Saturday, April 23, 2016

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.  

1 comment:

jb said...

It makes you wonder if Burton Malkiel wasn't on to something with his 'A Random Walk Down Wall Street'. I've been reviewing all my old holdings and there isn't much rhyme or reason as to why some went up or others went down. Some that went up had declining revenue, operating earnings, and decreasing shareholder equity while others with the same characteristics went down. Makes one wonder what the magic is, maybe it is just getting lucky and picking the occasional stock that has its price increase by 100%+.