MFI TRacking Portfolio - 3/27/15

MFI Tracking Portfolio

Another month/year has flown by. And so it is time to look at another monthly tracking portfolio as we near leap day 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 15 points. That makes it 12 of the last 13 to close have lost. In addition, this was the fifth straight portfolio to lose $ (though sadly 11 of the 11 open ones are also in the red).  Here are the 50 stocks in descending performance order:

Stock	Initial Price	End Price	Percent Change	52 week low	Mkt Cap
NHTC	17.58	32.02	82.1%	15.90	226
ONE	2.31	3.85	66.7%	1.85	110
MSFT	39.88	54.21	35.9%	39.72	336,692
SNDK	63.99	75.66	18.2%	44.28	15,179
KING	15.53	18.00	15.9%	N/A	5,000
PETS	15.50	17.43	12.5%	14.53	328
NSR	24.15	26.59	10.1%	20.00	1,330
ANIK	40.81	44.00	7.8%	30.93	606
IDCC	49.77	53.56	7.6%	41.01	1,867
CSCO	26.30	27.96	6.3%	22.46	138,553
PPC	23.71	24.09	1.6%	17.39	6,141
AGX	34.00	34.13	0.4%	28.03	504
IQNT	15.45	15.24	-1.4%	14.56	534
PENN	15.53	15.10	-2.8%	12.51	1,229
FLR	55.79	54.12	-3.0%	39.48	8,436
HPQ	31.13	29.64	-4.8%	8.91	57,375
PBI	22.48	20.90	-7.0%	16.24	4,689
GILD	99.33	91.32	-8.1%	81.89	151,399
BRCD	11.26	10.30	-8.5%	7.40	4,855
WILN	2.32	2.12	-8.7%	0.93	293
DLX	65.58	59.87	-8.7%	49.46	3,339
ENTA	31.35	27.03	-13.8%	16.75	583
HRB	31.24	26.61	-14.8%	26.60	8,816
VEC	25.59	21.75	-15.0%	17.25	268
GME	36.91	30.27	-18.0%	24.33	4,130
ADMS	17.50	14.17	-19.0%	12.02	307
TZOO	9.64	7.79	-19.2%	6.63	142
CPLA	64.79	51.91	-19.9%	39.06	818
STRA	59.93	47.94	-20.0%	41.50	653
QCOM	64.76	50.86	-21.5%	42.24	110,859
TSRA	38.92	30.39	-21.9%	26.21	2,108
RPXC	14.22	10.80	-24.1%	9.15	801
CLCT	20.86	15.58	-25.3%	11.66	200
GORO	3.20	2.30	-28.1%	1.14	180
BKE	46.43	33.21	-28.5%	26.05	2,388
PSDV	4.03	2.71	-32.8%	2.37	119
VIAB	65.56	39.68	-39.5%	30.11	27,635
TDC	42.71	25.85	-39.5%	21.98	6,317
DEPO	22.67	13.31	-41.3%	12.25	1,344
EGL	31.97	17.69	-44.7%	11.46	562
LQDT	9.80	5.11	-47.9%	4.42	294
PDLI	6.32	3.11	-50.8%	2.58	1,135
PFMT	3.34	1.64	-50.9%	1.51	165
ACHI	5.83	2.65	-54.5%	1.77	560
AVID	14.73	6.44	-56.3%	5.77	579
MSB	14.96	6.20	-58.6%	3.00	200
VNCE	17.04	6.31	-63.0%	3.31	626
BCOR	14.00	4.88	-65.1%	4.79	572
UIS	23.00	7.79	-66.1%	7.10	1,143
SMT	1.18	0.37	-68.3%	0.19	145

Obviously when 22 of the 50 stocks are down 20% or more over a year - it is a struggle.

I have mentioned that a "Dogs of MFI" approach has shown some promise.  MSB and DEPO 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	-19.0%	-7.3%	0
3/27/2015	-17.1%	-1.9%	0
4/24/2015	-20.3%	-4.5%	0
5/29/2015	-18.7%	-4.1%	0
6/26/2015	-14.6%	-4.2%	0
7/30/2015	-8.0%	-4.2%	0
8/28/2015	-4.0%	1.3%	0
9/25/2015	-0.7%	4.3%	0
10/30/2015	-8.9%	-2.5%	0
11/27/2015	-6.9%	-3.5%	0
12/31/2015	-2.1%	-1.0%	0
1/29/2016	4.3%	5.0%	0
2/26/2016	3.8%	4.3%	0

So you can see the -17.1% to -1.9% loss in 3/27/15. 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 15%. (PDLI, MSB, TPUB etc)  The Dogs portfolio was worse, down 34% (mostly BCOR &; UIS).  The New approach was also bad, down 22% (mainly VNCE).  I think we can safely say that nothing besides 100% NHTC was working. 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.

Category	Value
Total	162,517
Total Russell 3K	189,441
New	150,786
Dogs	228,402
Dividend	351,316

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.