Weekend Update - Happy New Year 2017!

Happy New Year

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%