Saturday, January 30, 2016

January 30th, 2015 Monthly Tracking Portfolio - MFI

MFI Monthly Tracking Portfolio

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:

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.

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.


2 comments:

Kranthi K said...

Hello Marsh,

I just started reading your blog, thank you for doing this.
Where can i find the total return of your MFI portfolio from 2006?

I want to use the MFI approach for investing, any feedback for me?
I have feeling this approach does not really work during bear markets.



Thanks,

Marsh_Gerda said...

Well - this post give returns back to 2006. My personal portfolio struggled in 2011 and 2010 as I became too enamored with some stocks that were frauds.