Good morning. Trump was inaugurated as the 45th President yesterday. I guess when they do a remake of Back To The Future, they will say Trump is president instead of Reagan and get the same incredulous looks.
I had a lot of new readers this week, if you stuck around - welcome. I have been blogging about Joel Greenblatt's Magic Formula Investing since 2006. I write about my own experiences with real money as well as the performance of tracking portfolios from the offical screen.
Past Week
I have four basic investing approaches I discuss here:
- MFI Select
- MFI Formula
- Dividend/Income
- Miscellaneous
The first two are MFI related, the back two are not. When I talk about YTD performance, I include a component of cash, which I plan to put to work over the course of the year. Although my hypothetical tables for MFI Select and MFI Formula (that assume I started with $100,000) do not have a cash component. They are always 100% invested.
Here is a table showing my YTD results (a bit tempered by cash):
| Component | YTD |
| Overall | +1.81% |
| Select | +1.23% |
| Formula | +0.39% |
| Miscellaneous | +5.60% |
| Dividend | +2.14% |
| R3K | +1.41% |
| MFI Index | -0.29% |
So I am up 1.81% overall, of which (ironically) Miscellaneous is the best (and unfortunately the smallest). The keen-eyed reader will note that while my MFI portfolios are up, that MFI Index (my personal way of tracking MFI over time) is down for the year. Looking at the stocks in my index, IRMD, SCMP and FRPX are the big losers so far, all down by more than 13% already. This gets back to my theme that we need to avoid the stinkers when picking MFI stocks (I have found that over time, 13% of stocks from $100m+ screen end up down 40% or more over the year).
MFI Select
This is my re-boot of MFI investing (where I really began to try and avoid the stinkers) from August 2012. It has been great as you can see in this table:
| Category/Tranche | August | November | February | May | Total |
| Initial Investment | 25,000 | 25,000 | 25,000 | 25,000 | 100,000 |
| Current Tranche | -1.9% | 11.8% | 12.4% | 27.0% | 11.4% |
| 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 | 81.0% | 235.9% | 86.3% | 49.3% | 113.1% |
| Current Balance | 45,244 | 83,969 | 46,564 | 37,322 | 213,098 |
| R3K Current Tranche | 5.3% | 5.2% | 21.0% | 13.5% | 11.2% |
| R3K Overall Gain | 76.0% | 79.2% | 61.2% | 50.8% | 64.6% |
| R3K Balance | 41,779 | 44,808 | 40,290 | 37,708 | 164,585 |
| Annualized IRR | 14.3% | 33.6% | 16.9% | 11.4% | 19.0% |
So a 19% annualized IRR. Then here is how this approach has done month by month:
| 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 | 47.19% | 209,503 | 162,313 |
| Current | 48.51% | 213,098 | 164,585 |
Then here are the individual tranches. Note that February 1st is fast approaching and is looking like it will lose. I am on the fence on what to do with DEPO as I think they may soon get a buyout offer.
| 2/1/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| VEC | $19.64 | $23.50 | $0.00 | 19.7% | 21.0% |
| QCOM | $45.18 | $62.88 | $2.07 | 43.8% | 21.0% |
| PERI | $2.45 | $1.57 | $0.00 | -35.9% | 21.0% |
| DEPO | $15.34 | $17.79 | $0.00 | 16.0% | 21.0% |
| TDC | $24.02 | $28.47 | $0.00 | 18.5% | 21.0% |
| Totals | 12.4% | 21.0% | |||
| 5/6/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| BRCD | $7.97 | $12.47 | $0.17 | 58.5% | 13.5% |
| CBI | $37.82 | $31.59 | $0.00 | -16.5% | 13.5% |
| HSII | $18.51 | $22.45 | $0.26 | 22.7% | 13.5% |
| RHI | $38.51 | $48.90 | $0.66 | 28.7% | 13.5% |
| UTHR | $107.99 | $152.60 | $0.00 | 41.3% | 13.5% |
| Totals | 27.0% | 13.5% | |||
| 8/15/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| CSCO | $31.20 | $30.10 | $0.26 | -2.7% | 5.3% |
| GNC | $19.79 | $9.47 | $0.38 | -50.2% | 5.3% |
| VLO | $54.73 | $66.24 | $0.60 | 22.1% | 5.3% |
| MSGN | $16.68 | $21.80 | $0.00 | 30.7% | 5.3% |
| GILD | $79.33 | $71.01 | $0.94 | -9.3% | 5.3% |
| Totals | -1.9% | 5.3% | |||
| 11/15/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| MPAA | $26.55 | $26.92 | $0.00 | 1.4% | 5.2% |
| ATHM | $22.61 | $29.97 | $0.00 | 32.6% | 5.2% |
| AMGN | $145.14 | $154.67 | $0.00 | 6.6% | 5.2% |
| RHI | $43.23 | $48.90 | $0.22 | 13.6% | 5.2% |
| CA | $31.11 | $32.57 | $0.00 | 4.7% | 5.2% |
| Totals | 11.8% | 5.2% |
Finally, here is how each stock performed during the past week:
| Stock | Last Week | Current | Dividend | Change |
| RHI | 49.91 | 48.90 | - | -2.0% |
| ATHM | 29.79 | 29.97 | - | 0.6% |
| CA | 33.09 | 32.57 | - | -1.6% |
| AMGN | 156.12 | 154.67 | - | -0.9% |
| MPAA | 28.33 | 26.92 | - | -5.0% |
| QCOM | 66.88 | 62.88 | - | -6.0% |
| MSGN | 22.20 | 21.80 | - | -1.8% |
| VLO | 66.39 | 66.24 | - | -0.2% |
| BRCD | 12.49 | 12.47 | - | -0.2% |
| DEPO | 18.88 | 17.79 | - | -5.8% |
| CSCO | 30.07 | 30.10 | - | 0.1% |
| VEC | 24.65 | 23.50 | - | -4.7% |
| TDC | 28.51 | 28.47 | - | -0.1% |
| GILD | 73.07 | 71.01 | - | -2.8% |
| CBI | 32.73 | 31.59 | -3.5% | |
| GNC | 11.42 | 9.47 | -17.1% | |
| PERI | 1.62 | 1.57 | -3.1% | |
| Average | -3.2% |
You'll see GNC really struggled as GS put a $8 price target on them. Note the average here is a straight average. GNC was already down a bunch coming into week, so not really down overall 3.2%.
MFI Formula
The formula approach takes selecting out of the equation. Rather I start with $100m screen, and pare it down to the top 2/3 stocks (by market cap) and pick stocks with a 2.4% yield or greater. I have found via back-testing that this takes the stinker % way down (from 13% to 5%ish).
I will show same tables:
| Category/Tranche | October | January | April | July | Total |
| Initial Investment | 249,820 | 249,939 | 250,180 | 249,728 | 999,667 |
| Current Tranche | 6.9% | 1.4% | 22.5% | 11.0% | 9.1% |
| Previous Tranche | 5.5% | 9.3% | -0.2% | -12.5% | 1.5% |
| Tranche -2 | 0.5% | 11.0% | - | - | 2.9% |
| MFI Overall Gain | 13.3% | 23.0% | 22.2% | -2.9% | 13.9% |
| Current Balance | 282,972 | 307,418 | 305,734 | 242,555 | 1,138,679 |
| R3K Current Tranche | 6.1% | 1.3% | 13.3% | 9.0% | 7.4% |
| R3K Overall Gain | 19.8% | 13.2% | 12.1% | 8.7% | 13.4% |
| R3K Balance | 299,210 | 283,002 | 280,447 | 271,366 | 1,134,025 |
| Annualized IRR | 5.5% | 10.6% | 11.7% | -1.8% | 6.5% |
This was started October 1st, 2014, so has not been going as long. 6.5% annualized IRR is not dreadful but this approach is lagging my selection approach.
| 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 | 0.47% | 113,868 | 113,402 |
Pretty much a jump ball between Formula approach and benchmark so far. Beating the market is hard.
| 4/1/16 Stocks | Start | Current | Dividend | Pct Gain | R3K Gain |
| CALM | $51.27 | $43.50 | $0.44 | -14.3% | 13.3% |
| HPQ | $12.10 | $14.73 | $0.38 | 24.8% | 13.3% |
| TIME | $15.24 | $18.75 | $0.57 | 26.7% | 13.3% |
| ILG | $13.85 | $18.02 | $0.36 | 32.7% | 13.3% |
| TSRA | $30.79 | $43.30 | $0.60 | 42.6% | 13.3% |
| Totals | 22.5% | 13.3% | |||
| 7/1/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| ILG | $16.76 | $18.02 | $0.24 | 8.9% | 9.0% |
| VIAB | $44.00 | $40.23 | $0.40 | -7.7% | 9.0% |
| CPLA | $53.22 | $85.80 | $0.80 | 62.7% | 9.0% |
| HRB | $23.62 | $23.14 | $0.44 | -0.2% | 9.0% |
| PBI | $17.69 | $15.72 | $0.38 | -9.0% | 9.0% |
| Totals | 11.0% | 9.0% | |||
| 10/3/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| CPLA | $58.15 | $85.80 | $0.41 | 48.3% | 6.1% |
| LDOS | $43.01 | $49.66 | $0.00 | 15.5% | 6.1% |
| GME | $27.70 | $23.58 | $0.37 | -13.5% | 6.1% |
| PBI | $18.15 | $15.72 | $0.19 | -12.4% | 6.1% |
| CSCO | $31.72 | $30.10 | $0.52 | -3.5% | 6.1% |
| Totals | 6.9% | 6.1% | |||
| 12/30/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| GILD | $71.69 | $71.01 | $0.00 | -0.9% | 1.3% |
| HPQ | $15.00 | $14.73 | $0.00 | -1.8% | 1.3% |
| TGNA | $21.33 | $21.45 | $0.00 | 0.6% | 1.3% |
| CA | $31.99 | $32.57 | $0.00 | 1.8% | 1.3% |
| SYNT | $19.79 | $21.25 | $0.00 | 7.4% | 1.3% |
| Totals | 1.4% | 1.3% |
Good news is all four of my open tranches are leading. Here are the individual names for the week:
| Stock | Last Week | Current | Dividend | Change |
| CPLA | 86.85 | 85.80 | - | -1.2% |
| HPQ | 14.77 | 14.73 | - | -0.3% |
| ILG | 18.12 | 18.02 | - | -0.6% |
| PBI | 16.59 | 15.72 | - | -5.2% |
| GILD | 73.07 | 71.01 | - | -2.8% |
| CA | 33.09 | 32.57 | - | -1.6% |
| SYNT | 21.21 | 21.25 | - | 0.2% |
| TGNA | 21.61 | 21.45 | - | -0.7% |
| TSRA | 44.05 | 43.30 | - | -1.7% |
| LDOS | 49.96 | 49.66 | - | -0.6% |
| TIME | 18.95 | 18.75 | - | -1.1% |
| CSCO | 30.07 | 30.10 | - | 0.1% |
| GME | 22.73 | 23.58 | - | 3.7% |
| HRB | 23.79 | 23.14 | - | -2.7% |
| CALM | 43.00 | 43.50 | 1.2% | |
| VIAB | 38.70 | 40.23 | 4.0% | |
| Average | -0.6% |
Not sure why PBI down 5.2%. VIAB has amazingly been one of best performers in 2017.
Dividend Stocks
Thos interested in MFI can stop here. Dividend stocks are my approach to building an income stream for retirement for this 57 year-old. Most of these securities are long term buy and hold and I reinvest many of the dividends. I love to get dividends on my dividends. I am planning to add to this portfolio as well during 2017.
| Dividend Stocks | Start | Current | Dividends | Overall Pct Gain | Weekly Pct Gain | 1/1/17 Price | % Chg Since 1/1/17 |
| CSQ | 9.11 | 10.71 | 2.29 | 42.7% | -0.5% | 10.27 | 4.9% |
| AOD | 7.64 | 7.79 | 1.74 | 24.8% | -2.1% | 7.58 | 3.5% |
| SBRA | 22.46 | 25.75 | 0.41 | 16.5% | 0.7% | 24.42 | 5.4% |
| PSXP | 46.95 | 52.21 | 0.53 | 12.3% | 2.3% | 48.64 | 7.3% |
| TGONF | 10.24 | 12.30 | 1.85 | 38.3% | -1.4% | 12.14 | 1.3% |
| JQC | 7.84 | 8.66 | 0.69 | 19.3% | -1.5% | 8.85 | -1.6% |
| PSX | 80.00 | 83.04 | 2.88 | 7.4% | -0.3% | 86.41 | -3.9% |
| DSL | 18.43 | 19.22 | 1.17 | 10.6% | 0.3% | 18.99 | 2.0% |
| GLDI | 10.65 | 9.32 | 0.80 | -5.0% | -0.6% | 8.94 | 5.1% |
| PEO | 20.49 | 20.33 | - | -0.8% | 0.3% | 20.17 | 0.8% |
| O | 24.30 | 59.69 | 19.43 | 225.6% | 1.0% | 57.48 | 3.7% |
| DHF | 3.19 | 3.40 | 0.04 | 7.6% | -0.3% | 3.36 | 1.5% |
| OIBAX | 5.07 | 5.65 | 2.32 | 57.1% | 0.0% | 5.61 | 1.0% |
| Totals | 23.4% | 2.1% |
Wow, no shame in being up 2.1% so far this year. These picks though are not meant to be sexy or high alpha stocks. They are listed in roughly descending order of size. You can see I have held some of these (like O) forever and you can see the power of compounding.
Miscellaneous
This is my other stuff. Biggest position is BAC warrants, then I have been doing some covered calls on NUGT/JNUG in a disciplined way. So far the covered calls have been very successful, up 11.5% since November. At start of year, I thought I would pare down Miscellaneous over 2017, but I continue to find some opportunities and will now not pare it down.
Have a great weekend everybody.
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