Weekend Update 1/14/2017

Weekend Update

Saw these pictures/posts on Buzzfeed yesterday.  Made me laugh out loud, so I have shared them here.

Ok, another week has passed.  I return to update everyone on my experience with Magic Formula Investing.  I am on a readership drive, so tell your friends and neighbors how good this blog is :).

As many of my readers know, I have been blogging about Joel Greenblatt's book, The Little Book That Beats the Markets, since 2006.  I have extensive real life/money experiences and also have an MFI Index I created and MFI tracking portfolios I discuss once a month here.

I know probably the first thing that people want to know is "does it work"?  I would say is that it has been borderline if you invest in it using the official screen.  There have been too many stinkers (stocks dropping more than 40% over the 12 months - almost 14% of the names).  If you dig a bit, you'll find a pattern.  The stinkers are disproportionately stocks with fraud (Chinese reverse mergers),  small biotechs that do not really have an income stream (often have a large one time royalty payment) and more broadly stocks where the income in the past year really is not reflective at all of future earnings potential.  asier said than done to prospectively weed these out - but I think that is a noble goal.

I have 4 portfolios of stocks I discuss here. (1) MFI Select - this started in August 2012 and is just 4 tranches of five stocks that I buy and hold for a year.  It has really been good, although several big wins have really helped, (2) MFI Formula - this is a formula approach that essentially tries to do the weeeding out I mention above by formula (going with larger cap stocks that pay a dividend). I started this approach in October 2014. Results so far have been just ok, (3) Dividend Holdings- This is not MFI, but I felt people might want to see how I am trying to build an income stream for retirement and (4) miscellaneous - this does have some MFI/quasi MFI names that I buy for speculative reasons, plus other stuff - like BAC warrants.  While this portfolio has done ok, I am trying to step away from it as I want longer term focus.

MFI Select

This portfolio was up almost 1% for the week.  Here is how the individual names fared:

Stock	Last Week	Current	Dividend	Change
RHI	48.30	49.91	-	3.3%
ATHM	27.41	29.79	-	8.7%
CA	33.19	33.09	-	-0.3%
AMGN	156.78	156.12	-	-0.4%
MPAA	27.91	28.33	-	1.5%
QCOM	65.53	66.88	-	2.1%
MSGN	22.95	22.20	-	-3.3%
VLO	66.66	66.39	-	-0.4%
BRCD	12.50	12.49	-	-0.1%
DEPO	19.17	18.88	-	-1.5%
CSCO	30.23	30.07	-	-0.5%
VEC	23.62	24.65	-	4.4%
TDC	28.75	28.51	-	-0.8%
GILD	75.49	73.07	-	-3.2%
CBI	33.16	32.73		-1.3%
GNC	11.04	11.42		3.4%
PERI	1.63	1.62		-0.6%

One thing to keep in mind is that my holdings in all names is not equal.  Over 4+ years, some quarterly tranches have done better and amount per stock is greater.  I am going to balance that out some this year as I am looking to increase my overall MFI investment by about 40% in 2017 - and I'll make that more in under-sixed quarters.

Here are the open tranches:

2/1/2016	Start	Current	Dividend	Pct Gain	R3K Gain
VEC	$19.64	$24.65	$0.00	25.5%	21.3%
QCOM	$45.18	$66.88	$2.07	52.6%	21.3%
PERI	$2.45	$1.62	$0.00	-33.9%	21.3%
DEPO	$15.34	$18.88	$0.00	23.1%	21.3%
TDC	$24.02	$28.51	$0.00	18.7%	21.3%
Totals				17.2%	21.3%
5/6/2016	Start	Current	Dividend	Pct Gain	R3K Gain
BRCD	$7.97	$12.49	$0.17	58.8%	13.7%
CBI	$37.82	$32.73	$0.00	-13.5%	13.7%
HSII	$18.51	$23.20	$0.26	26.7%	13.7%
RHI	$38.51	$49.91	$0.66	31.3%	13.7%
UTHR	$107.99	$150.22	$0.00	39.1%	13.7%
Totals				28.5%	13.7%
8/15/2016	Start	Current	Dividend	Pct Gain	R3K Gain
CSCO	$31.20	$30.07	$0.26	-2.8%	5.6%
GNC	$19.79	$11.42	$0.38	-40.4%	5.6%
VLO	$54.73	$66.39	$0.60	22.4%	5.6%
MSGN	$16.68	$22.20	$0.00	33.1%	5.6%
GILD	$79.33	$73.07	$0.94	-6.7%	5.6%
Totals				1.1%	5.6%
11/15/2016	Start	Current	Dividend	Pct Gain	R3K Gain
MPAA	$26.55	$28.33	$0.00	6.7%	5.4%
ATHM	$22.61	$29.79	$0.00	31.8%	5.4%
AMGN	$145.14	$156.12	$0.00	7.6%	5.4%
RHI	$43.23	$49.91	$0.22	16.0%	5.4%
CA	$31.11	$33.09	$0.00	6.4%	5.4%
Totals				13.7%	5.4%

November has always been the best (it doesn't makes sense that there would be seasonality, so I think it is just chance) and is once again off to strong start (and has no stinkers).

Category/Tranche	August	November	February	May	Total
Initial Investment	25,000	25,000	25,000	25,000	100,000
Current Tranche	1.1%	13.7%	17.2%	28.5%	14.1%
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	86.5%	241.6%	94.2%	51.1%	118.4%
Current Balance	46,630	85,399	48,554	37,777	218,360
R3K Current Tranche	5.6%	5.4%	21.3%	13.7%	11.5%
R3K Overall Gain	76.5%	79.7%	61.5%	51.2%	64.9%
R3K Balance	41,779	44,914	40,384	37,797	164,873
Annualized IRR	15.1%	34.3%	18.3%	11.8%	19.9%

This table gives a lot of statistics, but final row is where rubber meets the road - 19.9% annualized IRR and you'll see November is best at 34.3%.  Then here are month by month movements (up about 4% so far in 2017):

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
1/1/2017	50.56%	209,503	158,941
Current	53.49%	218,360	164,873

MFI Formula

Same series of tables for MFI formula, which was down slightly for the week:

Stock	Last Week	Current	Dividend	Change
CPLA	86.00	86.85	-	1.0%
HPQ	15.00	14.77	-	-1.5%
ILG	17.86	18.12	-	1.5%
PBI	16.18	16.59	-	2.5%
GILD	75.49	73.07	-	-3.2%
CA	33.19	33.09	-	-0.3%
SYNT	20.39	21.21	-	4.0%
TGNA	21.50	21.61	-	0.5%
TSRA	44.95	44.05	-	-2.0%
LDOS	50.66	49.96	-	-1.4%
TIME	18.60	18.95	-	1.9%
CSCO	30.23	30.07	-	-0.5%
GME	24.52	22.73	-	-7.3%
HRB	24.00	23.79	-	-0.9%
CALM	43.05	43.00		-0.1%
VIAB	37.79	38.70		2.4%
Average				-0.2%

GILD was down on Trump's comments about pharmas in general and GME had same store sales over holidays down an amazing 18.7%. I suspect that 7.3% drop is not completed.

4/1/16 Stocks	Start	Current	Dividend	Pct Gain	R3K Gain
CALM	$51.27	$43.00	$0.44	-15.3%	13.6%
HPQ	$12.10	$14.77	$0.38	25.1%	13.6%
TIME	$15.24	$18.95	$0.57	28.1%	13.6%
ILG	$13.85	$18.12	$0.36	33.4%	13.6%
TSRA	$30.79	$44.05	$0.60	45.0%	13.6%
Totals				23.3%	13.6%
7/1/2016	Start	Current	Dividend	Pct Gain	R3K Gain
ILG	$16.76	$18.12	$0.24	9.5%	9.2%
VIAB	$44.00	$38.70	$0.40	-11.1%	9.2%
CPLA	$53.22	$86.85	$0.80	64.7%	9.2%
HRB	$23.62	$23.79	$0.44	2.6%	9.2%
PBI	$17.69	$16.59	$0.38	-4.1%	9.2%
Totals				12.3%	9.2%
10/3/2016	Start	Current	Dividend	Pct Gain	R3K Gain
CPLA	$58.15	$86.85	$0.41	50.1%	6.3%
LDOS	$43.01	$49.96	$0.00	16.2%	6.3%
GME	$27.70	$22.73	$0.37	-16.6%	6.3%
PBI	$18.15	$16.59	$0.19	-7.6%	6.3%
CSCO	$31.72	$30.07	$0.52	-3.6%	6.3%
Totals				7.7%	6.3%
12/30/2016	Start	Current	Dividend	Pct Gain	R3K Gain
GILD	$71.69	$73.07	$0.00	1.9%	1.5%
HPQ	$15.00	$14.77	$0.00	-1.5%	1.5%
TGNA	$21.33	$21.61	$0.00	1.3%	1.5%
CA	$31.99	$33.09	$0.00	3.4%	1.5%
SYNT	$19.79	$21.21	$0.00	7.2%	1.5%
Totals				2.5%	1.5%
Category/Tranche	October	January	April	July	Total
Initial Investment	249,820	249,939	250,180	249,728	999,667
Current Tranche	7.7%	2.5%	23.3%	12.3%	12.9%
Previous Tranche	5.5%	9.3%	-0.2%	-12.5%	-1.0%
Tranche -2	0.5%	11.0%	-	-	2.9%
MFI Overall Gain	14.1%	24.3%	23.0%	-1.7%	14.9%
Current Balance	285,161	310,640	307,643	245,511	1,148,956
R3K Current Tranche	6.3%	1.5%	13.6%	9.2%	7.7%
R3K Overall Gain	20.1%	13.5%	12.4%	8.9%	13.7%
R3K Balance	299,917	283,673	281,104	272,004	1,136,699
Annualized IRR	5.9%	11.2%	12.2%	-1.1%	7.1%

So a 7.1% annualized IRR is not bad.  And current tranches are giving R3K a good 5 point thumping.  Hmm, there is a mistake, I didn't put the new January in there - lead isn't 5 points. Here is right table:

Category/Tranche	October	January	April	July	Total
Initial Investment	249,820	249,939	250,180	249,728	999,667
Current Tranche	7.7%	2.5%	23.3%	12.3%	10.1%
Previous Tranche	5.5%	9.3%	-0.2%	-12.5%	-1.0%
Tranche -2	0.5%	11.0%	-	-	2.9%
MFI Overall Gain	14.1%	24.3%	23.0%	-1.7%	14.9%
Current Balance	285,161	310,640	307,643	245,511	1,148,956
R3K Current Tranche	6.3%	1.5%	13.6%	9.2%	7.7%
R3K Overall Gain	20.1%	13.5%	12.4%	8.9%	13.7%
R3K Balance	299,917	283,673	281,104	272,004	1,136,699
Annualized IRR	5.9%	11.2%	12.2%	-1.1%	7.1%

Here is month by month:

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
1/1/2017	1.57%	113,406	111,832
Current	1.23%	114,896	113,669

Dividend Portfolio

This is not meant to be sexy, but steady eddy.

Dividend Stocks	Start	Current	Dividends	Overall Pct Gain	Weekly Pct Gain	1/1/17 Price	% Chg Since 1/1/17
CSQ	9.11	10.76	2.29	43.3%	0.7%	10.27	5.4%
AOD	7.64	7.96	1.69	26.3%	1.5%	7.58	5.0%
SBRA	22.46	25.58	0.41	15.8%	0.7%	24.42	4.8%
PSXP	46.95	51.06	0.53	9.9%	-0.6%	48.64	5.0%
TGONF	10.24	12.48	1.85	40.0%	2.3%	12.14	2.8%
JQC	7.84	8.79	0.69	21.0%	0.2%	8.85	-0.1%
PSX	80.00	83.29	2.88	7.7%	-2.5%	86.41	-3.6%
DSL	18.43	19.16	1.17	10.3%	0.4%	18.99	1.7%
GLDI	10.65	9.38	0.73	-5.1%	2.5%	8.94	4.9%
PEO	20.49	20.27	-	-1.1%	-1.3%	20.17	0.5%
O	24.30	59.07	19.43	223.0%	-1.3%	57.48	2.7%
DHF	3.19	3.41	0.04	7.9%	1.2%	3.36	1.8%
OIBAX	5.07	5.65	2.32	57.1%	0.4%	5.61	1.0%
Totals				23.7%			2.4%

Up 2.4% on the year, I am pleased with that. And that is with a cash component. These are generally in largest holdings to smallest holdings order.  So great to see my 4 largest all up around 5% in 2017. I have owned some of these names (like O and OIBAX for 15 years).

MIscellaneous

A very strong week here, up about 2.7%.  Now up 8% on the year.  Part of it is BAC-WTA and part are some speculative plays in NUGT and JNUG.  SPCB has also been going up nicely (up 14% in 2017 - this is a former micro cap MFI name).  I actually put in a sell order to sell some SPCB, but it just missed filling.

I did buy one stock here yesterday, AKRX.  It is really a holding position, I plan to make it an MFI Select stock February 1st.  FInally GNC and EMG continue to be hot messes. I may hold EMG all the way to bankruptcy.