MFI Monthly Tracking Portfolio 4/24/15

Monthly Tracking Portfolio Update

Another month/year has flown by. And so it is time to look at another monthly tracking portfolio as we near May 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 13 of the last 14 to close have lost. In addition, this was the sixth straight portfolio to lose $ (though only 8 of 11 open portfolios are trailing and 6 of them are in the black).  Here are the 50 stocks in descending performance order:

Stock	Initial Price	End Price	Percent Change	52 week low	Mkt Cap
WTW	8.25	14.47	75.4%	3.67	468
NHTC	22.33	35.95	61.0%	15.90	281
ONE	2.76	3.76	36.2%	1.85	132
ANIK	38.35	47.88	24.9%	30.93	570
PETS	16.62	18.13	9.1%	14.53	352
IDCC	53.01	57.70	8.8%	41.01	1,988
KING	16.76	18.00	7.4%	N/A	5,396
ADMS	17.70	18.83	6.4%	12.02	311
AGX	31.93	33.75	5.7%	28.03	477
NSU	3.63	3.69	1.6%	2.27	763
PPC	23.62	23.95	1.4%	17.39	6,118
CSCO	27.90	28.15	0.9%	22.46	147,184
GILD	101.99	101.93	-0.1%	81.89	155,439
PBI	22.07	21.49	-2.6%	16.24	4,605
KFY	32.07	30.94	-3.5%	25.21	1,636
NATH	46.49	43.94	-5.5%	30.20	209
STRA	53.40	49.23	-7.8%	41.50	582
FLR	59.09	54.28	-8.1%	39.48	8,934
GORO	3.26	2.99	-8.3%	1.14	183
HPQ	32.88	30.10	-8.5%	8.91	60,600
NSR	27.92	25.01	-10.4%	20.00	1,538
WILN	2.53	2.22	-12.3%	0.93	320
IQNT	18.69	16.20	-13.3%	14.56	648
ENTA	37.14	31.78	-14.4%	16.75	691
VEC	25.85	22.07	-14.6%	17.25	271
CLCT	21.23	18.04	-15.0%	11.66	204
GME	39.17	32.80	-16.3%	24.33	4,384
BRCD	11.89	9.69	-18.5%	7.40	5,124
KORS	63.48	51.60	-18.7%	34.83	12,761
CPLA	64.63	52.48	-18.8%	39.06	816
QCOM	65.93	52.64	-20.2%	42.24	111,436
TSRA	37.46	29.59	-21.0%	26.21	2,029
HRB	31.47	23.83	-24.3%	23.43	8,880
PSDV	4.16	3.15	-24.3%	2.37	122
RPXC	15.03	11.15	-25.8%	9.15	847
APEI	30.58	21.67	-29.1%	13.80	525
BKE	44.69	31.32	-29.9%	26.05	2,308
EGL	30.24	19.58	-35.3%	11.46	532
VIAB	68.35	43.78	-35.9%	30.11	28,812
DEPO	27.65	17.54	-36.6%	12.25	1,639
PDLI	6.31	3.82	-39.4%	2.58	1,131
LQDT	9.43	5.67	-39.9%	4.42	282
MSB	15.03	8.96	-40.4%	3.00	200
PFMT	3.22	1.77	-45.0%	1.51	159
BCOR	13.94	5.96	-57.2%	4.69	570
ACHI	5.66	2.39	-57.8%	1.77	543
APOL	17.51	7.27	-58.5%	6.31	1,885
SMT	1.17	0.46	-60.7%	0.19	143
UIS	21.82	8.17	-62.6%	7.04	1,084
NLNK	52.10	17.72	-66.0%	15.68	1,458

Obviously when 20 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.  BKE and VIAB 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	-15.4%	-0.8%	0
5/29/2015	-13.6%	-0.4%	0
6/26/2015	-9.5%	-0.5%	0
7/30/2015	-3.2%	-0.5%	0
8/28/2015	1.5%	5.2%	0
9/25/2015	3.4%	8.4%	0
10/30/2015	-4.2%	1.3%	0
11/27/2015	-2.7%	0.2%	0
12/31/2015	2.3%	2.8%	0
1/29/2016	10.2%	9.1%	1
2/26/2016	8.4%	8.3%	1
3/24/2016	6.3%	3.4%	1
Average 12	-1.4%	3.0%

So you can see the -15.4% to -0.8% loss in 4/24/15. Sadly, as my gentle readers have noted, MFI isn't doing so well of late.  

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 on par, down about 13%. (PDLI, MSB, BKE etc)  The Dogs portfolio was worse, down 25% (despite WTW being up 75%).  The New approach was also bad, down 18% (mainly NLNK).  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	168,811
Total Russell 3K	194,942
New	161,595
Dogs	238,187
Dividend	366,498

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.