Sunday, February 28, 2016

Formula Starting To Work?

Formula For The Magic Formula

As my readers know,  I have several "versions"  of the MFI approach  running. (1) I have the traditional approach, where I select 5 stocks once a quarter and hold for a year.  I do allow myself some flexibility in this approach and can pick stocks from my own internal screen rather than the official screen. (2) I have the formula approach,  which is also once a quarter and I have set rules (a) draw 50 stocks from  official screen, (b) get a subset of stocks with $600m market cap and 2.4%+ yield, (c)  discard up to one stock and (d) randomly pick five stocks from that list. Finally (3) I do have two  micro portfolios going which I may discontinue whenever I want.

Anyway, the formula approach (2), after struggling, seems to be working.  I have my March 31st tranche counting down.  It has been pretty solid and has really picked up some  ground of late:

3/31/2015  Start   Current   Dividend   Pct Gain   R3K Gain 
 HRB  $31.99 $33.73 $0.60 7.3% -6.8%
 GME  $37.69 $30.54 $1.08 -16.1% -6.8%
 KING  $15.85 $17.95 $0.00 13.6% -6.8%
 NSU  $3.43 $3.27 $0.12 -1.2% -6.8%
 PPC  $22.65 $23.71 $0.00 4.7% -6.8%
 Totals  1.7% -6.8%

 Three of the five are in the black and NSU has a lot of momentum of late.

Here is what that tranche looked like at year end:

3/31/2015 Start Current Dividend Pct Gain R3K Gain
HRB $31.99 $33.31 $0.60 6.0% -2.0%
GME $37.69 $28.04 $1.08 -22.7% -2.0%
KING $15.85 $17.65 $0.00 11.3% -2.0%
NSU $3.43 $2.71 $0.12 -17.5% -2.0%
PPC $22.65 $22.09 $0.00 -2.5% -2.0%
Totals -5.1% -2.0%

So that is pretty impressive,  while the index has dropped from -2% to -6.8%, these five names went from -5.1% to +1.7%.  Maybe the magic is back???

Finally,  here is the list of ten stocks that would be formula eligible as of today:

Number Ticker Market Cap Price Dividend Yield
1 BBY              10,546         32.45              0.92 2.8%
2 BKE                 1,540         31.75              1.00 3.1%
3 CALM                 2,543         52.44              3.00 5.7%
4 CSCO            133,423         26.41              1.04 3.9%
5 GME                 3,204         30.54              1.44 4.7%
6 HPQ              18,482         10.64              0.50 4.7%
7 PBI                 3,554         18.04              0.75 4.2%
8 TSRA                 1,473         28.98              0.80 2.8%
9 TIME                 1,453         13.67              0.76 5.6%
10 VIAB              14,351         36.23              1.60 4.4%

There are a bunch of others on the fringe:  CPLA, IQNT, BPT,  OUTR and RCN.  Of the ten above, I do not see an obvious candidate to axe, so I'd probably stand pat.  After the TPUB fiasco,  I am a bit gunshy of publishing stocks... so TIME is one I'd think long and hard about.

1 comment:

John Carney said...

Marsh,

I feeling something also. Looking at all 6 tranches +3.5%,-9.5% are in the books and are actual. March 31 is -5.4, June -2.4%, Sept +18.4%, Dec +3.8%. Might look at a few more cards and stay with this if it can beat the index.