Final weekend update of 2016. It was a solid year for me. I did edge out the benchmark a bit. It was a bit of a roller coaster... but that seems to be the norm.
as my readers know, this is a blog called the MFI Diary that focuses on Magic Formula Investing by Joel Greenblatt. I have two real life, real money portfolios - one is as described in the book, where I pick 5 stocks a quarter and hold for a year (MFI Select) and the second is the same, except instead of my picking, i use a formula (MFI Formula). My formula is to run a screen on the top 50 stocks and then pick those with a dividend > 2.4% and market cap >$600m. I am toying with changing the market cap to just discarding the smallest 17 (that makes it relative).
MFI Index
I do maintain an MFI Index and have tracked it since 2006. I reconstitute the stocks once a year, so Tuesday will have new names. Here is the year by year results:
| Annual | Inception to Date | |||
| Year | Russell | MFI | Russell ITD | MFI ITD |
| 2006 | 11.40% | 15.03% | 11.40% | 15.03% |
| 2007 | 4.09% | -6.69% | 15.96% | 7.34% |
| 2008 | -37.05% | -37.97% | -27.00% | -33.42% |
| 2009 | 32.51% | 45.18% | -3.27% | -3.34% |
| 2010 | 18.38% | 22.77% | 14.50% | 18.67% |
| 2011 | -0.56% | -10.47% | 13.87% | 6.25% |
| 2012 | 16.43% | 9.70% | 32.57% | 16.56% |
| 2013 | 33.01% | 51.70% | 76.34% | 76.82% |
| 2014 | 12.26% | 12.07% | 97.95% | 98.15% |
| 2015 | 0.38% | -8.95% | 98.33% | 89.37% |
| 2016 | 12.50% | 13.19% | 110.62% | 101.16% |
Here are my personal results during 2016:
| Component | YTD |
| Overall | +14.92% |
| Select | -0.01% |
| Formula | +17.12% |
| Miscellaneous | +24.39% |
| Dividend | +22.81% |
| R3K | +12.50% |
| MFI Index | +13.19% |
Miscellaneous was up so much because of the BAC Warrants (by far my largest holding). They were up 71%. Also WLDN was more than a double and ONE was a double.
Dividend was up because of REXI and SJT (both up over 50%).
MFI Select
Here are my current holdings:
| 2/1/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| VEC | $19.64 | $23.85 | $0.00 | 21.4% | 19.3% |
| QCOM | $45.18 | $65.20 | $2.07 | 48.9% | 19.3% |
| PERI | $2.45 | $1.42 | $0.00 | -42.0% | 19.3% |
| DEPO | $15.34 | $18.02 | $0.00 | 17.5% | 19.3% |
| TDC | $24.02 | $27.17 | $0.00 | 13.1% | 19.3% |
| Totals | 11.8% | 19.3% | |||
| 5/6/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| BRCD | $7.97 | $12.49 | $0.17 | 58.8% | 11.9% |
| CBI | $37.82 | $31.75 | $0.00 | -16.0% | 11.9% |
| HSII | $18.51 | $24.15 | $0.26 | 31.9% | 11.9% |
| RHI | $38.51 | $48.78 | $0.66 | 28.4% | 11.9% |
| UTHR | $107.99 | $143.43 | $0.00 | 32.8% | 11.9% |
| Totals | 27.2% | 11.9% | |||
| 8/15/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| CSCO | $31.20 | $30.22 | $0.26 | -2.3% | 3.9% |
| GNC | $19.79 | $11.04 | $0.38 | -42.3% | 3.9% |
| VLO | $54.73 | $68.32 | $0.60 | 25.9% | 3.9% |
| MSGN | $16.68 | $21.50 | $0.00 | 28.9% | 3.9% |
| GILD | $79.33 | $71.61 | $0.94 | -8.5% | 3.9% |
| Totals | 0.3% | 3.9% | |||
| 11/15/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| MPAA | $26.55 | $26.92 | $0.00 | 1.4% | 3.7% |
| ATHM | $22.61 | $25.28 | $0.00 | 11.8% | 3.7% |
| AMGN | $145.14 | $146.21 | $0.00 | 0.7% | 3.7% |
| RHI | $43.23 | $48.78 | $0.22 | 13.3% | 3.7% |
| CA | $31.11 | $31.77 | $0.00 | 2.1% | 3.7% |
| Totals | 5.9% | 3.7% | |||
| Category/Tranche | August | November | February | May | Total |
| Initial Investment | 25,000 | 25,000 | 25,000 | 25,000 | 100,000 |
| Current Tranche | 0.3% | 5.9% | 11.8% | 27.2% | 9.6% |
| Previous Tranche | 2.8% | 8.0% | -14.3% | -25.2% | 6.4% |
| 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 | 85.1% | 218.2% | 85.2% | 49.5% | 109.5% |
| Current Balance | 46,265 | 79,548 | 46,306 | 37,384 | 209,503 |
| R3K Current Tranche | 3.9% | 3.7% | 19.3% | 11.9% | 9.7% |
| R3K Overall Gain | 73.6% | 76.7% | 59.0% | 33.0% | 58.9% |
| R3K Balance | 41,779 | 44,187 | 39,738 | 33,238 | 158,941 |
| Annualized IRR | 15.1% | 32.4% | 17.0% | 11.6% | 19.0% |
You can see the open tranches are pretty much a push with R3K. I have had too many losers (like PERI & GNC). So this approach did lay an egg in 2016, essentially flat. But still overall, since 2012 this has been a very good 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 |
| 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 |
| 12/1/2016 | 45.92% | 202,775 | 156,859 |
| Current | 50.56% | 209,503 | 158,941 |
Here is how MFI Select stocks fared the final week:
| Stock | Last Week | Current | Dividend | Change |
| RHI | 48.95 | 48.78 | - | -0.3% |
| ATHM | 25.58 | 25.28 | - | -1.2% |
| CA | 32.05 | 31.77 | - | -0.9% |
| AMGN | 147.55 | 146.21 | - | -0.9% |
| MPAA | 25.66 | 26.92 | - | 4.9% |
| QCOM | 66.86 | 65.20 | - | -2.5% |
| MSGN | 21.45 | 21.50 | - | 0.2% |
| VLO | 68.96 | 68.32 | - | -0.9% |
| BRCD | 12.45 | 12.49 | - | 0.3% |
| DEPO | 18.49 | 18.02 | - | -2.5% |
| CSCO | 30.53 | 30.22 | - | -1.0% |
| VEC | 24.02 | 23.85 | - | -0.7% |
| TDC | 26.97 | 27.17 | - | 0.7% |
| GILD | 73.64 | 71.61 | - | -2.8% |
| CBI | 34.20 | 31.75 | -7.2% | |
| GNC | 10.84 | 11.04 | 1.8% | |
| PERI | 1.35 | 1.42 | 5.2% | |
| Average | -0.5% |
MFI Formula
This week I retired a tranche and started a new one.
| 12/31/15 Stocks | Start | Current | Dividend | Pct Gain | R3K Gain |
| BBY | $30.31 | $42.67 | $1.57 | 46.0% | 12.1% |
| GME | $28.34 | $25.45 | $1.48 | -5.0% | 12.1% |
| ILG | $15.89 | $18.17 | $0.48 | 17.4% | 12.1% |
| PPC | $22.22 | $19.14 | $2.75 | -1.5% | 12.1% |
| VIAB | $40.93 | $35.40 | $1.20 | -10.6% | 12.1% |
| Totals | 9.3% | 12.1% | |||
| 4/1/16 Stocks | Start | Current | Dividend | Pct Gain | R3K Gain |
| CALM | $51.27 | $44.18 | $0.44 | -13.0% | 11.8% |
| HPQ | $12.10 | $14.84 | $0.38 | 25.7% | 11.8% |
| TIME | $15.24 | $17.85 | $0.57 | 20.8% | 11.8% |
| ILG | $13.85 | $18.17 | $0.36 | 33.8% | 11.8% |
| TSRA | $30.79 | $44.20 | $0.60 | 45.5% | 11.8% |
| Totals | 22.6% | 11.8% | |||
| 7/1/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| ILG | $16.76 | $18.17 | $0.24 | 9.8% | 7.5% |
| VIAB | $44.00 | $35.10 | $0.40 | -19.3% | 7.5% |
| CPLA | $53.22 | $87.80 | $0.80 | 66.5% | 7.5% |
| HRB | $23.62 | $22.99 | $0.44 | -0.8% | 7.5% |
| PBI | $17.69 | $15.19 | $0.38 | -12.0% | 7.5% |
| Totals | 8.8% | 7.5% | |||
| 10/3/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| CPLA | $58.15 | $87.80 | $0.41 | 51.7% | 4.6% |
| LDOS | $43.01 | $51.14 | $0.00 | 18.9% | 4.6% |
| GME | $27.70 | $25.26 | $0.37 | -7.5% | 4.6% |
| PBI | $18.15 | $15.19 | $0.19 | -15.3% | 4.6% |
| CSCO | $31.72 | $30.22 | $0.26 | -3.9% | 4.6% |
| Totals | 8.8% | 4.6% | |||
| 12/30/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| GILD | $71.69 | $71.61 | $0.00 | -0.1% | -0.1% |
| HPQ | $15.00 | $14.84 | $0.00 | -1.1% | -0.1% |
| TGNA | $21.33 | $21.39 | $0.00 | 0.3% | -0.1% |
| CA | $31.99 | $31.77 | $0.00 | -0.7% | -0.1% |
| SYNT | $19.79 | $19.79 | $0.00 | 0.0% | -0.1% |
| Totals | -0.3% | -0.1% | |||
| Category/Tranche | October | January | April | July | Total |
| Initial Investment | 249,820 | 249,939 | 250,180 | 249,728 | 999,667 |
| Current Tranche | 8.8% | -0.3% | 22.6% | 8.8% | 12.2% |
| Previous Tranche | 5.5% | 9.3% | -0.2% | -12.5% | -1.7% |
| Tranche -2 | 0.5% | 11.0% | - | - | 2.9% |
| MFI Overall Gain | 15.3% | 20.9% | 22.3% | -4.7% | 13.4% |
| Current Balance | 288,048 | 302,210 | 305,897 | 237,905 | 1,134,060 |
| R3K Current Tranche | 4.6% | -0.1% | 11.8% | 7.5% | 5.9% |
| R3K Overall Gain | 18.1% | 11.6% | 10.6% | 7.2% | 11.9% |
| R3K Balance | 295,060 | 279,057 | 276,589 | 267,615 | 1,118,321 |
| Annualized IRR | 6.5% | 9.9% | 12.1% | -3.2% | 6.4% |
Here is month by month results.
| 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 |
| 12/1/2016 | 1.62% | 110,705 | 109,088 |
| Current | 1.57% | 113,406 | 111,832 |
You can see that I am winning, by a bit (1.57% percent) 2+ years in. But current tranches are looking strong (12.2% versus 5.9%), so perhaps starting to gain traction.
Dividend Portfolio
I did add PEO, but nothing else yet. I may wait until February.
| Dividend Stocks | Start | Current | Dividends | Overall Pct Gain |
| CSQ | 9.10 | 10.27 | 2.23 | 37.3% |
| AOD | 7.64 | 7.58 | 1.69 | 21.3% |
| SBRA | 22.46 | 24.42 | 0.41 | 10.6% |
| TGONF | 10.24 | 12.14 | 1.85 | 36.7% |
| PSXP | 46.95 | 48.64 | 0.53 | 4.7% |
| JQC | 7.84 | 8.85 | 0.64 | 21.0% |
| PSX | 80.00 | 86.41 | 2.88 | 11.6% |
| DSL | 18.43 | 18.99 | 1.02 | 8.6% |
| GLDI | 10.65 | 8.94 | 0.73 | -9.2% |
| PEO | 20.55 | 20.17 | - | -1.8% |
| SJT | 5.48 | 6.62 | 0.33 | 26.9% |
| O | 24.18 | 57.48 | 19.49 | 218.3% |
| DHF | 3.11 | 3.36 | 0.03 | 8.9% |
| OIBAX | 5.07 | 5.61 | 2.30 | 56.0% |
| Totals | 20.5% |
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