July 30th, 2015 Monthly Tracking Portfolio

Magic Formula Investing Tracking

Another month/year has flown by. And so it is time to look at another monthly tracking portfolio as we reach August 2016 (I actually stopped this portfolio a day late... gasp!).  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 (wait for it) was a virtual tie. That breaks a streak of  15 of the last 16 to close have lost. In addition, after 5 straight portfolios losing money, this one was up 4%.  Here are the 50 stocks in descending performance order:

Stock	Initial Price	End Price	Percent Change	52 week low	Mkt Cap
WTW	4.14	11.15	169.3%	4.10	236
GORO	2.17	5.74	164.3%	1.14	121
ONE	2.29	5.15	124.9%	1.85	110
COH	30.09	43.46	44.4%	27.22	8,642
ETM	10.21	13.93	36.4%	8.88	391
VEC	23.09	31.28	35.5%	17.25	243
PETS	16.37	20.81	27.2%	14.53	342
KORS	42.12	52.90	25.6%	34.83	8,551
CA	28.38	34.85	22.8%	25.16	12,827
IQNT	17.08	20.89	22.3%	14.56	594
AGX	38.25	46.79	22.3%	28.03	572
CPLA	49.53	59.95	21.0%	39.06	619
PPC	19.63	23.24	18.4%	17.39	5,692
APEI	25.33	29.72	17.3%	13.80	434
CLCT	18.64	21.82	17.1%	11.66	179
KING	15.47	18.00	16.4%	12.00	4,878
HPQ	30.43	35.26	15.9%	8.91	55,330
CSCO	27.35	30.73	12.3%	22.46	144,132
BBY	30.70	33.47	9.0%	25.31	11,346
DLX	62.93	67.49	7.2%	49.46	3,212
IDCC	55.32	59.23	7.1%	41.01	2,018
NSU	3.25	3.47	6.6%	2.27	685
NHTC	32.19	33.90	5.3%	15.90	401
TIVO	10.07	10.52	4.5%	7.29	978
QCOM	62.06	61.85	-0.3%	42.24	101,639
PBI	19.66	19.06	-3.1%	16.24	4,131
PSDV	4.06	3.93	-3.2%	2.37	119
LQDT	8.73	8.27	-5.3%	4.42	262
WILN	1.96	1.82	-7.1%	0.93	245
DHX	7.92	7.26	-8.3%	5.99	410
MSB	10.35	9.40	-9.2%	3.00	143
BRCD	10.18	9.22	-9.4%	7.40	4,338
AAPL	119.91	106.05	-11.6%	89.47	698,170
NSR	29.01	25.04	-13.7%	20.00	1,582
STRA	55.85	46.55	-16.7%	42.39	616
VIAB	54.26	44.35	-18.3%	30.11	22,381
TDC	36.60	28.39	-22.4%	21.98	5,194
HRB	32.43	23.92	-26.2%	19.18	9,178
GME	44.20	30.35	-31.3%	24.33	4,944
KFY	32.95	22.53	-31.6%	18.57	1,690
PDLI	5.22	3.55	-31.9%	2.58	942
XENE	11.06	7.44	-32.7%	5.65	157
BKE	41.10	27.37	-33.4%	22.00	2,138
EVOL	7.94	5.24	-34.0%	4.79	100
RPXC	15.30	10.02	-34.5%	8.60	870
UIS	15.94	9.86	-38.1%	6.72	796
LCI	59.44	31.10	-47.7%	16.91	2,148
VNCE	9.95	4.93	-50.5%	3.31	366
ENTA	49.64	22.30	-55.1%	16.75	928
NLNK	51.16	10.49	-79.5%	9.23	1,656

14 of the 50 stocks are down 20% or more over a year - that at least is better than the 21 last month.  We did have three big winners this time though, WTW, GORO and ONE.

I have mentioned that a "Dogs of MFI" approach has shown some promise.  ENTA and UIS 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	-14.1%	0.1%	0
6/26/2015	-8.7%	0.4%	0
7/30/2015	3.96%	4.02%	0
8/28/2015	4.1%	10.0%	0
9/25/2015	5.4%	13.3%	0
10/30/2015	4.0%	5.8%	0
11/27/2015	2.4%	4.8%	0
12/31/2015	6.7%	7.5%	0
1/29/2016	15.2%	14.0%	1
2/26/2016	12.2%	13.2%	0
3/24/2016	14.4%	8.1%	1
4/22/2016	3.7%	4.5%	0
5/27/2016	9.0%	4.0%	1
6/30/2016	8.0%	3.8%	1

So technically, when you go out two decimal places, this is a loss.

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 very good, up about 13.5%.   The Dogs portfolio was great (helped by WTW), up 44%.  The New approach was solid, up 9% (only BBY).  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	181,707
Total Russell 3K	207,231
New	166,534
Dogs	255,738
Dividend	401,617