Another month/year has flown by. And so it is time to look at another monthly tracking portfolio as we enter 2016. 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 about 9.5 points. In addition, this was the third straight portfolio to lose $ (though sadly the next 11 open ones are also in the red). Here are the 50 stocks in descending performance order:
| NHTC | 12.00 | 19.95 | 66.3% | 10.40 | 154 |
| RGR | 39.61 | 58.85 | 48.6% | 40.11 | 784 |
| KING | 12.41 | 17.93 | 44.4% | 11.63 | 4,245 |
| MSFT | 39.33 | 55.09 | 40.1% | 39.72 | 332,007 |
| RTN | 97.62 | 128.24 | 31.4% | 95.32 | 30,925 |
| USNA | 98.04 | 126.90 | 29.4% | 96.04 | 1,213 |
| PETS | 15.20 | 18.02 | 18.6% | 14.53 | 318 |
| TTWO | 29.72 | 34.70 | 16.8% | 23.30 | 3,415 |
| UBNT | 26.30 | 29.61 | 12.6% | 25.50 | 2,323 |
| DHX | 8.27 | 9.31 | 12.6% | 7.09 | 429 |
| SPOK | 16.51 | 18.01 | 9.1% | 15.26 | 371 |
| IQNT | 16.29 | 17.18 | 5.5% | 14.31 | 557 |
| ONE | 3.31 | 3.49 | 5.4% | 1.85 | 158 |
| COH | 35.75 | 37.05 | 3.6% | 27.22 | 10,250 |
| ADMS | 16.83 | 17.14 | 1.8% | 12.73 | 286 |
| AGX | 29.81 | 30.12 | 1.0% | 28.03 | 442 |
| AFOP | 14.48 | 14.37 | -0.8% | 12.92 | 269 |
| CA | 29.27 | 28.73 | -1.8% | 25.16 | 13,281 |
| ANIK | 39.18 | 37.62 | -4.0% | 30.93 | 580 |
| TZOO | 8.58 | 8.11 | -5.5% | 6.77 | 126 |
| LFVN | 8.89 | 8.37 | -5.8% | 0.20 | 128 |
| RPXC | 12.35 | 11.58 | -6.2% | 10.09 | 695 |
| NSR | 26.29 | 24.58 | -6.5% | 20.32 | 1,695 |
| CSCO | 25.56 | 23.79 | -6.9% | 22.47 | 133,565 |
| IDCC | 49.20 | 45.04 | -8.5% | 41.01 | 1,923 |
| ITRN | 20.02 | 18.17 | -9.2% | 16.76 | 435 |
| FLR | 52.72 | 44.89 | -14.9% | 39.48 | 8,388 |
| LQDT | 7.74 | 6.51 | -15.9% | 5.57 | 230 |
| DEPO | 18.27 | 15.34 | -16.0% | 13.27 | 1,073 |
| NUS | 39.67 | 31.65 | -20.2% | 29.52 | 2,430 |
| STRA | 67.00 | 53.39 | -20.3% | 41.50 | 731 |
| GME | 33.99 | 26.21 | -22.9% | 24.33 | 3,853 |
| WTW | 16.56 | 12.69 | -23.4% | 3.67 | 939 |
| TIVO | 10.46 | 7.98 | -23.7% | 7.48 | 1,103 |
| QCOM | 60.56 | 45.34 | -25.1% | 43.47 | 103,309 |
| VIAB | 62.59 | 45.64 | -27.1% | 36.32 | 26,238 |
| BRCD | 10.94 | 7.98 | -27.1% | 7.40 | 4,798 |
| VEC | 27.84 | 19.76 | -29.0% | 18.27 | 292 |
| BCOR | 13.52 | 8.63 | -36.2% | 7.76 | 555 |
| AWRE | 4.88 | 2.96 | -39.3% | 2.81 | 111 |
| BKE | 47.78 | 28.42 | -40.5% | 26.05 | 2,457 |
| AVID | 12.96 | 7.10 | -45.2% | 5.77 | 508 |
| PDLI | 6.51 | 3.14 | -51.8% | 2.83 | 1,217 |
| TPUB | 19.75 | 9.34 | -52.7% | 7.03 | 534 |
| ACHI | 5.85 | 2.62 | -55.2% | 1.77 | 562 |
| UIS | 21.93 | 9.82 | -55.2% | 8.15 | 1,095 |
| GORO | 3.36 | 1.34 | -60.1% | 1.14 | 190 |
| PFMT | 4.96 | 1.71 | -65.5% | 1.63 | 245 |
| APOL | 25.26 | 7.94 | -68.6% | 6.31 | 2,737 |
| MSB | 16.80 | 4.40 | -73.8% | 3.00 | 224 |
Obviously when 16 of the 50 stocks are down 25% or more over a year - it is a struggle.
I have mentioned that a "Dogs of MFI" approach has shown some promise. BKE 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:
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 | -9.3% | 0.3% | 0 |
| 1/30/2015 | -12.4% | -2.8% | 0 |
| 2/27/2015 | -21.8% | -8.0% | 0 |
| 3/27/2015 | -22.6% | -6.6% | 0 |
| 4/24/2015 | -25.2% | -9.1% | 0 |
| 5/29/2015 | -21.3% | -8.7% | 0 |
| 6/26/2015 | -19.7% | -8.8% | 0 |
| 7/30/2015 | -14.8% | -8.8% | 0 |
| 8/28/2015 | -9.3% | -3.5% | 0 |
| 9/25/2015 | -7.9% | -0.6% | 0 |
| 10/30/2015 | -12.8% | -7.2% | 0 |
| 11/27/2015 | -11.9% | -8.1% | 0 |
| 12/31/2015 | -8.2% | -5.7% | 0 |
So you can see the -12.4% to -2.8% loss in 1/30/15. Sadly, as my gentle readers have noted, MFI isn't doing so well of late. And 11 of the other 11 open portfolios are trailing - several by a wide margin. Just 1 win/lead in past 22. Ouch.
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 have added 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 12.4%. (PDLI, GORO, BKE etc) The new portfolio was worse, down 34% (mostly ACHI & TIVO). The Dogs approach was also bad, down 14.2% (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.
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 have added 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 12.4%. (PDLI, GORO, BKE etc) The new portfolio was worse, down 34% (mostly ACHI & TIVO). The Dogs approach was also bad, down 14.2% (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 | 154,268 |
| Total Russell 3K | 181,782 |
| New | 149,465 |
| Dogs | 229,209 |
| Dividend | 325,003 |
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.
Newest Tracking Portfolio
I did pull in the newest 50 stocks. Here are how they split into my subsets:
New
| Stock | Initial Price |
| SCMP | 12.65 |
| STRZA | 28.43 |
| FIT | 16.60 |
| BLBD | 9.80 |
Dogs
| Stock | Initial Price |
| VIAB | 45.64 |
| VEC | 19.76 |
| TDC | 24.34 |
| PDLI | 3.14 |
| BKE | 28.42 |
Dividend
| Stock | Initial Price | Yield |
| BKE | 28.42 | 10.6% |
| BPT | 26.78 | 9.0% |
| CALM | 50.47 | 5.9% |
| CLCT | 15.25 | 9.2% |
| CPLA | 43.91 | 3.6% |
| CSCO | 23.79 | 3.5% |
| GME | 26.21 | 5.5% |
| HPQ | 9.71 | 5.1% |
| IILG | 11.78 | 4.1% |
| IQNT | 17.18 | 3.5% |
| OUTR | 33.80 | 3.6% |
| PBI | 19.58 | 3.8% |
| PDLI | 3.14 | 19.1% |
| PETS | 18.02 | 4.0% |
| PPC | 22.18 | 26.0% |
| QCOM | 45.34 | 4.2% |
| VIAB | 45.64 | 3.5% |
Looking at the names, IILG and TDC look interesting for my buys on Monday.
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