Weekend Update 7/16/16

Weekend Update

Good morning everybody.  Another week has flown by.  Lots on the news front between Turkey, Nice (France) and Pence. Little of it good.  Despite the news, the markets continue to levitate.  I am now up 7.25%, which is a bit better than the benchmark.  I have a couple of hedges in place the last ten days - that has "hurt" my results. But I am sleeping better knowing I have some downside protection.

Interestingly, MFI seems to be working better of late. My MFI Index is now up almost 4% for 2016. While that still trails the benchmark, the gap has been narrowed.  That is pretty consistent with my twelve open tracking tranches - they are up an average of 5.2% versus 7.1% for the benchmark.

MFI Select

July is turning out to be a banner month for my select approach.

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
2/1/2016	49.49%	187,428	137,934
3/1/2016	56.48%	194,415	137,934
4/1/2016	47.34%	195,770	148,430
5/1/2016	46.38%	194,301	147,923
6/1/2016	51.44%	201,999	150,558
7/1/2016	50.41%	201,092	150,680
Current	54.07%	207,680	153,611

You can see it is up about 3% in the month and the lead has expanded. Looking at individual names for the month:

• LCI +19.5%
• CBI +10%
• IILG +11.6%
• HSII +6%
• TDC +8%
• VIAB +7%
• VEC +10%
• HPQ +10%

Some of these are Formula names, not select names. You'll see it has been a good month on that side as well.

8/17/2015	Start	Current	Dividend	Pct Gain	R3K Gain
VDSI	$18.66	$16.44	$0.00	-11.9%	3.5%
SALE	$9.34	$8.15	$0.00	-12.7%	3.5%
CSCO	$28.95	$29.82	$0.94	6.3%	3.5%
TGNA	$25.30	$24.43	$0.56	-1.2%	3.5%
HSII	$20.14	$17.88	$0.26	-9.9%	3.5%
Totals				-5.9%	3.5%
11/15/2015	Start	Current	Dividend	Pct Gain	R3K Gain
LCI	$34.01	$28.42	$0.00	-16.4%	5.9%
SAVE	$34.48	$47.46	$0.00	37.7%	5.9%
PPC	$18.98	$25.17	$2.75	47.1%	5.9%
VEC	$23.60	$31.25	$0.00	32.4%	5.9%
VNCE	$3.99	$5.34	$0.00	33.8%	5.9%
Totals				26.9%	5.9%
2/1/2016	Start	Current	Dividend	Pct Gain	R3K Gain
VEC	$19.64	$31.25	$0.00	59.1%	12.7%
QCOM	$45.18	$54.75	$1.01	23.4%	12.7%
PERI	$2.45	$1.15	$0.00	-53.1%	12.7%
DEPO	$15.34	$18.81	$0.00	22.6%	12.7%
TDC	$24.02	$27.18	$0.00	13.2%	12.7%
Totals				13.1%	12.7%
5/6/2016	Start	Current	Dividend	Pct Gain	R3K Gain
BRCD	$7.97	$9.09	$0.06	14.7%	5.7%
CBI	$37.82	$38.01	$0.00	0.5%	5.7%
HSII	$18.51	$17.88	$0.00	-3.4%	5.7%
RHI	$38.51	$39.36	$0.22	2.8%	5.7%
UTHR	$107.99	$110.75	$0.00	2.6%	5.7%
Totals				3.4%	5.7%
Category/Tranche	August	November	February	May	Total
Initial Investment	25,000	25,000	25,000	25,000	100,000
Current Tranche	-5.9%	26.9%	13.1%	3.4%	11.7%
Previous Tranche	11.2%	69.4%	-14.3%	-25.2%	8.3%
Tranche -2	41.4%	14.2%	8.5%	18.3%	20.6%
Tranche -3	14.1%	43.7%	78.3%	33.0%	42.3%
MFI Overall Gain	68.7%	253.0%	87.3%	21.6%	107.7%
Current Balance	42,186	88,251	46,834	30,409	207,680
R3K Current Tranche	3.5%	5.9%	12.7%	5.7%	7.0%
R3K Overall Gain	64.3%	67.1%	50.1%	33.0%	53.6%
R3K Balance	41,072	41,768	37,533	33,238	153,611
Annualized IRR	14.3%	41.0%	19.9%	6.3%	22.2%

You can see from this table that my open tranches are up 11.7%. That is solid. The benchmark R3K is up 7.0% over the four tranches.

MFI Formula

Kind of a breakthrough month here.  I guess Brexit was good.

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	100,012
2/1/2016	-0.72%	93,797	94,367
3/1/2016	4.07%	98,588	94,367
4/1/2016	0.34%	102,371	101,548
5/1/2016	-1.91%	99,774	101,200
6/1/2016	-0.42%	103,145	103,568
7/1/2016	-0.19%	103,022	103,216
Current	1.44%	107,029	105,585

That is a pretty impressive move from 5/1 to current - over 7%.  And I am now ahead by 144 basis points. Not a stomp, but over many years, 144 basis points would compound nicely. Certainly being ahead makes it easier to stay the course.

10/1/2015	Start	Current	Dividend	Pct Gain	R3K Gain
BKE	$36.83	$25.93	$1.73	-24.9%	12.3%
IQNT	$21.96	$20.52	$0.45	-4.5%	12.3%
QCOM	$53.45	$54.75	$1.49	5.2%	12.3%
CSCO	$26.37	$29.82	$0.94	16.6%	12.3%
CA	$27.30	$34.17	$0.76	27.9%	12.3%
Totals				4.1%	12.3%
12/31/15 Stocks	Start	Current	Dividend	Pct Gain	R3K Gain
BBY	$30.31	$31.38	$1.01	6.9%	6.4%
GME	$28.34	$27.99	$0.74	1.4%	6.4%
IILG	$15.89	$17.74	$0.24	13.2%	6.4%
PPC	$22.22	$25.17	$2.75	25.7%	6.4%
VIAB	$40.93	$44.28	$0.80	10.2%	6.4%
Totals				11.4%	6.4%
4/1/16 Stocks	Start	Current	Dividend	Pct Gain	R3K Gain
CALM	$51.27	$44.15	$0.44	-13.0%	6.1%
HPQ	$12.10	$13.85	$0.13	15.5%	6.1%
TIME	$15.24	$16.37	$0.19	8.6%	6.1%
IILG	$13.85	$17.74	$0.12	28.9%	6.1%
TSRA	$30.79	$31.95	$0.20	4.4%	6.1%
Totals				8.9%	6.1%
7/1/2016	Start	Current	Dividend	Pct Gain	R3K Gain
IILG	$16.76	$17.74	$0.00	5.8%	2.0%
VIAB	$44.00	$44.28	$0.00	0.6%	2.0%
CPLA	$53.22	$56.43	$0.00	6.0%	2.0%
HRB	$23.62	$24.27	$0.00	2.8%	2.0%
PBI	$17.69	$18.85	$0.00	6.6%	2.0%
Totals				4.4%	2.0%

Wow, three of  my four open tranches are winning.

Category/Tranche	October	January	April	July	Total
Initial Investment	249,820	249,939	250,180	249,728	999,667
Current Tranche	4.1%	11.4%	8.9%	4.4%	7.2%
Previous Tranche	0.5%	11.0%	-0.2%	-12.5%	-0.1%
Tranche -2	0.0%	-	-	-	0.0%
MFI Overall Gain	4.6%	23.7%	8.6%	-8.6%	7.1%
Current Balance	261,204	309,219	271,744	228,128	1,070,295
R3K Current Tranche	12.3%	6.4%	6.1%	-0.3%	6.1%
R3K Overall Gain	11.7%	6.1%	4.9%	-0.3%	5.6%
R3K Balance	279,109	265,199	262,498	249,047	1,055,853
Annualized IRR	2.5%	14.8%	6.6%	-8.3%	5.0%

A new hope.

Dividends & Warrants

Div and Warrants	Start	Current	Dividend	Pct Gain	Pct Gain Last Week	June 1 2016
BAC-WTA	$4.90	$3.37	$0.00	-31.2%	-33.6%	-20.6%
AOD	$7.64	$7.54	$1.42	17.3%	14.7%	17.1%
JQC	$7.82	$8.19	$0.40	9.9%	9.9%	8.4%
CSQ	$9.06	$10.31	$1.90	34.8%	32.9%	30.5%
DSL	$18.41	$18.68	$0.15	2.3%	3.9%	0.0%
TGONF	$10.24	$10.00	$1.52	12.5%	11.7%	12.5%
HIG-WT	$21.24	$36.90	$0.00	73.8%	73.8%	75.7%
O	$23.57	$69.84	$18.60	275.2%	277.9%	249.0%
OIBAX	$5.06	$5.86	$2.23	60.1%	59.9%	58.1%
SJT	$8.75	$6.85	$0.19	-19.6%	-14.7%	-14.4%
GLDI	$10.69	$10.74	$0.12	1.6%	3.0%	0.0%
Totals				7.1%	6.5%	9.0%

Bank of America will report next week. Hopefully some good news and I can start eroding that -31.2%.  SJT should start benefiting from higher NG prices.  If prices go up and the monthly dividend follows, I could make some gains there as well.  One typically "good" thing about dividend stocks is that I reinvest all the dividends and when the stock price drops, I get more shares with me repurchase.  But that does not work for SJT as their dividend is variable based upon actual results.  So when the stocks is the cheapest, I am also getting the smallest dividend typically.

Recent Buy

I did buy some PN at $7.73 this week. EBIX offered to buy them at $9.50 back in June - so I am hoping EBIX comes back with a higher bid.  These deals have rarely work for me - but in today's challenged markets, I am going to be looking for more of these special situations that may have asymmetrical returns... the REXI deal was eye-opening to me. I mean REXI announced they were going to look to sell themselves. After a short term spike, the markets (which have the attention span of a fruit fly) gave most of it back. So an investor had a chance for great upside with limited downside.

I am going to hunt for more of those...  PN is my first try.