Saturday, April 11, 2015

Weekend Update 4/11/15

Weekend Update

Up early this morning.  Wearing a new shirt I bought last week.  Just says "Game Changer" and then has a picture f a steaming cup of coffee.  Listening to Pandora, I recently took a laptop no one was using and made it into a little media center.  It is hooked up to a decent sound system (Bose) and it has a slide slow screensaver as well. It works pretty well, it is a Lenovo Yoga, so has a touchscreen in tent mode. I still type these blogs on my Lenovo ThinkPad X220 - I have been doing so for the past ten years. Though I have to admit I am looking at the new

Dell XPS 13


Okay, I suspect most of you did not come here for a computer review. On to my portfolio.

Overview

My portfolio is firing on all cylinders.  Things are going so well right now, that is an indication the wheels will soon fall off.  I am up 8.5% on the year.  I am very happy with that against the back drop of the Russell 3000 being up 3.3% and my MFI Index being up 3.7%.  To be honest, the majority of my out-performance is from a single stock, NHTC.  But that is the nature of MFI.  You get some stocks that do really well - hopefully that is enough to offset the duds.

MFI Select

As a reminder, I really split my investing into 4 components:
  1. MFI Select - 4 tranches of 5 MFI stocks that I pick from the official screen plus my own screen.
  2. MFI Formula - currently three tranches of 5 MFI stocks (but will be four on July 1st) that are picked by formula and random number generator.
  3. Dividend securities - a group of securities (many are closed end funds) that I am growing to build a steady income stream as I near retirement.
  4. Discretionary - self evident.
The Select Portfolio has really gone up of late.  Just since April 1st it is up 5% and so is now up 8% for 2015.  Recall that this portfolio started off the year terribly, it was down over 6% in January as every stock seemed to have pre-announced a poor fourth quarter.  That is the beauty of MFI, by committing to hold stocks for a year, I avoid the emotional mistake of selling on some negative news.

5/6/2014 Start Current Dividend Pct Gain R3K Gain
AVG $19.57 $21.88 $0.00 11.8% 14.1%
CA $29.54 $31.55 $1.00 10.2% 14.1%
CSCO $22.79 $28.04 $0.57 25.6% 14.1%
NSR $25.82         27.82 $0.00 7.8% 14.1%
RCII $28.78 $27.41 $0.94 -1.5% 14.1%
Totals 10.8% 14.1%
8/15/2014 Start Current Dividend Pct Gain R3K Gain
CSCO $24.40 $28.04 $0.59 17.3% 9.2%
AGX $36.71 $34.44 $0.70 -4.3% 9.2%
ITRN $21.32 $22.99 $0.71 11.2% 9.2%
BRCD $9.34 $12.21 $0.11 31.9% 9.2%
CBI $58.25 $49.62 $0.14 -14.6% 9.2%
Totals 8.3% 9.2%
11/15/2014 Start Current Dividend Pct Gain R3K Gain
FLR $64.80 $59.13 $0.42 -8.1% 4.8%
IPCM $38.45 $48.65 $0.00 26.5% 4.8%
VIAB $72.29 $69.27 $0.66 -3.3% 4.8%
NHTC $12.19 $22.17 $0.03 82.1% 4.8%
AWRE $4.40 $4.43 $0.00 0.7% 4.8%
Totals 19.6% 4.8%
2/1/2015 Start Current Dividend Pct Gain R3K Gain
VEC $28.00 $27.82 $0.00 -0.6% 6.3%
QCOM $62.73 $69.16 $0.42 10.9% 6.3%
VIAB $63.91 $69.27 $0.33 8.9% 6.3%
UIS $22.03 $23.07 $0.00 4.7% 6.3%
NHTC $12.44 $22.17 $0.02 78.4% 6.3%
Totals 20.5% 6.3%
Category/Tranche August November February May Total
Initial Investment      25,000       25,000     25,000      25,000    100,000
Current Tranche 8.3% 19.6% 20.5% 10.8% 15.0%
Previous Tranche 41.4% 14.2% 8.5% 33.0% 21.8%
Tranche -2 14.1% 43.7% 78.3%             -   34.0%
MFI Overall Gain 74.7% 96.3% 132.9% 47.3% 87.8%
Current Balance      43,678       49,076     58,215      36,832    187,800
R3K Current Tranche 9.2% 4.8% 6.3% 14.1% 8.6%
R3K Overall Gain 59.3% 63.9% 45.3% 35.6% 51.0%
R3K Balance      39,832       40,984     36,330      33,901    151,047
Annualized IRR 23.4% 32.4% 47.1% 22.2% 28.6%

Looking at the 4 tranches, you will note November and February are blowing the doors off. Of course in February it helps to have NHTC up 78%.  It is certainly possible NHTC pulls back a bit, but it is not expensive, especially if they can grow by 20% in 2015.  I am a bit worried about the impact of the strengthening USD for NHTC though.

Going into Friday, my August tranche had actually moved ahead. But it gave it back on AGX earnings (Argan, Inc. Reports Fourth Quarter and Year End Results).  The amazing stock has been NSR, which has moved from $22 to $27.80 in the past two+ weeks post their "bad news" from FCC. Again, the discipline of MFI helps.

The table below shows the month by month progression of MFI Seelect against R3K assuming $25,000 invested in each of the four tranches:

Date Differential MFI Value R3K Value
12/1/2012 -2.20%       99,765         101,965
1/1/2013 -1.78%      102,798         104,575
2/1/2013 -2.26%      102,594         104,856
3/1/2013 -2.23%      102,881         105,114
4/1/2013 -0.43%      106,804         107,234
5/1/2013 2.00%      110,423         108,423
6/1/2013 4.75%      115,831         111,085
7/1/2013 4.29%      114,888         110,597
8/1/2013 6.91%      124,799         117,889
9/1/2013 10.46%      124,536         114,079
10/1/2013 19.67%      138,655         118,990
11/1/2013 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
3/1/2014 25.66%      158,116         132,458
4/1/2014 30.38%      162,991         132,616
5/1/2014 29.65%      162,428         132,779
6/1/2014 31.44%      167,001         135,559
7/1/2014 39.23%      177,971         138,740
8/1/2014 31.13%      167,054         135,922
9/1/2014 35.90%      177,792         141,892
10/1/2014 29.38%      168,321         138,944
11/1/2014 26.14%      168,810         142,666
12/1/2014 30.22%      176,420         146,198
1/1/2015 28.17%      174,306         146,140
2/1/2015 20.63%      162,833         142,201
3/1/2015 25.15%      175,476         150,324
4/1/2015 29.95%      178,565         148,612
Current 36.75%      187,800         151,047

The keen-eyed reader will note that the current balance of 187,800 is an all-time high. And the 36.75% differential is 2nd highest.  Hopefully the wheels stay on!

MFI Formula

This portfolio also continues to do very well.  It is a little more difficult to say how much it is "up" on the year as it isn't fully funded. It was 50% funded at start of the year and is now 25% funded as of April 1st.  I will fund the final 1/4 on June 30th. Even so, it is up almost 7% so far even assuming that 1/2 of it was sterile (making nothing) for the first quarter). Impressive, non?

10/1/2014 Stocks Start Current Dividend Pct Gain R3K Gain
BAH $23.52 $28.53 $0.24 22.3% 8.7%
BKE $45.55 $48.85 $3.22 14.3% 8.7%
CA $27.87 $31.55 $0.50 15.0% 8.7%
GME $41.70 $40.40 $0.69 -1.5% 8.7%
NUS $44.56 $60.76 $0.70 37.9% 8.7%
Totals 17.6% 8.7%
12/31/14 Stocks Start Current Dividend Pct Gain R3K Gain
CA $30.83 $31.55 $0.25 3.1% 2.2%
CSCO $28.36 $28.04 $0.40 0.3% 2.2%
RGR $34.81 $47.78 $0.17 37.7% 2.2%
GME $34.21 $40.40 $0.36 19.1% 2.2%
IQNT $19.87 $17.02 $0.15 -13.6% 2.2%
Totals 9.3% 2.2%
3/31/2015 Start Current Dividend Pct Gain R3K Gain
HRB $31.99 $31.79 $0.00 -0.6% 0.9%
GME $37.69 $40.40 $0.00 7.2% 0.9%
KING $15.85 $16.90 $0.00 6.6% 0.9%
NSU $3.43 $3.52 $0.00 2.6% 0.9%
PPC $22.65 $23.29 $0.00 2.8% 0.9%
Totals 3.7% 0.9%

The newest tranche is off to a nice start. The other two tranches enjoy comfortable leads.  We often debate on whether I should allow the formula to double up on stocks.  From a diversification view, I understand the answer not to double up.  But again with GME it was a good call (so far).  Interestingly, the formula did not allow a double up on IQNT as it had fallen beneath the 600m threshold.   Perhaps a shame as it is up 8% since 3/31.  Here is a similar month by month table.  Keep in mind that $50,000 was not yet invested as of 1/1 and still 25,000 is waiting on sidelines.

Date Differential Value
10/1/2014 0.00%      100,000
11/1/2014 1.63%      102,288
12/1/2014 0.30%      101,375
1/1/2015 -0.33%      100,664
2/1/2015 1.67%      101,281
3/1/2015 3.62%      106,073
4/1/2015 5.09%      106,781
Current 4.70%      107,660

Dividend Securities

I thought my readers might want to know what securities are here and how they are doing in 2015.  I do not track them as thoroughly as MFI.

Stock 12/31/2014 Current Dividend Gain
AOD  $          8.49  $       9.05  $        0.17 8.6%
FSC  $          7.07  $       7.09  $        0.06 1.1%
CSQ  $        11.44  $     11.27  $        0.33 1.4%
NTC  $        12.54  $     12.73  $        0.17 2.9%
TGONF  $          9.80  $       9.85  $        0.15 2.0%
O  $        47.71  $     49.51  $        0.57 5.0%
OIBAX  $          5.92  $       5.94  $        0.04 1.0%
Note that FSC was added in March.  So while not setting the world afire, recall the goal here is income stream.  With my multiplier, these are now creating almost $43,000 a year in income. And right now it is all being reinvested.  The blended yield is 7.5%, so if I do not touch these and just keep up the reinvestment the income will double in 10 years. Right when I turn 65 :).

Discretionary Stocks

I really just have three core holdings here, GNWBAC-WTA and HIG-WT.  They are not "going to the moon" at this time.  But I am patient (at times).  Actually BAC and GNW are down pretty substantially in 2015 (-15% and -9%).

Then I have been "trading" some other names with some success.
  • UCO has not been a success, though it could have just as easily been.  It has moved around a lot.
  • TCMCF - these are associated with TC.  I got them at a great "discount", but to have really benefited I would had to short TC. I did not do that, so relative to having bought TC, I have done "well" but overall a bit of a disaster.
  • NADL - one of my worst trades ever (lost 80%). I finally sold this dog this past week.  I do think there is money to be made in the drilling space, but NADL is too speculative and too highly leveraged.  Should have realized it earlier.
  • RDC - this is a drilling stock I bought on 3/24. I sold yesterday for a 7.5% gain.  Just need to do that 10 more times to make up for NADL loss.  Actually, I also had a successful 18% trade with RIG earlier this year. So I just need to repeat that pair trade 5 times.
  • ENTA - this a a pharma stock on MFI screen that I have been watching and trading.  I bought and sold at the start of the week for a quick 3% gain.  I have re-bought and am up 3% again.
  • BXE - this is my main oil and gas play.  It is a Seth Klarman holding and is esentially flat for me.  I almost nought CRC instead, a spin-off from OXY play. So far that was the wrong move as CRC is up 27% in the same stretch.  That being said, I do believe the same type of gains are potentially in BXE as well, they are trading at $2.70 and have a present value NAV of about $9. That is a margin of safety.
  • SFUN - this is a company from my top 200 listing that I bought and sold and broke even.  Right after I sold it popped up about 20% from $6 to $7.40. Oh well, had it been a real MFI stock I would have held - fear kills.

Ok, I think I have filled up enough blank space. Have a great weekend.
.

1 comment:

John Carney said...

Marsh,

My MFI formula has traunch #1 up 17.7% and #2 is up 9.7%. Very similar results when you consider we only share 8 stocks bought at different times. Also no double picks for me. MY #3 is down 2.4%.
Hard to believe when you look at IRR beating the index by +19 points.

This matches the performance from 2010 and is 4 points less since 2006 based on less accurate information.