 8.5% | 33.0% | 21.7% |
| Tranche -2 | 14.1% | 43.7% | 78.3% | - | 34.0% |
| MFI Overall Gain | 71.4% | 81.5% | 115.9% | 43.9% | 78.2% |
| Current Balance | 42,850 | 45,363 | 53,971 | 35,968 | 178,153 |
| R3K Current Tranche | 9.4% | 4.9% | 6.4% | 14.2% | 8.8% |
| R3K Overall Gain | 59.6% | 64.2% | 45.6% | 35.8% | 51.3% |
| R3K Balance | 39,899 | 41,052 | 36,391 | 33,957 | 151,298 |
| Annualized IRR | 23.1% | 28.9% | 43.5% | 21.4% | 27.5% |
So we know we're going to have good weeks and bad weeks. Still a bit disappointing.
MFI Formula
"A Simple Formula Beats an Expert with a Simple Formula". I should probably get this tattooed on my chest. I used to worry about a hedge fund trying my simple formula approach. I have decided that there just are not enough stocks for that, unless you expand it in some fashion. I am coming up on my April 1st tranche, and it will likely end up containing some names in my other 2 tranches.
| 10/1/2014 Stocks | Start | Current | Dividend | Pct Gain | R3K Gain |
| BAH | $23.52 | $29.77 | $0.24 | 27.6% | 8.9% |
| $45.55 | $50.93 | $3.22 | 18.9% | 8.9% | |
| CA | $27.87 | $32.90 | $0.50 | 19.8% | 8.9% |
| $41.70 | $40.92 | $0.69 | -0.2% | 8.9% | |
| $44.56 | $58.38 | $0.70 | 32.6% | 8.9% | |
| Totals | 19.7% | 8.9% | |||
| 12/31/14 Stocks | Start | Current | Dividend | Pct Gain | R3K Gain |
| CA | $30.83 | $32.90 | $0.25 | 7.5% | 2.4% |
| $28.36 | $28.44 | $0.19 | 0.9% | 2.4% | |
| $34.81 | $50.51 | $0.17 | 45.6% | 2.4% | |
| $34.21 | $40.92 | $0.36 | 20.7% | 2.4% | |
| IQNT | $19.87 | $16.49 | $0.15 | -16.3% | 2.4% |
| Totals | 11.7% | 2.4% |
The start of these two tranches is beyond my wildest expectations. And it isn't "luck". The stocks I didn't pick on October 1st are up about 14%. The stocks I didn't pick in December are up 11% as well. It is ironic, I have been asked about adding stocks already held and I have also been asked about buying stocks that are still on the list and down. Of these stocks, IQNT is the big loser. But it has fallen so far that it will not be eligible to be picked (recall my market cap rule of $600 million).
I took a look this morning at my automated spreadsheet to see what stocks would qualify at end of March for the next tranche. It is getting to be a very short list:
| Ticker | Market Cap | Price | Dividend | Yield |
| 8,888 | 32.90 | 0.80 | 2.4% | |
| 144,324 | 28.44 | 0.84 | 3.0% | |
| 4,458 | 40.92 | 1.44 | 3.5% | |
| 347,498 | 42.88 | 1.24 | 2.9% | |
| 1,130 | 7.29 | 0.60 | 8.2% | |
| 4,673 | 23.96 | 0.75 | 3.1% |
One issue is that Yahoo seems to have changed what happens with this formula:
=RCHGetYahooQuotes($G11,"d")
Where $g11 is a cell with a ticker. It used to give you the dividends in the past twelve months. Now it seems to be more of a forward-looking yield. So stocks like BKE and PPC, which have had sizable special dividends in past 12 months are now not making the cut.
I think my approach will be to manually add in stocks that have regular special dividends (seems like an oxymoron). So BKE and AGX for instance seem to pay some sort of special dividend every year. Those dividends would be included. But PPC and EGL paid "one time" special dividends. That will not be included. Unless I can show that those companies do very well. Hmmm, I might be able to look at that quickly. Going back in my data, there are just a handful of companies since 2010 that have done that: IDCC, WRCX and EXPE. They all did very well post that special large dividend. So I will include a PPC-type company. I am going to need to find a way to automate.
Other Stocks
My UCO play has been floundering a bit. I am still in it, but will likely start exiting (already have one tranche at a $6 strike price to sell.
| Date | Purchase | Current | Cost | Value | Gain/Loss | Strike | X Date | Basis |
| 2/19 | $8.69 | $6.00 | 26,070 | 18,000 | (8,070) | $7.39 | ||
| 2/19 | $0.20 | 600 | 600 | 9.50 | 2/27 | |||
| 3/2 | $0.25 | 750 | 750 | 9.00 | 3/13 | |||
| 3/19 | $0.85 | 2,550 | 2,550 | 6.00 | 4/17 | |||
| 3/3 | $8.34 | $6.50 | 25,020 | 19,500 | (5,520) | $7.89 | ||
| 3/4 | $0.45 | 1,350 | 1,350 | 9.00 | 3/20 | |||
| 3/11 | $7.69 | $6.50 | 23,070 | 19,500 | (3,570) | $7.29 | ||
| 3/11 | $0.40 | 1,200 | 1,200 | 8.00 | 3/27 |
So overall I am down about 13%. That can change pretty quickly as 4 to 5% daily moves for UCO are not uncommon. My options I sold on 2nd tranche expired on Friday. I will likely sell again on Monday to reduce that $7.89 basis.
ZSAN is a stock I own a small position in. I was excited that it seemed to have momentum this week until that last 10 minutes of Friday when it dropped like a rock on heavy volume. I am very concerned that somebody knows something and bad news will come out next week:
Otherwise, here are some of my other larger holdings:
- GNW - continues to flounder. Part of me likes the fact that they have a book value north of $20 and yet they trade for $7.20. At some point that gap has to be narrowed (hopefully by stock price increasing, not BV dropping). On the other hand, the drop in commodities could impact them as they have exposure to Canadian and Australian housing markets via Genworth Canada and Genworth Australia. Also, they have had back to back quarters with large reserve adds for LTC, are they done? Finally, they are at risk of being downgraded. Lot of hair on this stock.
- BAC warrants. Wow, these are for the patient. I have owned for a couple years and basically they haven't moved. If I had bought warrants in anything else, I'd be rich (not really). Since I first bought TARP warrants two years ago, BAC is very flat. Here are the other ones that I have tracked: HIG (+123%), C (+27%), CMA (+60%), GM (+55%), PNC (+152%), WFC (+84%), COF (+116%) and JPM (+42%). Do I know how to pick 'em? Still, four years to go. And at least I also bought the HIG ones.
- All my dividend plays, FSC, NTC, AOD, CSQ, O and OIBAX continues to pay me nice dividends. It more than pays for a few trips to Starbucks.
That is all for now.
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1 comment:
You mention the worry of hedge funds trying to muscle in on the simpler version of the formula, or too small a pool of stocks - I don't share that concern. They'd lose a lot of assets on the years when the formula under-performs since they are constantly judged on short-term metrics. They'd get shaken out just like most of us mere mortals when it isn't going gang-busters terrific. It might work for managing their own money, but not for outsiders who are paying for out performance.
cheers,
j
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