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%