Weekend Update - 6/20/15

Weekend Update

Happy Father's Day weekend.  Been super busy, last weekend my son graduated from High School and we went to New York and did the town.

This continues to be a very, very strong year for my investments.  I am now up 15.4%, while the R3K is up 4.1%.  Granted, NHTC has played a significant role in my gains, up over 200%.  But even without NHTC, I'd be up 9.2% => so it is more than a single name.  But while things are working out well for me, MFI is only so-so.  My MFI index is up 6.2% (again, NHTC a big driver of that).  But GARIX, Gotham's long/short MFI fund is actually down 4%.

MFI Select

My MFI select tranches continue to be nothing short of amazing. They were doing well coming into June and have had a major spurt in the month.  My most recent tranche, May 2015, is off to a sluggish start, but I am still hopeful of a rally.  In addition, IPCM in my November tranche was up 10% on Friday. So it is also becoming a very strong performer.

8/15/2014	Start	Current	Dividend	Pct Gain	R3K Gain
CSCO	$24.40	$29.03	$0.59	21.4%	9.9%
AGX	$36.71	$39.59	$0.70	9.8%	9.9%
ITRN	$21.32	$24.75	$0.87	20.2%	9.9%
BRCD	$9.34	$12.46	$0.15	35.1%	9.9%
CBI	$58.25	$53.43	$0.14	-8.0%	9.9%
Totals				15.7%	9.9%
11/15/2014	Start	Current	Dividend	Pct Gain	R3K Gain
FLR	$64.80	$55.59	$0.63	-13.2%	5.4%
IPCM	$38.45	$57.82	$0.00	50.4%	5.4%
VIAB	$72.29	$67.61	$1.06	-5.0%	5.4%
NHTC	$12.19	$39.41	$0.06	223.8%	5.4%
AWRE	$4.40	$4.08	$0.00	-7.3%	5.4%
Totals				49.7%	5.4%
2/1/2015	Start	Current	Dividend	Pct Gain	R3K Gain
VEC	$28.00	$23.90	$0.00	-14.6%	7.0%
QCOM	$62.73	$66.88	$0.90	8.1%	7.0%
VIAB	$63.91	$67.61	$0.73	6.9%	7.0%
UIS	$22.03	$20.75	$0.00	-5.8%	7.0%
NHTC	$12.44	$39.41	$0.05	217.2%	7.0%
Totals				42.3%	7.0%
5/6/2015	Start	Current	Dividend	Pct Gain	R3K Gain
CBI	$50.38	$53.43	$0.00	6.1%	1.7%
PSDV	$4.12	$4.05	$0.00	-1.8%	1.7%
TSRA	$38.94	$38.78	$0.20	0.1%	1.7%
KORS	$62.24	$46.60	$0.00	-25.1%	1.7%
DEPO	$23.50	$22.27	$0.00	-5.2%	1.7%
Totals				-5.2%	1.7%
Category/Tranche	August	November	February	May	Total
Initial Investment	25,000	25,000	25,000	25,000	100,000
Current Tranche	15.7%	49.7%	42.3%	-5.2%	26.0%
Previous Tranche	41.4%	14.2%	8.5%	18.3%	19.4%
Tranche -2	14.1%	43.7%	78.3%	33.0%	42.3%
MFI Overall Gain	86.6%	145.8%	175.2%	49.1%	114.2%
Current Balance	46,644	61,444	68,795	37,283	214,167
R3K Current Tranche	9.9%	5.4%	7.0%	1.7%	6.0%
R3K Overall Gain	60.4%	65.0%	46.3%	36.4%	52.0%
R3K Balance	40,092	41,251	36,569	34,108	152,020
Annualized IRR	24.5%	41.4%	53.0%	20.7%	36.6%

So I encourage people to take a long look at these tables. February tranche is up 42.3%! Whoa. November is pushing 50%. Double whoa.  Starting with 100,000 spread equally over the four tranches in August 2012, you would now have $214,167.  Here is month by month:

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
5/1/2015	37.31%	186,655	149,348
6/1/2015	51.53%	202,897	151,371
Current	62.15%	214,167	152,020

MFI Formula

Recall that my formula tranches are picked entirely by formula => taking out my human bias.  I have only been using this approach since the end of the third quarter last year. It has worked very very well so far, though it is admittedly early days.  It has also worked very well in back testing to 2006.

My formula is start with the official MFI screen, 50 stocks > 100m market cap.  I then filter that to just pick stocks greater than 600m market cap and a 2.4% dividend yield or greater.  I can then throw out one stock.  Finally, I use a randomizer and pick five stocks from that list.

I am giving the detail as a week from Tuesday (June 30th) I am due for my next tranche.  Here is how the three open tranches are faring:

10/1/2014 Stocks	Start	Current	Dividend	Pct Gain	R3K Gain
BAH	$23.52	$26.28	$0.37	13.3%	9.4%
BKE	$45.55	$46.04	$3.45	8.7%	9.4%
CA	$27.87	$30.48	$0.75	12.0%	9.4%
GME	$41.70	$43.09	$1.05	5.8%	9.4%
NUS	$44.56	$50.17	$1.05	14.9%	9.4%
Totals				11.0%	9.4%
12/31/14 Stocks	Start	Current	Dividend	Pct Gain	R3K Gain
CA	$30.83	$30.48	$0.50	0.5%	2.9%
CSCO	$28.36	$29.03	$0.40	3.8%	2.9%
RGR	$34.81	$57.31	$0.49	66.0%	2.9%
GME	$34.21	$43.09	$0.72	28.1%	2.9%
IQNT	$19.87	$17.88	$0.30	-8.5%	2.9%
Totals				18.0%	2.9%
3/31/2015	Start	Current	Dividend	Pct Gain	R3K Gain
HRB	$31.99	$30.65	$0.20	-3.6%	1.6%
GME	$37.69	$43.09	$0.36	15.3%	1.6%
KING	$15.85	$13.99	$0.00	-11.7%	1.6%
NSU	$3.43	$3.87	$0.00	12.8%	1.6%
PPC	$22.65	$25.57	$0.00	12.9%	1.6%
Totals				5.1%	1.6%

So early days, as I said. But all three tranches are winning. So that is nice.

MFI Formula Candidates

Here are the stocks that would be eligible were I to pick today:

Number	Ticker	Market Cap	Price	Dividend	Yield
1	HRB	8,359	30.65	0.80	2.6%
2	BKE	2,222	46.04	3.92	8.5%
3	CA	13,278	30.48	1.00	3.3%
4	CPLA	689	56.98	1.48	2.6%
5	CSCO	148,767	29.03	0.84	2.9%
6	GME	4,652	43.09	1.44	3.3%
7	IQNT	607	17.88	0.60	3.4%
8	KING	4,525	13.99	1.40	10.0%
9	NSU	793	3.87	0.16	4.1%
10	OMC	17,774	72.15	2.00	2.8%
11	PDLI	1,063	6.50	0.60	9.2%
12	PPC	6,302	25.57	5.77	22.6%
13	PBI	4,410	21.98	0.75	3.4%
14	QCOM	109,999	66.88	1.92	2.9%
15	RTN	30,969	100.60	2.68	2.7%

So 15 stocks on the list - quite a few. VIAB is very very close as well.  Recall that I do count special dividends in past 12 months.  I also am using forward rates, so QCOM gets credit for recent bump in dividend.

Just for fun, I then ran my randomizer against this.  Here are the 5 stocks it gave me:

Randomizer	3	4	11	14	7
	CA	CPLA	PDLI	QCOM	IQNT

So in this version, I have two repeats: IQNT & CA.

Tracking Portfolios

My 12 monthly tracking portfolios are now outperforming in aggregate.  The 12 portfolios are up on average by 5.6% versus 5.0% for the R3K.  I am sure having NHTC in there 7 times at an average of +195% helps.  The 12 dividend portfolios are only up 4.8%.  It is possible that dividend stocks in general are becoming less in favor as one speculates interest rate raises on the horizon.

Have a great weekend everyone.