Weekend Update
Greetings. I am at my highest weight of the year. Thanksgiving is great, but I am weak when I have pies and cookies around the house. Took a long walk yesterday, but I needed more calories burnt apparently. Oh well.
Markets went up yet again yesterday. It has been quite a run for me. I am not sure the gains are sustainable, but am glad I have largely been in the markets.
I seem to have gained a few readers this week. Perhaps some are interested in my findings and MFI stats. To you I say Hola! Welcome. Feel free to drop a comment.
Sitting here with a month to go on the year, I am up exactly 11% on my active investments. Guess what? If I had just put money in Russell 3000 I'd also be up 11%. It is tough to beat the market. I have made some unbelievably great picks this year, including REXI and BAC warrants. But I have also picked some absolute dogs, such as EMG which seems headed towards bankruptcy and SPCB. As my daughter would say, "the struggle is real".
MFI Select
For my ten new readers, I tend every week to comment on my various portfolios. Probably dull to read, but it helps me. I split my Magic Formula Investing (MFI) approach into two portfolios. One is MFI Select, which is four tranches of five stocks. This one is pretty free form and started in August 2012. So I pick pretty much whatever stocks I want. I usually use the official MFI website, but I also have my own spreadsheet that replicates the official website and I occasionally pick from it. Here are my four tranches:
| 2/1/2016 |
Start |
Current |
Dividend |
Pct
Gain |
R3K
Gain |
| VEC |
$19.64 |
$23.10 |
$0.00 |
17.6% |
17.8% |
| QCOM |
$45.18 |
$68.29 |
$1.54 |
54.6% |
17.8% |
| PERI |
$2.45 |
$1.14 |
$0.00 |
-53.5% |
17.8% |
| DEPO |
$15.34 |
$20.39 |
$0.00 |
32.9% |
17.8% |
| TDC |
$24.02 |
$27.35 |
$0.00 |
13.9% |
17.8% |
| Totals |
|
|
|
13.1% |
17.8% |
|
|
|
|
|
|
| 5/6/2016 |
Start |
Current |
Dividend |
Pct
Gain |
R3K Gain |
| BRCD |
$7.97 |
$12.38 |
$0.11 |
56.7% |
10.5% |
| CBI |
$37.82 |
$33.68 |
$0.00 |
-10.9% |
10.5% |
| HSII |
$18.51 |
$21.25 |
$0.26 |
16.2% |
10.5% |
| RHI |
$38.51 |
$45.26 |
$0.66 |
19.2% |
10.5% |
| UTHR |
$107.99 |
$134.55 |
$0.00 |
24.6% |
10.5% |
| Totals |
|
|
|
21.2% |
10.5% |
|
|
|
|
|
|
| 8/15/2016 |
Start |
Current |
Dividend |
Pct
Gain |
R3K Gain |
| CSCO |
$31.20 |
$30.09 |
$0.26 |
-2.7% |
2.6% |
| GNC |
$19.79 |
$15.34 |
$0.19 |
-21.5% |
2.6% |
| VLO |
$54.73 |
$64.86 |
$0.60 |
19.6% |
2.6% |
| MSGN |
$16.68 |
$19.90 |
$0.00 |
19.3% |
2.6% |
| GILD |
$79.33 |
$75.44 |
$0.47 |
-4.3% |
2.6% |
| Totals |
|
|
|
2.1% |
2.6% |
|
|
|
|
|
|
| 11/15/2016 |
Start |
Current |
Dividend |
Pct
Gain |
R3K Gain |
| MPAA |
$26.55 |
$26.35 |
$0.00 |
-0.8% |
2.4% |
| ATHM |
$22.61 |
$28.05 |
$0.00 |
24.1% |
2.4% |
| AMGN |
$145.14 |
$145.43 |
$0.00 |
0.2% |
2.4% |
| RHI |
$43.23 |
$45.26 |
$0.22 |
5.2% |
2.4% |
| CA |
$31.11 |
$31.78 |
$0.00 |
2.2% |
2.4% |
| Totals |
|
|
|
6.2% |
2.4% |
So you can see that two tranches are leading and two are trailing. PERI and GNC have hurt me. I also publish a table that summarizes each tranche over time:
| Category/Tranche |
August |
November |
February |
May |
Total |
| Initial Investment |
25,000 |
25,000 |
25,000 |
25,000 |
100,000 |
| Current Tranche |
2.1% |
6.2% |
13.1% |
21.2% |
9.3% |
| Previous Tranche |
2.8% |
8.0% |
-14.3% |
-25.2% |
6.5% |
| Tranche -2 |
11.2% |
69.4% |
8.5% |
18.3% |
26.8% |
| Tranche -3 |
41.4% |
14.2% |
78.3% |
33.0% |
41.7% |
| Tranche -4 |
14.1% |
43.7% |
0.0% |
0.0% |
14.5% |
| MFI Overall Gain |
88.3% |
219.1% |
87.4% |
42.5% |
109.3% |
| Current Balance |
47,065 |
79,767 |
46,854 |
35,620 |
209,306 |
| R3K Current Tranche |
2.6% |
2.4% |
17.8% |
10.5% |
8.3% |
| R3K Overall Gain |
71.4% |
74.5% |
57.0% |
33.0% |
57.9% |
| R3K Balance |
41,779 |
43,623 |
39,238 |
33,238 |
157,876 |
| Annualized IRR |
15.9% |
33.3% |
17.9% |
10.5% |
19.4% |
So this shows that this approach has been extremely successful. If I had invested $100,000 in 4 $25,000 slugs over the four tranches, then the current balance would be $209,306. That works out to a 19.4% annulaized IRR (internal rate of return). I do not think I am a great stock picker, rather I have had a few very lucky picks in here. One can also see that November has been my most successful series of tranches, up 219%. May has been a struggle, only up 42%.
Then here is a table that shows my balances (assuming I started at $100K month by month since I started.
| 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 |
| 8/1/2016 |
52.72% |
207,223 |
154,501 |
| 9/1/2016 |
67.04% |
222,481 |
155,446 |
| 10/1/2016 |
42.98% |
198,563 |
155,582 |
| 11/1/2016 |
41.86% |
195,726 |
153,863 |
| Current |
51.43% |
209,306 |
157,876 |
You can see here that I am basically flat for 2016 and down over the past 12 months. A February tranche stock from the prior year, NHTC, was a big cause of this. In November 2015 it was around $50 a share. But when sold at end of January it was $19.95. That February 2015 tranche was just pretty bad.
Of my current holdings,
- BRCD is being bought by AVGO at about $12.80, so that looks pretty locked in as a good gainer.
- A lot of noise about DEPO getting sold.
- GNC was rumored to being bought by Chinese firm and popped to about $24, but since then has collapsed.
- CBI has really bounced back with Trump ($28.09 to $33.68).
- VEC has been all over the place. It was as high as $34, then dropped off a cliff to $17 when they announced loss of two major contracts. Now about $23.
Here are how Select stocks fared during week:
| Stock |
Last
Week |
Current |
Dividend |
Change |
| RHI |
44.76 |
45.26 |
- |
1.1% |
| ATHM |
26.32 |
28.05 |
- |
6.6% |
| CA |
31.48 |
31.78 |
- |
1.0% |
| AMGN |
145.23 |
145.43 |
- |
0.1% |
| MPAA |
26.08 |
26.35 |
- |
1.0% |
| QCOM |
67.31 |
68.29 |
- |
1.5% |
| MSGN |
19.75 |
19.90 |
- |
0.8% |
| VLO |
63.39 |
64.86 |
- |
2.3% |
| BRCD |
12.38 |
12.38 |
- |
0.0% |
| DEPO |
20.47 |
20.39 |
- |
-0.4% |
| CSCO |
30.18 |
30.09 |
- |
-0.3% |
| VEC |
21.63 |
23.10 |
- |
6.8% |
| TDC |
27.07 |
27.35 |
- |
1.0% |
| GILD |
74.62 |
75.44 |
- |
1.1% |
MFI Formula
As suggested by the name, this is a portfolio of four tranches that I pick by formula. I want to human bias out. I run the mfi screen, 50 stocks over $100m market cap. I then take a subset of that list: stocks over $600m market cap and that yield 2.4% or higher (via regular dividend or special dividends). I do allow myself to discard one name at this point. Then I use a random number generator and pick five stocks.
I started this approach in October 2014 based on studies I had done on all my tracking portfolios. That being said, I have been aware of it for longer and it has driven many of my picks (although not random) in my Select portfolio.
| 12/31/15 Stocks |
Start |
Current |
Dividend |
Pct
Gain |
R3K
Gain |
| BBY |
$30.31 |
$46.58 |
$1.29 |
57.9% |
10.6% |
| GME |
$28.34 |
$25.82 |
$1.11 |
-5.0% |
10.6% |
| ILG |
$15.89 |
$18.40 |
$0.36 |
18.1% |
10.6% |
| PPC |
$22.22 |
$18.18 |
$2.75 |
-5.8% |
10.6% |
| VIAB |
$40.93 |
$37.64 |
$1.00 |
-5.6% |
10.6% |
| Totals |
|
|
|
11.9% |
10.6% |
|
|
|
|
|
|
| 4/1/16
Stocks |
Start |
Current |
Dividend |
Pct Gain |
R3K Gain |
| CALM |
$51.27 |
$40.35 |
$0.44 |
-20.4% |
10.4% |
| HPQ |
$12.10 |
$15.18 |
$0.25 |
27.5% |
10.4% |
| TIME |
$15.24 |
$13.80 |
$0.38 |
-7.0% |
10.4% |
| ILG |
$13.85 |
$18.40 |
$0.24 |
34.5% |
10.4% |
| TSRA |
$30.79 |
$40.55 |
$0.60 |
33.7% |
10.4% |
| Totals |
|
|
|
13.7% |
10.4% |
|
|
|
|
|
|
| 7/1/2016 |
Start |
Current |
Dividend |
Pct
Gain |
R3K Gain |
| ILG |
$16.76 |
$18.40 |
$0.12 |
10.5% |
6.1% |
| VIAB |
$44.00 |
$37.64 |
$0.20 |
-14.0% |
6.1% |
| CPLA |
$53.22 |
$88.55 |
$0.78 |
67.9% |
6.1% |
| HRB |
$23.62 |
$23.98 |
$0.22 |
2.5% |
6.1% |
| PBI |
$17.69 |
$14.86 |
$0.38 |
-13.9% |
6.1% |
| Totals |
|
|
|
10.6% |
6.1% |
|
|
|
|
|
|
| 10/3/2016 |
Start |
Current |
Dividend |
Pct
Gain |
R3K Gain |
| CPLA |
$58.15 |
$88.55 |
$0.39 |
52.9% |
3.2% |
| LDOS |
$43.01 |
$49.98 |
$0.00 |
16.2% |
3.2% |
| GME |
$27.70 |
$25.82 |
$0.00 |
-6.8% |
3.2% |
| PBI |
$18.15 |
$14.86 |
$0.19 |
-17.1% |
3.2% |
| CSCO |
$31.72 |
$30.09 |
$0.26 |
-4.3% |
3.2% |
| Totals |
|
|
|
8.2% |
3.2% |
As you can see, all four current tranches are leading. Sweet. Obviously a big shout out to CPLA, up 68% and 53%. This was a matter of controversy whether to allow stocks to be picked multiple times. If this was my entire net worth, I might say "no" as you do not want eggs in too few baskets. But my backtesting did allow stocks to be picked multiple times and you will generally have repeats as the stock names do not change that quickly.
Here is the same table showing IRRs etc:
| Category/Tranche |
October |
January |
April |
July |
Total |
| Initial Investment |
249,820 |
249,939 |
250,180 |
249,728 |
999,667 |
| Current Tranche |
8.2% |
11.9% |
13.7% |
10.6% |
11.0% |
| Previous Tranche |
5.5% |
11.0% |
-0.2% |
-12.5% |
1.0% |
| Tranche -2 |
0.5% |
- |
- |
- |
0.1% |
| MFI Overall Gain |
14.7% |
24.3% |
13.4% |
-3.2% |
12.3% |
| Current Balance |
286,468 |
310,568 |
283,654 |
241,726 |
1,122,415 |
| R3K Current Tranche |
3.2% |
10.6% |
10.4% |
6.1% |
7.6% |
| R3K Overall Gain |
16.6% |
10.4% |
9.2% |
5.8% |
10.5% |
| R3K Balance |
291,294 |
275,850 |
273,088 |
264,211 |
1,104,443 |
| Annualized IRR |
6.5% |
12.1% |
7.9% |
-2.3% |
6.7% |
You can see the current tranhes are +11% versus R3K up 7.6%. July has been a problem, in aggregate losing $. Here I start at hypothetical $250,000 per tranche (as opposed to $25,000 in Select). Can't remember why I did it differently,doesn't really matter.
Here is month by month listing:
| 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 |
| 8/1/2016 |
2.56% |
109,419 |
106,857 |
| 9/1/2016 |
-0.34% |
106,704 |
107,048 |
| 10/1/2016 |
-0.85% |
106,377 |
107,230 |
| 11/1/2016 |
0.42% |
105,421 |
105,003 |
| Current |
1.80% |
112,242 |
110,444 |
One can see that here 2016 has been strong, going from 96,830 to 112,242... over 16%. But my lead over R3K has been pretty hit or miss.
Here are how Formula stocks did during the week. Strong move by GME.
| Stock |
Last
Week |
Current |
Dividend |
Change |
| ILG |
18.24 |
18.40 |
- |
0.9% |
| CPLA |
85.80 |
88.55 |
0.39
|
3.7% |
| GME |
23.46 |
25.82 |
- |
10.1% |
| VIAB |
37.77 |
37.64 |
- |
-0.3% |
| BBY |
44.79 |
46.58 |
- |
4.0% |
| PBI |
14.67 |
14.86 |
- |
1.3% |
| TSRA |
40.20 |
40.55 |
- |
0.9% |
| HPQ |
15.87 |
15.18 |
- |
-4.3% |
| LDOS |
48.36 |
49.98 |
- |
3.3% |
| CSCO |
30.18 |
30.09 |
- |
-0.3% |
| PPC |
18.31 |
18.18 |
- |
-0.7% |
| TIME |
13.75 |
13.80 |
- |
0.4% |
| HRB |
23.15 |
23.98 |
- |
3.6% |
| CALM |
40.00 |
40.35 |
- |
0.9% |
Dividend/Income Portfolio
As I approach 60, I am making a conscious effort to build up a sustainable income stream. So largely the two MFI tranches are "fixed", I am not adding or removing $. New money is going into income/dividend stocks. Here I do not have an approach, I simply look for securities to buy and hold. I do like closed end funds as they can be bought at a discount (look at CEF Connect). I do have a couple Warren Buffett plays with PSX and their pipeline company PSXP. I also have SJT, which I am frankly selling (they seem expensive given the amount of gas in the ground). I own TGONF, which is like a closed end fund and sells at big discount. I have a reit, SBRA... though I am unsure whether they are "cheap".
Hmm, this will have to be continued. My spreadsheet just crashed. It links to Yahoo Finance, which has really become embarrassingly unstable. At some point I am going to need to revamp it.
Wait, got it to work. Here are my holdings here:
| Dividend
Stocks |
Start |
Current |
Dividends |
Overall Pct
Gain |
Weekly Pct
Gain |
7/1/16 Price |
% Chg Since
7/1/16 |
| CSQ |
9.09 |
10.16 |
2.16 |
35.5% |
1.5% |
9.99 |
5.9% |
| AOD |
7.64 |
7.52
|
1.65 |
20.1% |
3.6% |
7.33 |
6.4% |
| SBRA |
22.46 |
21.98 |
0.42 |
-0.3% |
0.7% |
22.46
|
-2.1% |
| SJT |
7.76 |
6.17
|
0.30 |
-16.7% |
-0.3% |
7.26 |
-13.1% |
| JQC |
7.83 |
8.63 |
0.60 |
17.8% |
3.0% |
8.10 |
9.7% |
| TGONF |
10.24 |
11.00 |
1.85 |
25.6% |
-1.3% |
10.05 |
11.1% |
| PSXP |
46.95 |
44.78 |
0.53 |
-3.5% |
3.3% |
46.95
|
-4.6% |
| PSX |
80.00 |
84.89 |
2.25 |
8.9% |
1.5% |
80.00 |
6.1% |
| DSL |
18.43 |
18.34 |
0.88 |
4.3% |
2.4% |
18.59
|
2.7% |
| GLDI |
10.67 |
9.21
|
0.68 |
-7.3% |
-2.5% |
10.87 |
-9.9% |
| O |
24.07 |
56.57 |
19.16 |
214.7% |
2.6% |
69.64
|
-17.3% |
| DHF |
3.11 |
3.24
|
- |
4.2% |
0.9% |
3.11 |
4.2% |
| OIBAX |
5.07 |
5.59 |
2.29 |
55.4% |
-0.2% |
5.84 |
-2.8% |
| Totals |
|
|
|
15.2% |
|
|
1.6% |
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