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.