Good morning everyone. And it is morning as the clock on the wall, y'all, says it is 5:41 am. As my readers know, this is the MFI Diary, a blog I have been keeping since 2006 following my investments in Magic Formula Investing courtesy of "The Little Book That Beats The Market" by Joel Greenblatt.
I also track the performance of the official screen and have created an MFI Index. For those who care, I did quite MFI for a year or so around 2011. I had dipped too much into some of the more speculative MFI plays and had also strayed some from following the buy and hold for a year rules. I re-booted in August 2012 and have done much better.
MFI Select
This is my approach I have used since August 2012. It consists of 4 tranches of five stocks picked once a quarter and held for a year. Next week I will retire the 2/1/16 tranche and start a new one. The 2/1/16 tranche has underperformed as you can see in the table below:
| 2/1/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| VEC | $19.64 | $22.96 | $0.00 | 16.9% | 22.2% |
| QCOM | $45.18 | $54.24 | $2.07 | 24.6% | 22.2% |
| PERI | $2.45 | $1.77 | $0.00 | -27.8% | 22.2% |
| DEPO | $15.34 | $17.96 | $0.00 | 17.1% | 22.2% |
| TDC | $24.02 | $29.12 | $0.00 | 21.2% | 22.2% |
| Totals | 10.4% | 22.2% | |||
| 5/6/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| BRCD | $7.97 | $12.48 | $0.17 | 58.7% | 14.6% |
| CBI | $37.82 | $33.85 | $0.00 | -10.5% | 14.6% |
| HSII | $18.51 | $22.40 | $0.26 | 22.4% | 14.6% |
| RHI | $38.51 | $46.30 | $0.66 | 21.9% | 14.6% |
| UTHR | $107.99 | $162.43 | $0.00 | 50.4% | 14.6% |
| Totals | 28.6% | 14.6% | |||
| 8/15/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| CSCO | $31.20 | $30.98 | $0.26 | 0.1% | 6.4% |
| GNC | $19.79 | $8.83 | $0.38 | -53.5% | 6.4% |
| VLO | $54.73 | $67.31 | $0.60 | 24.1% | 6.4% |
| MSGN | $16.68 | $22.35 | $0.00 | 34.0% | 6.4% |
| GILD | $79.33 | $71.26 | $0.94 | -9.0% | 6.4% |
| Totals | -0.8% | 6.4% | |||
| 11/15/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| MPAA | $26.55 | $27.01 | $0.00 | 1.7% | 6.2% |
| ATHM | $22.61 | $31.09 | $0.00 | 37.5% | 6.2% |
| AMGN | $145.14 | $157.16 | $0.00 | 8.3% | 6.2% |
| RHI | $43.23 | $46.30 | $0.22 | 7.6% | 6.2% |
| CA | $31.11 | $31.13 | $0.00 | 0.1% | 6.2% |
| Totals | 11.0% | 6.2% |
This reminds me of a year ago where my 2/1/15 tranche crashed the final 3 weeks. Disappointing, but life goes on. Here are how stocks fared during the week (not good for QCOM, RHI or CA).
| Stock | Last Week | Current | Dividend | Change |
| RHI | 48.90 | 46.30 | - | -5.3% |
| ATHM | 29.97 | 31.09 | - | 3.7% |
| CA | 32.57 | 31.13 | - | -4.4% |
| AMGN | 154.67 | 157.16 | - | 1.6% |
| MPAA | 26.92 | 27.01 | - | 0.3% |
| QCOM | 62.88 | 54.24 | - | -13.7% |
| MSGN | 21.80 | 22.35 | - | 2.5% |
| VLO | 66.24 | 67.31 | - | 1.6% |
| BRCD | 12.47 | 12.48 | - | 0.1% |
| DEPO | 17.79 | 17.96 | - | 1.0% |
| CSCO | 30.10 | 30.98 | - | 2.9% |
| VEC | 23.50 | 22.96 | - | -2.3% |
| TDC | 28.47 | 29.12 | - | 2.3% |
| GILD | 71.01 | 71.26 | - | 0.4% |
| CBI | 31.59 | 33.85 | 7.2% | |
| GNC | 9.47 | 8.83 | -6.8% | |
| PERI | 1.57 | 1.77 | 12.7% |
Finally, here is a table showing month by month progression - assuming I started at $100,000.
| 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 | 46.89% | 212,688 | 165,801 |
MFI Formula
Similar to MFI Select, MFI is also real money involving 4 tranches of 5 stocks apiece. These though are picked by formula and a random number generator to take my personal biases out. These all have to be dividend-paying stocks as that is what my tracking shows have outperformed.
| 4/1/16 Stocks | Start | Current | Dividend | Pct Gain | R3K Gain |
| CALM | $51.27 | $41.40 | $0.44 | -18.4% | 14.5% |
| HPQ | $12.10 | $14.80 | $0.38 | 25.4% | 14.5% |
| TIME | $15.24 | $19.35 | $0.57 | 30.7% | 14.5% |
| ILG | $13.85 | $18.74 | $0.36 | 37.9% | 14.5% |
| TSRA | $30.79 | $45.80 | $0.60 | 50.7% | 14.5% |
| Totals | 25.2% | 14.5% | |||
| 7/1/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| ILG | $16.76 | $18.74 | $0.24 | 13.2% | 10.0% |
| VIAB | $44.00 | $41.97 | $0.40 | -3.7% | 10.0% |
| CPLA | $53.22 | $85.40 | $0.80 | 62.0% | 10.0% |
| HRB | $23.62 | $22.19 | $0.44 | -4.2% | 10.0% |
| PBI | $17.69 | $15.87 | $0.38 | -8.2% | 10.0% |
| Totals | 11.8% | 10.0% | |||
| 10/3/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| CPLA | $58.15 | $85.40 | $0.41 | 47.6% | 7.1% |
| LDOS | $43.01 | $49.55 | $0.00 | 15.2% | 7.1% |
| GME | $27.70 | $24.31 | $0.37 | -10.9% | 7.1% |
| PBI | $18.15 | $15.87 | $0.19 | -11.5% | 7.1% |
| CSCO | $31.72 | $30.98 | $0.52 | -0.7% | 7.1% |
| Totals | 7.9% | 7.1% | |||
| 12/30/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| GILD | $71.69 | $71.26 | $0.00 | -0.6% | 2.3% |
| HPQ | $15.00 | $14.80 | $0.00 | -1.3% | 2.3% |
| TGNA | $21.33 | $22.69 | $0.00 | 6.4% | 2.3% |
| CA | $31.99 | $31.13 | $0.00 | -2.7% | 2.3% |
| SYNT | $19.79 | $21.09 | $0.00 | 6.6% | 2.3% |
| Totals | 1.7% | 2.3% | |||
| Category/Tranche | October | January | April | July | Total |
| Initial Investment | 249,820 | 249,939 | 250,180 | 249,728 | 999,667 |
| Current Tranche | 7.9% | 1.7% | 25.2% | 11.8% | 10.2% |
| Previous Tranche | 5.5% | 9.3% | -0.2% | -12.5% | 1.6% |
| Tranche -2 | 0.5% | 11.0% | - | - | 2.9% |
| MFI Overall Gain | 14.4% | 23.3% | 24.9% | -2.1% | 15.1% |
| Current Balance | 285,775 | 308,218 | 312,590 | 244,446 | 1,151,029 |
| R3K Current Tranche | 7.1% | 2.3% | 14.5% | 10.0% | 8.5% |
| R3K Overall Gain | 21.0% | 14.4% | 13.2% | 9.7% | 14.6% |
| R3K Balance | 302,191 | 285,835 | 283,218 | 274,059 | 1,145,303 |
| Annualized IRR | 5.9% | 10.6% | 12.9% | -1.3% | 7.0% |
Not exactly huge outperformance thus far (you can see in total I am up 15.1% vs 14.6% from R3K benchmark). Here are stocks during the week.
| Stock | Last Week | Current | Dividend | Change |
| CPLA | 85.80 | 85.40 | - | -0.5% |
| HPQ | 14.73 | 14.80 | - | 0.5% |
| ILG | 18.02 | 18.74 | - | 4.0% |
| PBI | 15.72 | 15.87 | - | 1.0% |
| GILD | 71.01 | 71.26 | - | 0.4% |
| CA | 32.57 | 31.13 | - | -4.4% |
| SYNT | 21.25 | 21.09 | - | -0.8% |
| TGNA | 21.45 | 22.69 | - | 5.8% |
| TSRA | 43.30 | 45.80 | - | 5.8% |
| LDOS | 49.66 | 49.55 | - | -0.2% |
| TIME | 18.75 | 19.35 | - | 3.2% |
| CSCO | 30.10 | 30.98 | - | 2.9% |
| GME | 23.58 | 24.31 | - | 3.1% |
| HRB | 23.14 | 22.19 | - | -4.1% |
| CALM | 43.50 | 41.40 | -4.8% | |
| VIAB | 40.23 | 41.97 | 4.3% |
Then here is month by month performance - it has been a dogfight.
| 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 | 0.57% | 115,103 | 114,530 |
Dividend Stocks
Now I go outside of MFI, so those of you just interested in that can tune out. But I am 57 and retirement is not that far off. So I am steadily building a portfolio of dividend/income producing holdings. I try to hold many of these long term and on many simply reinvest dividends (until I need the income). It is not sexy. It is steady. But as they say in The Richest Man in Babylon
“The man who became of his understanding of the laws of wealth, acquireth a growing surplus, should give thought to those future days. He should plan certain investments or provisions that may endure safely for many years, yet will be available when the time arrives which he has so wisely anticipated.”
Great book by the way.
| 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% | 0.5% | 10.27 | 5.4% |
| AOD | 7.64 | 7.91 | 1.74 | 26.4% | 1.5% | 7.58 | 5.1% |
| SBRA | 22.46 | 25.66 | 0.41 | 16.1% | -0.3% | 24.42 | 5.1% |
| PSXP | 46.95 | 56.14 | 1.09 | 21.9% | 7.5% | 48.64 | 16.6% |
| TGONF | 10.24 | 12.50 | 1.85 | 40.2% | 1.6% | 12.14 | 3.0% |
| JQC | 7.84 | 8.74 | 0.69 | 20.3% | 0.9% | 8.85 | -0.6% |
| PSX | 80.00 | 82.77 | 2.88 | 7.1% | -0.3% | 86.41 | -4.2% |
| DSL | 18.43 | 19.59 | 1.17 | 12.6% | 1.9% | 18.99 | 3.9% |
| GLDI | 10.64 | 9.23 | 0.79 | -5.8% | -1.0% | 8.94 | 4.0% |
| PEO | 20.49 | 20.42 | - | -0.3% | 0.4% | 20.17 | 1.2% |
| O | 24.30 | 59.44 | 19.43 | 224.5% | -0.4% | 57.48 | 3.4% |
| DHF | 3.19 | 3.43 | 0.04 | 8.5% | 0.9% | 3.36 | 2.3% |
| OIBAX | 5.07 | 5.65 | 2.32 | 57.1% | 0.0% | 5.61 | 1.0% |
| Totals | 24.8% | 3.2% |
This has really been a good performer so far in 2017. 3.2% is nothing to sneeze at in under a month. I do not pretend to understand why PSXP is up so much (16.6%). I know I liked them as I felt they had capacity to increase their dividends (and they have). Maybe it was Trump approving pipelines.
Miscellaneous Stocks
These are other investments that do not fit neatly in the above buckets. This has been my best approach so far in 2017, up over 7%. These are more speculative plays, so I do not talk about much here. But big winners have been BAC Warrants (up over 10%) and then some covered call plays (up about 50% this month). This bucket is the smallest of my four.
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