Good morning. Welcome to my blog I call The MFI Diary. It is based upon my tracking of Magic Formula Investing, a book by Joel Greenblatt. My tracking involves real money in 8 tranches of five stocks each along with an MFI Index I created and monthly tracking of hypothetical portfolios.
I have done well with real money since a re-boot in 2012, I had struggled earlier as I went with too many speculative plays within the lists. My MFI Index, which will be reconstituted next week, in total has lost (tracking back to 2006) to the Russell 3000 - though it is winning this year (by a little bit).
Besides my two series of MFI stocks (Select and Formula), I also track a dividend portfolio which is structured to create an income stream as I approach requirement. I then finally have a Miscellaneous portfolio, which I am steadily taking down.
People reading my blog should be fully aware that I am just a guy with a spreadsheet. no special financial training or certificates (by profession an actuary). So if you see something I do that looks intriguing, I recommend you do your own due diligence.
MFI Select
As the name suggests, these are MFI stocks that I select, in whatever way I want. I have been using this approach since August 2012 and have been very successful (19% annualized IRR). However, in 2016 thus approach has struggled as I had some major sell-offs in January.
| 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 | 50.43% | 210,197 | 159,765 |
This table shows month by month changes, assuming I started with $100,000. You can see the drop off from Dec 2015 to Feb 2016 from 223,435 to 187,428. It isn't all up, up, up.
Here are my current holdings and how they fared last week:
| 2/1/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| VEC | $19.64 | $24.02 | $0.00 | 22.3% | 20.5% |
| QCOM | $45.18 | $66.86 | $2.07 | 52.6% | 20.5% |
| PERI | $2.45 | $1.35 | $0.00 | -44.9% | 20.5% |
| DEPO | $15.34 | $18.49 | $0.00 | 20.5% | 20.5% |
| TDC | $24.02 | $26.97 | $0.00 | 12.3% | 20.5% |
| Totals | 12.6% | 20.5% | |||
| 5/6/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| BRCD | $7.97 | $12.45 | $0.17 | 58.3% | 13.0% |
| CBI | $37.82 | $34.20 | $0.00 | -9.6% | 13.0% |
| HSII | $18.51 | $23.95 | $0.26 | 30.8% | 13.0% |
| RHI | $38.51 | $48.95 | $0.66 | 28.8% | 13.0% |
| UTHR | $107.99 | $142.01 | $0.00 | 31.5% | 13.0% |
| Totals | 28.0% | 13.0% | |||
| 8/15/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| CSCO | $31.20 | $30.53 | $0.26 | -1.3% | 4.9% |
| GNC | $19.79 | $10.84 | $0.38 | -43.3% | 4.9% |
| VLO | $54.73 | $68.96 | $0.60 | 27.1% | 4.9% |
| MSGN | $16.68 | $21.45 | $0.00 | 28.6% | 4.9% |
| GILD | $79.33 | $73.64 | $0.94 | -6.0% | 4.9% |
| Totals | 1.0% | 4.9% | |||
| 11/15/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| MPAA | $26.55 | $25.66 | $0.00 | -3.4% | 4.7% |
| ATHM | $22.61 | $25.58 | $0.00 | 13.1% | 4.7% |
| AMGN | $145.14 | $147.55 | $0.00 | 1.7% | 4.7% |
| RHI | $43.23 | $48.95 | $0.22 | 13.7% | 4.7% |
| CA | $31.11 | $32.05 | $0.00 | 3.0% | 4.7% |
| Totals | 5.6% | 4.7% | |||
| Category/Tranche | August | November | February | May | Total |
| Initial Investment | 25,000 | 25,000 | 25,000 | 25,000 | 100,000 |
| Current Tranche | 1.0% | 5.6% | 12.6% | 28.0% | 9.9% |
| 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 | 86.3% | 217.5% | 86.5% | 50.5% | 110.2% |
| Current Balance | 46,580 | 79,367 | 46,630 | 37,620 | 210,197 |
| R3K Current Tranche | 4.9% | 4.7% | 20.5% | 13.0% | 10.8% |
| R3K Overall Gain | 75.3% | 78.5% | 60.5% | 33.0% | 59.8% |
| R3K Balance | 41,779 | 44,623 | 40,126 | 33,238 | 159,765 |
| Annualized IRR | 15.3% | 32.5% | 17.4% | 11.9% | 19.3% |
So you can see in green table that my current tranches are up 9.9% on average (note the poor Feb and May previous tranches - that was sell-off in Dec/Jan last year).
| Stock | Last Week | Current | Dividend | Change |
| RHI | 48.51 | 48.95 | - | 0.9% |
| ATHM | 26.10 | 25.58 | - | -2.0% |
| CA | 32.02 | 32.05 | - | 0.1% |
| AMGN | 149.37 | 147.55 | - | -1.2% |
| MPAA | 26.40 | 25.66 | - | -2.8% |
| QCOM | 66.46 | 66.86 | - | 0.6% |
| MSGN | 21.20 | 21.45 | - | 1.2% |
| VLO | 68.00 | 68.96 | - | 1.4% |
| BRCD | 12.46 | 12.45 | - | -0.1% |
| DEPO | 18.57 | 18.49 | - | -0.4% |
| CSCO | 30.59 | 30.53 | - | -0.2% |
| VEC | 23.41 | 24.02 | - | 2.6% |
| TDC | 28.23 | 26.97 | - | -4.5% |
| GILD | 74.10 | 73.64 | - | -0.6% |
| CBI | 35.24 | 34.20 | -3.0% | |
| GNC | 13.02 | 10.84 | -16.7% | |
| PERI | 1.22 | 1.35 | 10.7% | |
| Average | -0.8% |
You can see that past week was not exactly a santa rally. GNC really crashed (what a terrible buy). PERI was up nicely, but it may be my single smallest holding as it was down like 50% heading into the week.
MFI Formula
For my smarter readers, you can figure out that my MFI Formula approach is derived via a formula (I guess a formula embedded in a formula). It is simply stocks over $600m in market cap and a dividend of 2.4% or greater. I pick the stocks using a random number generator. So far (I started in 2014), I have out-performed by a little bit, but it has been a bit of a struggle. I am convinced this approach will work and I am increasing my holdings by about 50% during 2017 as I wind down my miscellaneous portfolio.
| 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 | 1.56% | 114,519 | 112,961 |
| 12/31/15 Stocks | Start | Current | Dividend | Pct Gain | R3K Gain |
| BBY | $30.31 | $44.77 | $1.57 | 52.9% | 13.2% |
| GME | $28.34 | $25.41 | $1.48 | -5.1% | 13.2% |
| ILG | $15.89 | $18.19 | $0.48 | 17.5% | 13.2% |
| PPC | $22.22 | $19.02 | $2.75 | -2.0% | 13.2% |
| VIAB | $40.93 | $35.15 | $1.20 | -11.2% | 13.2% |
| Totals | 10.4% | 13.2% | |||
| 4/1/16 Stocks | Start | Current | Dividend | Pct Gain | R3K Gain |
| CALM | $51.27 | $44.95 | $0.44 | -11.5% | 12.9% |
| HPQ | $12.10 | $15.10 | $0.38 | 27.9% | 12.9% |
| TIME | $15.24 | $17.75 | $0.57 | 20.2% | 12.9% |
| ILG | $13.85 | $18.19 | $0.36 | 33.9% | 12.9% |
| TSRA | $30.79 | $44.75 | $0.60 | 47.3% | 12.9% |
| Totals | 23.6% | 12.9% | |||
| 7/1/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| ILG | $16.76 | $18.19 | $0.24 | 10.0% | 8.5% |
| VIAB | $44.00 | $35.15 | $0.40 | -19.2% | 8.5% |
| CPLA | $53.22 | $88.35 | $0.80 | 67.5% | 8.5% |
| HRB | $23.62 | $23.28 | $0.44 | 0.4% | 8.5% |
| PBI | $17.69 | $15.60 | $0.38 | -9.7% | 8.5% |
| Totals | 9.8% | 8.5% | |||
| 10/3/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| CPLA | $58.15 | $88.35 | $0.41 | 52.6% | 5.6% |
| LDOS | $43.01 | $51.06 | $0.00 | 18.7% | 5.6% |
| GME | $27.70 | $25.41 | $0.37 | -6.9% | 5.6% |
| PBI | $18.15 | $15.60 | $0.19 | -13.0% | 5.6% |
| CSCO | $31.72 | $30.53 | $0.26 | -2.9% | 5.6% |
| Totals | 9.7% | 5.6% | |||
| Category/Tranche | October | January | April | July | Total |
| Initial Investment | 249,820 | 249,939 | 250,180 | 249,728 | 999,667 |
| Current Tranche | 9.7% | 10.4% | 23.6% | 9.8% | 13.2% |
| Previous Tranche | 5.5% | 11.0% | -0.2% | -12.5% | 1.1% |
| Tranche -2 | 0.5% | - | - | - | 0.1% |
| MFI Overall Gain | 16.3% | 22.6% | 23.3% | -3.9% | 14.6% |
| Current Balance | 290,451 | 306,367 | 308,360 | 240,008 | 1,145,186 |
| R3K Current Tranche | 5.6% | 13.2% | 12.9% | 8.5% | 10.0% |
| R3K Overall Gain | 19.3% | 12.9% | 11.6% | 8.2% | 13.0% |
| R3K Balance | 297,974 | 282,096 | 279,298 | 270,249 | 1,129,617 |
| Annualized IRR | 7.0% | 10.8% | 12.8% | -2.6% | 7.0% |
You can see that overall a slight lead: 14.6% to 13.0%. But the trend is good - current open positions winning by 3 points.
Here are the stocks and how they did last week:
| Stock | Last Week | Current | Dividend | Change |
| ILG | 18.06 | 18.19 | - | 0.7% |
| CPLA | 88.05 | 88.35 | - | 0.3% |
| GME | 25.42 | 25.41 | - | 0.0% |
| VIAB | 35.22 | 35.15 | - | -0.2% |
| BBY | 47.00 | 44.77 | - | -4.7% |
| PBI | 15.80 | 15.60 | - | -1.3% |
| TSRA | 44.75 | 44.75 | - | 0.0% |
| HPQ | 15.05 | 15.10 | - | 0.3% |
| LDOS | 51.17 | 51.06 | - | -0.2% |
| CSCO | 30.59 | 30.53 | - | -0.2% |
| PPC | 18.31 | 19.02 | - | 3.9% |
| TIME | 17.65 | 17.75 | - | 0.6% |
| HRB | 23.45 | 23.28 | - | -0.7% |
| CALM | 43.25 | 44.95 | - | 3.9% |
| Average | 0.2% |
Dividend Portfolio
I continue to sell off my SJT. I plan to buy PEO at start of 2017. I just think for my dividend portfolio, I like more closed end funds to stay away from single stock risk. I also worry about trusts like SJT as they typically are not reinvesting, so when they run out, they run out.
| Dividend Stocks | Start | Current | Dividends | Overall Pct Gain | Weekly Pct Gain | 7/1/16 Price | % Chg Since 7/1/16 |
| CSQ | 9.10 | 10.42 | 2.23 | 39.0% | 0.8% | 9.99 | 9.3% |
| AOD | 7.64 | 7.56 | 1.70 | 21.2% | -0.9% | 7.33 | 7.8% |
| SBRA | 22.46 | 23.29 | 0.41 | 5.6% | -1.4% | 22.46 | 3.7% |
| SJT | 5.48 | 6.69 | 0.27 | 27.0% | 5.9% | 7.26 | -5.9% |
| JQC | 7.84 | 8.71 | 0.65 | 19.4% | 0.1% | 8.10 | 11.4% |
| TGONF | 10.24 | 12.01 | 1.85 | 35.4% | 2.2% | 10.05 | 21.2% |
| PSXP | 46.95 | 48.45 | 0.53 | 4.3% | 4.2% | 46.95 | 3.2% |
| PSX | 80.00 | 85.00 | 2.88 | 9.9% | 0.0% | 80.00 | 6.3% |
| DSL | 18.43 | 18.76 | 1.03 | 7.4% | 1.9% | 18.59 | 5.8% |
| GLDI | 10.66 | 8.81 | 0.73 | -10.5% | -0.6% | 10.87 | -13.1% |
| O | 24.18 | 56.41 | 19.29 | 213.1% | 1.7% | 69.64 | -17.3% |
| DHF | 3.11 | 3.34 | 0.03 | 8.2% | 1.5% | 3.11 | 7.4% |
| OIBAX | 5.07 | 5.59 | 2.30 | 55.6% | 0.5% | 5.84 | -2.4% |
| Totals | 21.4% | 5.7% |
This has really been a strong performing portfolio. I have it up 14.6% on the year. Here is a graph (dollar amount are for illustration) showing quarterly dividends I have received by quarter by year as I try and build an income stream (note I reinvest most of these dividends).
I certainly expect this upward trend to continue. In part from reinvested dividends (that grows it say 5% a year) and in part as I will be putting new money to work here.
Other Stuff
My miscellaneous holdings (besides BAC-WTA) continue to be a bit challenged. That is why I am winding it down and stopping trading and just focusing on investing. It was down 2% this week. I did sell my specualtive PERI (also in Feb Select tranche) and sold some more OGXI. I wish I had sold speculative GNC. Oh well.
Have a Merry Christmas/Happy Holiday! () May I recommend a song from my favorite Christmas album of all time?
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