Saturday, January 09, 2016

Weekend Update - 1/9/16

Weekend Update

Well, the markets have certainly taken a dive the last couple of weeks.  Down about 8% since 12/23.  Merry Christmas!  I am certainly tracking the drop. As I mentioned yesterday,  I am down 5.4% this first week.

While it is tempting to run around with hair on fire, it is more useful (in my opinion), to take a longer term view.  I am 56. I am still putting money into the markets on a net basis by a wide margin.  So I will be getting stocks at cheaper prices.

In fact, in my dividend stocks that I reinvest in shares - I am still  getting the same monthly dividend and getting quite a few more shares at the reinvestment.  That doesn't seem worthy of hair on fire.

I had mentioned near the end of last year that 2015 felt a lot like 2007.  So far 2016 is feeling like 2008. But while going through the 30 to 40% plunge in stocks in 2008 was stressful, I did get it all back. One key is not to be 100% invested - that way no margin calls, you have cash for living and you have cash if things get exceedingly cheap.

MFI Select

Speaking of history repeating itself, NHTC seems to be repeating NUS almost exactly 2 years ago.  At that time, the Chinese gov't accused NUS of not following their rules.  NUS dropped from $130 near the end of 2013 to $78 a couple months later.  There are rumors of NHTC having similar charges and it has dropped 50% in the past month.  I always knew this was a possibility.  I read a hit piece on NHTC last Spring. But I decided to respect MFI and hold for the one year period.  That has turned out to be a great move as I sold the first tranche at a 300% gain. Even with the drop, this tranche has NHTC up 88%. But the precipitous drop is very evident in my tables below:

2/1/2015 Start Current Dividend Pct Gain R3K Gain
VEC $28.00 $20.78 $0.00 -25.8% -3.0%
QCOM $62.73 $45.88 $1.86 -23.9% -3.0%
VIAB $63.91 $40.98 $1.53 -33.5% -3.0%
UIS $22.03 $9.76 $0.00 -55.7% -3.0%
NHTC $12.44 $23.35 $0.05 88.1% -3.0%
Totals -10.2% -3.0%
5/6/2015 Start Current Dividend Pct Gain R3K Gain
CBI $50.38 $36.80 $0.14 -26.7% -7.8%
PSDV $4.12 $3.96 $0.00 -4.0% -7.8%
TSRA $38.94 $27.29 $0.60 -28.4% -7.8%
KORS $62.24 $37.79 $0.00 -39.3% -7.8%
DEPO $23.50 $15.44 $0.00 -34.3% -7.8%
Totals -26.5% -7.8%
8/17/2015 Start Current Dividend Pct Gain R3K Gain
VDSI $18.66 $15.96 $0.00 -14.5% -8.4%
SALE $9.34 $8.86 $0.00 -5.1% -8.4%
CSCO $28.95 $24.78 $0.42 -13.0% -8.4%
TGNA $25.30 $23.50 $0.28 -6.0% -8.4%
HSII $20.14 $25.76 $0.13 28.5% -8.4%
Totals -2.0% -8.4%
11/15/2015 Start Current Dividend Pct Gain R3K Gain
LCI $34.01 $35.99               -   5.8% -6.3%
SAVE $34.48 $38.54               -   11.8% -6.3%
PPC $18.98 $22.91               -   20.7% -6.3%
VEC $23.60 $20.78               -   -11.9% -6.3%
VNCE $3.99 $4.48               -   12.3% -6.3%
Totals 7.7% -6.3%
Category/Tranche August November February May Total
Initial Investment        25,000          25,000       25,000        25,000      100,000
Current Tranche -2.0% 7.7% -10.2% -26.5% -7.8%
Previous Tranche 11.2% 69.4% 8.5% 18.3% 46.3%
Tranche -2 41.4% 14.2% 78.3% 33.0% 41.7%
Tranche -3 14.1% 43.7% 0.0% 0.0% 0.0%
MFI Overall Gain 75.7% 199.6% 73.7% 15.6% 91.2%
Current Balance        43,937          74,910       43,422        28,897      191,166
R3K Current Tranche -8.4% -6.3% -3.0% -7.8% -6.4%
R3K Overall Gain 45.4% 47.7% 32.7% 23.7% 37.4%
R3K Balance        36,341          36,937       33,168        30,924      137,370
Annualized IRR 18.0% 41.7% 20.7% 5.6% 23.4%


While 3 of my 4 tranches are in the red, at least the last two are beating the benchmark. In aggregate, the 4 are trailing the benchmark by about 1.4 percentage points per stock.  Let me say that compared to MFI in total, that is a home run - the differential is 8 percentage points in my tracking portfolios.

As my readers know, I generally also track "rejects" and "runoff" at each tranche (runoff means I hold the MFI tranche for a second year and rejects are generally about 10 stocks that I considered but did not buy).

Feb 2015
Actual: -10.2%
Rejects: -18% (TPUB and GORO each down over 50%)
Run Off: +13% (ATVI up 70%!)

May 2015
Actual: -26.5% (my worst tranche ever).
Rejects: -23%
Run Off: -26% (it was just a bad time to start an MFI tranche - tracking portfolio is -22%)

August 2015
Actual: -2%
Rejects: -17%
Run Off: -22% (whew)

November 2015
Actual +7.7% (is that a positive sign?)
Rejects: -11%
Run Off:  -16% (and that is with IPCM being flat as it was acquired within a month).

Date Differential MFI Value R3K Value
12/1/2012 -2.20%          99,765            101,965
1/1/2013 -1.78%        102,798            104,575
2/1/2013 -2.26%        102,594            104,856
3/1/2013 -2.23%        102,881            105,114
4/1/2013 -0.43%        106,804            107,234
5/1/2013 2.00%        110,423            108,423
6/1/2013 4.75%        115,831            111,085
7/1/2013 4.29%        114,888            110,597
8/1/2013 6.91%        124,799            117,889
9/1/2013 10.46%        124,536            114,079
10/1/2013 19.67%        138,655            118,990
11/1/2013 19.75%        143,514            123,764
12/1/2013 23.70%        150,105            126,405
1/1/2014 26.63%        157,138            130,503
2/1/2014 24.70%        150,619            125,918
3/1/2014 25.66%        158,116            132,458
4/1/2014 30.38%        162,991            132,616
5/1/2014 29.65%        162,428            132,779
6/1/2014 31.44%        167,001            135,559
7/1/2014 39.23%        177,971            138,740
8/1/2014 31.13%        167,054            135,922
9/1/2014 35.90%        177,792            141,892
10/1/2014 29.38%        168,321            138,944
11/1/2014 26.14%        168,810            142,666
12/1/2014 30.22%        176,420            146,198
1/1/2015 28.17%        174,306            146,140
2/1/2015 20.63%        162,833            142,201
3/1/2015 25.15%        175,476            150,324
4/1/2015 29.95%        178,565            148,612
5/1/2015 37.31%        186,655            149,348
6/1/2015 51.53%        202,897            151,371
7/1/2015 62.69%        211,437            148,743
8/1/2015 40.75%        192,117            151,369
9/1/2015 36.41%        178,603            142,195
10/1/2015 43.12%        181,175            138,052
11/1/2015 69.02%        217,959            148,936
12/1/2015 73.49%        223,435            149,946
1/1/2016 63.33%        209,514            146,186
Current 53.80%        191,166            137,370

This table shows the cliff impact the best. You can see on 12/1/15, my select tranches were notionally at $223,435. Now they are $191,166 (14% drop) and my lead over benchmark has eroded by 20 percentage points (73% to 53%).

MFI Formula

Well, about all I can say here is that I am losing money less quickly.  I am "gaining" on the benchmark as we're  both in reverse.  The newest tranche has been actually ok (all things considered).

3/31/2015 Start Current Dividend Pct Gain R3K Gain
HRB $31.99 $32.29 $0.60 2.8% -7.9%
GME $37.69 $28.37 $1.08 -21.9% -7.9%
KING $15.85 $17.65 $0.00 11.3% -7.9%
NSU $3.43 $2.50 $0.12 -23.6% -7.9%
PPC $22.65 $22.91 $0.00 1.1% -7.9%
Totals -6.0% -7.9%
7/1/2015 Start Current Dividend Pct Gain R3K Gain
BKE $46.45 $28.16 $0.46 -38.4% -7.9%
CA $29.34 $26.35 $0.50 -8.5% -7.9%
MSFT $44.42 $52.33 $0.67 19.3% -7.9%
QCOM $62.95 $45.88 $0.96 -25.6% -7.9%
VIAB $64.75 $40.98 $0.80 -35.5% -7.9%
Totals -17.7% -7.9%
10/1/2015 Start Current Dividend Pct Gain R3K Gain
BKE $36.83 $28.16 $0.23 -22.9% -1.1%
IQNT $21.96 $16.10 $0.15 -26.0% -1.1%
QCOM $53.45 $45.88 $0.48 -13.3% -1.1%
CSCO $26.37 $24.78 $0.42 -4.4% -1.1%
CA $27.30 $26.35 $0.25 -2.6% -1.1%
Totals -13.8% -1.1%
12/31/15 Stocks Start Current Dividend Pct Gain R3K Gain
BBY $30.31 $28.95 $0.00 -4.5% -6.5%
GME $28.34 $28.37 $0.00 0.1% -6.5%
IILG $15.89 $13.79 $0.00 -13.2% -6.5%
PPC $22.22 $22.91 $0.00 3.1% -6.5%
VIAB $40.93 $40.98 $0.00 0.1% -6.5%
Totals -2.9% -6.5%
But I can not wallpaper these results. They are not very satisfying. The July and October tranches are just messes.  But it is a marathon,  not a sprint.  I stay the course.

Category/Tranche October January April July Total
Initial Investment     249,820        249,939     250,180      249,728         999,667
Current Tranche -13.8% -2.9% -6.0% -17.7% -10.1%
Previous Tranche 0.5% 11.0% 0.0% 0.0% 3.1%
Tranche -2 0.0%                 -                 -                  -   0.0%
MFI Overall Gain -13.4% 7.8% -6.0% -17.7% -7.3%
Current Balance     216,238        269,509     235,074      205,461         926,282
R3K Current Tranche -1.1% -6.5% -7.9% -7.9% -5.8%
R3K Overall Gain -1.7% -6.7% -7.9% -7.9% -5.8%
R3K Balance     245,598        233,166     230,443      230,118         939,325
Annualized IRR -10.7% 7.6% -7.7% -30.9% -8.2%

Wow, -8.2% annualized IRR - that is a bad number.

Date Differential Value R3K Value
10/1/2014 0.00%        100,000            100,000
11/1/2014 1.63%        102,288            100,658
12/1/2014 0.30%        101,375            101,075
1/1/2015 -0.33%        100,664            100,995
2/1/2015 1.67%        101,281              99,611
3/1/2015 3.62%        106,073            102,454
4/1/2015 5.09%        106,781            101,695
5/1/2015 5.78%        107,859            102,077
6/1/2015 5.08%        108,213            103,134
7/1/2015 4.82%        106,423            101,604
8/1/2015 3.71%        107,112            103,404
9/1/2015 4.38%        101,523              97,139
10/1/2015 6.39%        100,703              94,312
11/1/2015 2.93%        104,835            101,907
12/1/2015 -3.48%          99,443            102,926
1/1/2016 -3.36%          96,830            100,193
Current -1.50%          92,628              94,129

Pretty sharp drop off since 11/1,  from $104K to $92.6K.

MFI Micro

Small stocks are certainly not unscathed in sell off. If anything, it has been worse. So I am actually pleased that both tranches are hanging in there.

8/28/2015 Start Current Dividend Pct Gain R3K Gain
VNCE $8.50 $4.48 $0.00 -47.3% -3.7%
ONE $1.99 $3.33 $0.00 67.3% -3.7%
TPUB $11.60 $8.47 $0.18 -25.5% -3.7%
LQDT $7.26 $5.90 $0.00 -18.7% -3.7%
PERI $2.45 $2.74 $0.00 11.8% -3.7%
Totals -2.5% -3.7%
12/15/2015 Start Current Dividend Pct Gain R3K Gain
MGIC $5.38 $5.57 $0.00 3.5% -6.2%
BSQR $6.00 $5.61 $0.00 -6.5% -6.2%
SPCB $4.52 $4.82 $0.00 6.6% -6.2%
WLDN $8.64 $8.05 $0.00 -6.9% -6.2%
MNDO $2.58 $2.52 $0.00 -2.3% -6.2%
Totals              -   -1.1% -6.2%

Both in the red (but not by much), however they are each winning.  PERI sold off over 20% this week.  I have doubled my share count as I felt was over done. That was my only transaction during this entire week.

Dividends and Warrants

Div and Warrants Start Current Dividend Pct Gain Pct Gain Last Week
BAC-WTA $6.04 $4.89 $0.00 -19.0% -3.6%
AOD $8.08 $7.29 $1.64 10.5% 15.3%
JQC $7.82 $7.75 $0.05 -0.2% 0.9%
CSQ $9.32 $9.12 $2.03 19.6% 27.3%
NTC $12.06 $12.72 $1.24 15.8% 16.1%
TGONF $10.24 $9.55 $1.19 4.9% 8.3%
HIG-WT $21.24 $33.22 $0.00 56.4% 72.9%
O $22.72 $51.17 $17.82 203.7% 205.7%
OIBAX $5.04 $5.52 $2.14 51.9% 51.9%
SJT $8.82 $5.13 $0.13 -40.4% -51.6%
REXI $6.35 $5.99 $0.05 -5.0% -2.8%
Totals 2.6% 6.2%

While in total this group held up better than most (going from +6.2% to +2.6%); the BAC-WTA sell off is insane in my mind. My average buy price is $6.04 and it is now 19% off of that (it was 3.6% off it last week) at $4.89.  I may buy quite a few more shares next week - that really seems overdone.  SJT actually made a decent move up. Still way under water, but still felt vindicated a bit.  The flatness in NTC seems quite telling to me - these are just municipal bonds. That and JQC are where people want to be.

Ok, that is kind of that.  It hasn't been pretty, it could get worse.  But the best stocks I ever bought were in March 2009.  These drops mean down the road we'll have more two baggers.  There are many stocks in the universe (bio tech names,  NFLX, some of the IPOs) that fully deserve the sell  off.  But there are also many good values being created. Our job will be to separate the sheep from the goats.





3 comments:

John Carney said...

My MFI Formula is at $95,000 vs R3k Value of $94,129. Just too many stocks that are down big time vs no huge wins like NHTC.

When you study the Track J Greenblatt from the Motley fool for nine years you see the big big losses but they are offset by the huge wins like NHTC. That is not going to happen with the dividend stocks in my opinion. Just huge losses without the gains.

I am turning yellow and may not renew my March 2016 tranche.

Marsh_Gerda said...

Good luck John. You can at least check in here regularly to see how my real money portfolios are faring.

John Carney said...

Nothing for sure yet! I like the permanent portfolio for my advanced age. I will for sure check in.