Saturday, November 28, 2015

MFI Tracking Portfolio - 11/28/2014

MFI Tracking Portfolio 11/28/14

Another month has flown by. And so it is time to look at another monthly tracking portfolio as we reach Thankgiving, 2015.  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. This month, MFI lost by almost 6 points. In addition, this was only the second portfolio in the past 40 to lose $. NHTC was one of the best stocks ever, which was not enough to offset a plethora of low performance stocks. Here are the 50 stocks in descending performance order:

Stock  Initial Price   End Price   Percent Change   52 week low   Mkt Cap 
NHTC              13.55           48.28 256.3%      10.40            174
EBIX              16.06           37.81 135.5%      15.63            602
RGR              37.34           53.28 42.7%      33.60            740
PETS              12.93           16.99 31.4%      13.29            274
TTWO              27.66           35.69 29.0%      23.30         2,446
AFOP              12.53           15.66 25.0%      12.26            236
LBMH                2.67             3.33 24.6%        1.96            148
AGX              31.77           39.43 24.1%      29.63            459
DEPO              15.49           19.13 23.5%      14.38            910
KING              14.34           17.67 23.2%      11.63         4,905
SPOK              15.29           18.58 21.5%      15.26            343
UBNT              28.90           34.33 18.8%      25.50         2,553
HRB              32.83           36.73 11.9%      29.15         9,254
ADMS              14.69           16.28 10.8%      12.73            249
IQNT              17.84           19.37 8.6%      14.31            610
IDCC              49.12           52.75 7.4%      44.28         1,919
RPXC              13.12           13.96 6.4%      11.94            739
DLX              57.33           59.06 3.0%      51.61         2,903
ANIK              40.89           41.89 2.4%      30.93            605
CSCO              26.82           27.32 1.9%      23.03     140,024
ITRN              20.89           20.54 -1.7%      18.52            455
TSRA              33.41           32.74 -2.0%      30.62         1,801
GME              36.84           36.01 -2.3%      31.69         4,273
CA              30.09           28.20 -6.3%      25.16       13,716
NSR              27.25           25.23 -7.4%      20.32         1,757
WTW              29.00           26.20 -9.7%        3.67         1,644
LFVN                9.45             8.46 -10.5%        0.20            136
COH              35.72           31.82 -10.9%      27.22       10,230
PBI              23.79           21.06 -11.5%      18.59         4,948
NUS              40.46           35.50 -12.3%      31.15         2,479
VEC              28.26           24.56 -13.1%      21.22            297
ONE                3.57             3.07 -14.0%        1.85            170
PDFS              13.25           10.99 -17.1%        9.68            410
FLR              61.25           48.32 -21.1%      40.61         9,703
IILG              21.30           15.61 -26.7%      14.89         1,241
BCOR              14.21           10.29 -27.6%        8.85            583
AWRE                4.41             3.19 -27.7%        2.82            101
VIAB              73.82           51.16 -30.7%      36.32       31,326
BKE              47.68           32.76 -31.3%      29.28         2,476
TZOO              13.13             8.63 -34.3%        8.02            193
GORO                3.45             2.25 -34.9%        1.99            195
LQDT              10.51             6.76 -35.7%        6.28            312
AVID              12.05             6.97 -42.2%        5.77            472
PDLI                7.54             3.97 -47.4%        3.43         1,379
UIS              26.72           12.68 -52.5%      11.49         1,334
TPUB              20.22             9.29 -54.1%        7.33            536
CJREF              17.64             7.59 -57.0%        7.21         1,622
WILN                2.96             1.09 -63.2%        0.97            381
PFMT                6.80             1.97 -71.0%        1.86            335
APOL              31.22             6.91 -77.9%        6.83         3,400


Looking at the list, it is stunning to see the spread.  If you just randomly picked 5 stocks from this list, the variance of actual results would be very wide.

I have mentioned that a "Dogs of MFI" approach has shown some promise.  APOL and PDLI are still on the list.  It would take some courage to buy any of those - but I guess that is why they are called dogs. 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 MFI R3K Lead
1/6/2006 16.0% 10.9% 1
2/17/2006 21.2% 14.6% 1
3/29/2006 13.0% 9.6% 1
4/7/2006 10.3% 12.1% 0
5/12/2006 20.4% 18.6% 1
5/31/2006 29.2% 23.3% 1
6/30/2006 22.4% 20.0% 1
7/31/2006 19.7% 17.3% 1
8/31/2006 13.0% 13.3% 0
9/28/2006 12.7% 14.6% 0
10/27/2006 10.3% 12.0% 0
11/29/2006 -0.3% 4.8% 0
12/28/2006 -6.9% 3.4% 0
1/26/2007 -10.2% -6.6% 0
2/27/2007 -3.7% -1.0% 0
3/26/2007 -9.8% -5.5% 0
4/27/2007 -10.9% -5.0% 0
5/29/2007 -11.5% -6.3% 0
7/3/2007 -30.0% -15.6% 0
7/30/2007 -19.9% -11.5% 0
8/30/2007 -12.5% -8.7% 0
9/27/2007 -19.0% -18.2% 0
11/2/2007 -40.4% -34.3% 0
11/28/2007 -40.1% -38.3% 0
12/28/2007 -36.3% -40.0% 1
1/25/2008 -36.4% -35.9% 0
2/26/2008 -51.7% -41.5% 0
3/24/2008 -40.9% -36.8% 0
4/25/2008 -25.6% -31.0% 1
5/28/2008 -22.2% -33.6% 1
7/2/2008 -11.7% -25.3% 1
7/29/2008 -10.5% -20.9% 1
8/29/2008 -13.8% -17.9% 1
9/26/2008 -4.3% -10.0% 1
10/31/2008 18.7% 13.9% 1
11/26/2008 50.9% 27.7% 1
12/26/2008 48.9% 32.3% 1
1/23/2009 59.3% 36.4% 1
2/27/2009 92.8% 55.6% 1
3/27/2009 85.8% 48.1% 1
4/24/2009 69.7% 45.8% 1
5/29/2009 31.8% 22.8% 1
6/29/2009 21.3% 24.0% 0
7/29/2009 19.5% 15.9% 1
8/28/2009 7.4% 8.8% 0
9/25/2009 12.6% 12.4% 1
10/30/2009 22.7% 18.3% 1
11/27/2009 24.3% 13.6% 1
12/31/2009 23.7% 18.1% 1
1/22/2010 19.0% 20.6% 0
2/26/2010 18.6% 23.6% 0
3/25/2010 10.0% 15.4% 0
4/23/2010 7.1% 11.4% 0
5/28/2010 19.3% 25.4% 0
6/29/2010 16.7% 25.7% 0
7/29/2010 5.4% 20.1% 0
9/2/2010 7.3% 10.1% 0
9/24/2010 -4.3% 0.3% 0
10/29/2010 -2.9% 10.4% 0
11/26/2010 -8.5% 1.4% 0
1/3/2011 -11.4% 0.1% 0
1/28/2011 -7.6% 4.9% 0
2/25/2011 -5.5% 5.0% 0
3/24/2011 -4.4% 7.4% 0
4/21/2011 -16.0% 3.2% 0
5/27/2011 -12.0% -0.4% 0
6/24/2011 -9.5% 5.0% 0
7/29/2011 -4.3% 8.1% 0
8/26/2011 12.0% 21.6% 0
9/30/2011 23.5% 29.6% 0
10/28/2011 0.4% 11.5% 0
11/25/2011 13.9% 24.0% 0
12/29/2011 9.9% 15.9% 0
1/27/2012 7.4% 16.6% 0
2/24/2012 7.8% 13.3% 0
3/23/2012 9.1% 15.2% 0
4/27/2012 10.5% 15.3% 0
5/25/2012 26.5% 27.5% 0
6/22/2012 26.1% 24.6% 1
7/27/2012 30.4% 25.7% 1
8/24/2012 26.0% 19.8% 1
9/28/2012 39.3% 22.1% 1
10/26/2012 48.3% 28.9% 1
11/23/2012 45.7% 32.1% 1
12/31/2012 52.3% 33.0% 1
1/25/2013 39.5% 22.0% 1
2/22/2013 46.5% 26.4% 1
3/28/2013 40.1% 21.2% 1
4/26/2013 35.0% 20.5% 1
5/24/2013 20.4% 19.2% 1
6/28/2013 26.9% 24.1% 1
7/29/2013 17.8% 19.0% 0
8/30/2013 17.5% 24.6% 0
9/27/2013 12.9% 17.7% 0
10/25/2013 11.8% 15.4% 0
11/29/2013 12.3% 15.6% 0
12/31/2013 12.7% 11.9% 1
1/31/2014 14.2% 13.0% 1
2/28/2014 15.4% 13.9% 1
3/28/2014 6.1% 12.3% 0
4/25/2014 8.6% 15.8% 0
5/30/2014 5.9% 11.7% 0
6/27/2014 2.5% 9.2% 0
7/25/2014 3.3% 8.7% 0
8/29/2014 -2.2% 1.0% 0
9/26/2014 -0.6% -0.9% 1
10/31/2014 4.3% 4.4% 0
11/28/2014 -2.9% 2.9% 0
12/31/2014 -4.1% 3.0% 0
1/30/2015 0.0% 5.8% 0
2/27/2015 -9.9% 0.2% 0
3/27/2015 -10.5% 1.6% 0
4/24/2015 -10.3% -1.1% 0
5/29/2015 -12.1% -0.6% 0
6/26/2015 -4.5% -0.7% 0
7/30/2015 2.5% -0.7% 1
8/28/2015 6.6% 5.0% 1
9/25/2015 7.3% 8.1% 0
10/30/2015 -1.8% 1.0% 0

So you can see the -2.9% to +2.9% loss in 11/28/14. Sadly, as my gentle readers have noted, MFI isn't doing so well of late.  And 9 of the other 11 open portfolios are trailing - several by a wide margin.

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 , 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 terrible, down about 9.9%. (PDLI, CJREF, GORO, WILN etc)  The new portfolio was worse, down 22% (many hands such as CJREF, TPUB, WILD etc).  The Dogs approach was also terrible, down 13.7%(that approach is admittedly exciting). 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. It is telling that even though MFI and R3K have both averaged 9.2% per year, that R3K is ahead due to less variability.

Category Value
Total      178,642
Total Russell 3K      197,844
New      173,288
Dogs      277,018
Dividend      350,116

That is a sobering table.  It strongly indicates (assuming a guy with a spreadsheet hasn't made too many errors) that for the $100m + bucket that it hasn't worked very well since 2006.  I do think things like the chinese reverse merger scandal depressed the results. But MFI has also had us in for profit education for many years with not exactly stellar results.  Here are how those stocks have fared (certainly a drag):


Average of Percent Change    
Stock Date Total
APEI 7/27/2012 52.9%
  9/27/2013 -27.7%
  2/28/2014 -8.5%
  8/29/2014 -26.4%
  9/26/2014 -14.5%
  10/31/2014 -29.9%
  4/24/2015 -24.9%
  5/29/2015 -5.0%
  7/30/2015 -9.3%
  10/30/2015 5.7%
APEI Total   -8.7%
APOL 11/27/2009 -38.2%
  1/22/2010 -33.0%
  2/26/2010 -23.6%
  3/25/2010 -30.5%
  4/23/2010 -37.4%
  5/28/2010 -24.3%
  6/29/2010 -2.8%
  7/29/2010 7.8%
  9/2/2010 0.4%
  9/24/2010 -21.6%
  10/29/2010 28.5%
  11/26/2010 33.0%
  1/3/2011 35.3%
  1/28/2011 32.8%
  2/25/2011 13.9%
  3/24/2011 -2.2%
  4/21/2011 -15.2%
  5/27/2011 -17.7%
  6/24/2011 -21.9%
  7/29/2011 -44.1%
  8/26/2011 -39.6%
  9/30/2011 -26.7%
  10/28/2011 -59.1%
  11/25/2011 -57.9%
  12/29/2011 -61.3%
  1/27/2012 -62.0%
  2/24/2012 -64.4%
  3/23/2012 -59.0%
  4/27/2012 -49.9%
  5/25/2012 -36.6%
  6/22/2012 -47.2%
  7/27/2012 -35.5%
  8/24/2012 -31.5%
  9/28/2012 -29.6%
  10/26/2012 43.3%
  11/23/2012 39.4%
  12/31/2012 30.6%
  1/25/2013 56.0%
  2/22/2013 79.4%
  3/28/2013 89.0%
  4/26/2013 55.3%
  5/24/2013 27.7%
  6/28/2013 75.3%
  7/29/2013 57.3%
  8/30/2013 49.5%
  9/27/2013 24.2%
  10/25/2013 3.7%
  11/29/2013 18.8%
  12/31/2013 24.9%
  1/31/2014 -21.8%
  2/28/2014 -17.0%
  3/28/2014 -41.6%
  4/25/2014 -37.1%
  5/30/2014 -38.1%
  6/27/2014 -47.4%
  7/25/2014 -53.8%
  8/29/2014 -58.7%
  9/26/2014 -55.4%
  10/31/2014 -74.7%
  11/28/2014 -77.9%
  12/31/2014 -79.7%
  1/30/2015 -72.6%
  2/27/2015 -75.0%
  4/24/2015 -60.5%
  5/29/2015 -58.3%
  6/26/2015 -57.7%
  8/28/2015 -39.8%
  9/25/2015 -39.0%
  10/30/2015 -4.8%
APOL Total   -16.8%
CECO 2/17/2006 -16.5%
  3/29/2006 -12.9%
  5/12/2006 8.8%
  5/31/2006 7.4%
  6/30/2006 12.8%
  7/31/2006 5.0%
  8/31/2006 52.4%
  9/28/2006 24.4%
  10/27/2006 64.3%
  9/2/2010 -9.7%
  9/24/2010 -36.0%
  10/29/2010 -2.2%
  11/26/2010 -62.8%
  1/3/2011 -62.9%
  1/28/2011 -52.9%
  2/25/2011 -50.0%
  3/24/2011 -60.9%
  4/21/2011 -67.0%
  5/27/2011 -67.8%
  6/24/2011 -70.0%
  7/29/2011 -78.0%
  8/26/2011 -78.9%
  9/30/2011 -71.2%
  10/28/2011 -80.7%
  11/25/2011 -60.3%
  12/29/2011 -55.1%
  1/27/2012 -67.3%
  2/24/2012 -67.0%
  4/27/2012 -70.2%
CECO Total   -35.3%
COCO 7/29/2010 -55.7%
  9/24/2010 -75.4%
  10/29/2010 -64.2%
  1/3/2011 -58.0%
  1/28/2011 -45.8%
COCO Total   -59.8%
CPLA 2/25/2011 -27.4%
  3/24/2011 -26.6%
  4/21/2011 -39.1%
  5/27/2011 -35.7%
  6/24/2011 -22.1%
  7/29/2011 -38.6%
  8/26/2011 0.9%
  9/30/2011 23.5%
  10/28/2011 -13.3%
  11/25/2011 -14.3%
  12/29/2011 -20.9%
  1/27/2012 -34.6%
  2/24/2012 -21.9%
  3/23/2012 -16.8%
  4/27/2012 9.2%
  5/25/2012 41.2%
  6/22/2012 24.6%
  7/27/2012 86.4%
  8/24/2012 70.2%
  9/28/2012 60.4%
  10/26/2012 92.5%
  11/23/2012 139.7%
  12/31/2012 136.6%
  1/25/2013 122.3%
  2/22/2013 106.3%
  3/28/2013 96.2%
  4/26/2013 56.5%
  5/24/2013 31.1%
  6/28/2013 34.5%
  7/29/2013 19.3%
  4/25/2014 22.3%
  5/30/2014 -4.8%
  6/27/2014 3.3%
  7/25/2014 -8.8%
  2/27/2015 -25.0%
  3/27/2015 -27.7%
  4/24/2015 -27.5%
  5/29/2015 -9.3%
  6/26/2015 -13.7%
  7/30/2015 -6.1%
  8/28/2015 -3.2%
  9/25/2015 -7.7%
  10/30/2015 5.5%
CPLA Total   17.2%
DV 9/30/2011 -37.8%
DV Total   -37.8%
ESI 10/30/2009 -28.6%
  11/27/2009 -34.9%
  12/31/2009 -32.4%
  5/27/2011 -18.3%
  6/24/2011 -25.0%
  7/29/2011 -49.3%
  8/26/2011 -55.7%
  9/30/2011 -44.0%
  10/28/2011 -67.9%
  11/25/2011 -67.0%
  12/29/2011 -69.9%
  1/27/2012 -75.8%
  2/24/2012 -74.9%
  3/23/2012 -79.0%
  4/27/2012 -73.0%
  5/25/2012 -57.2%
  6/22/2012 -56.1%
  7/27/2012 -37.3%
  8/24/2012 -8.3%
  9/28/2012 -3.9%
  10/26/2012 82.3%
  11/23/2012 129.4%
  12/31/2012 94.0%
  1/25/2013 81.9%
  2/22/2013 66.6%
  3/28/2013 98.5%
  4/26/2013 52.5%
  5/24/2013 -30.6%
  6/28/2013 -31.9%
  7/29/2013 -45.7%
  8/30/2013 -70.7%
  9/27/2013 -86.0%
  10/25/2013 -75.2%
  11/29/2013 -78.7%
  12/31/2013 -71.4%
  1/31/2014 -75.3%
  2/28/2014 -76.2%
  3/28/2014 -75.2%
  4/25/2014 -77.3%
  5/30/2014 -74.6%
  6/27/2014 -74.2%
  7/25/2014 -73.6%
  8/29/2014 -54.6%
  9/26/2014 -28.1%
  6/26/2015 -20.3%
ESI Total   -32.7%
LINC 5/12/2006 -12.2%
  11/26/2010 -49.9%
  1/3/2011 -47.4%
  1/28/2011 -40.2%
  2/25/2011 -40.7%
LINC Total   -38.1%
STRA 1/28/2011 -4.0%
  4/21/2011 -20.5%
  5/27/2011 -22.8%
  7/29/2011 -33.9%
  8/26/2011 -24.9%
  9/30/2011 -12.1%
  10/28/2011 -31.2%
  11/25/2011 -40.6%
  3/23/2012 -48.1%
  5/25/2012 -34.8%
  7/27/2012 -40.9%
  8/24/2012 -38.6%
  9/28/2012 -34.0%
  10/26/2012 -13.8%
  11/23/2012 -24.9%
  12/31/2012 -38.6%
  1/25/2013 -36.8%
  2/22/2013 -8.6%
  3/28/2013 -5.3%
  4/26/2013 -10.3%
  5/24/2013 -2.8%
  6/28/2013 7.8%
  7/29/2013 10.6%
  8/30/2013 52.0%
  9/27/2013 42.3%
  10/25/2013 52.7%
  11/29/2013 103.7%
  12/31/2013 115.5%
  1/31/2014 91.6%
  2/28/2014 27.4%
  3/28/2014 30.8%
  4/25/2014 24.0%
  5/30/2014 -16.1%
  6/27/2014 -12.5%
  7/25/2014 14.8%
  8/29/2014 -12.9%
  9/26/2014 -3.4%
  10/31/2014 -27.7%
  12/31/2014 -22.1%
  1/30/2015 -13.7%
  2/27/2015 -5.0%
  3/27/2015 -3.5%
  4/24/2015 8.3%
  5/29/2015 26.2%
  6/26/2015 25.7%
  7/30/2015 3.6%
  8/28/2015 9.4%
  9/25/2015 1.1%
  10/30/2015 9.3%
STRA Total   0.3%
Grand Total   -13.8%

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