Final Day of 4/1/16 Tranche

Final Day of 4/1/16 Tranche

Another MFI tranche winds down today. I have sold CALM (the one loser) and will sell the other four names on Monday.  I will then buy 5 new names.

This was a good tranche:

4/1/16 Stocks	Start	Current	Dividend	Pct Gain	R3K Gain
CALM	$51.27	$37.55	$0.44	-25.9%	17.7%
HPQ	$12.10	$17.65	$0.51	50.0%	17.7%
TIME	$15.24	$19.35	$0.76	31.9%	17.7%
ILG	$13.85	$20.76	$0.51	53.5%	17.7%
XPER	$30.79	$34.25	$0.80	13.8%	17.7%
Totals				24.7%	17.7%

Hard to be unhappy with almost 25% gain.

I was certainly a little lucky this time - the 7 names I did not pick were only up about 8% (GME, BKE and PBI all down 30% ish).

I will also be closing my March 24 2016 Tracking portfolio of 50 stocks.  It was also strong, up 26.0%. It seems the end of March last year was a good time to start a portfolio. (the dividend subset was up 30.5%!).

Sadly, March also (right now) seems like the last good time to start an MFI tranche.  All other 11 open tranches in my tracking system are trailing, by an average of 2 points.

Calm Before the Storm?

Calm Before the Storm?

I do believe that Trump's administration not being able to pass ACA reform last week casts a shadow of doubt on his ability to deliver on many of his promises.  Wall Street may be waking up to that shadow as well.  I suspect tax reform and infrastructure spending could easiliy not happen or be watered down - Trump's popularity is too low for him to bully lawmakers.

I may sell a few things today.

Speaking of selling and CALM, CALM reported earnings this morning and it looks like we are not eating enough eggs!  It sucks as I was going gto sell CALM this week (they are in my 4/1 tranche and are under water so would be sold short of a year).

Oh well. Not a huge position.

Weekend Update 3/25/17

Weekend Update

Another week zips by. You have found your way to the MFI Diary.  This is my blog where I discuss many things related to "The Little Book That Beats the Market" by Joel Greenblatt.  I have been writing this blog since early 2006 and have tracked my performance with real money and tracking portfolios based on the official Magic Formula Investing (MFI) website.  I also have created an MFI Index, which is fifty MFI stocks and is reconstituted once a year.

At least I had a good laugh yesterday when I saw Trump blame the Democrats for the AHCA not passing the house yesterday

(President Trump Blames Lack of Democrat Support for Failure of AHCA).

You just can't make this stuff up.  Instead he should think about the line from Hamilton, "Winning is easy, Governing is hard."  I know it is sacrilegious, but we would do a lot better if the two major parties worked together and found compromises both don't like but could live with.  Someday...

Ok, back to MFI.

I should mention that I am just a guy with a spreadsheet.  Not a CFA, not an expert... just a guy.  So please use what I write for information, but do your own diligence in making stock decisions.

So welcome!

The Past Week

Well, we finally had a day where the market dopped more than 1%.  First time in like 4 months.  It definitely hurt as I lost well more than 1%.  But one really can't be surprised.  I continue to underperform the benchmarks so far in 2017... it is a bit frustrating, but I am not unhappy.  Here are how all the components are faring:

Component	YTD
Overall	+2.97%
Select	+4.53%
Formula	+0.62%
Miscellaneous	+3.98%
Dividend	+3.37%
R3K	+4.20%
MFI Index	-2.83%

I say this caveat all the time, but keep in mind that these portfolios have a cash component (as I do plan on plowing in more money in 2017 should the market ever drop).  So the percentages here may not match what you see further on as I often show those returns assuming zero cash. (As I pointed out midweek in Falling (not so) Slowly - the MFI Index is really struggling in 2017. Down 2.8%.  My Select approach continues to be solid, while my Formula approach struggles (not helped by GME as we shall see).  My Miscellaeous took a hige tumble.  I had mentioned that this was a riskier approach and that showed in a bumpy week.  My BAC warrants are easily my single largest holding and they went from $12.61 to $10.79 in a week.  Ouch.

MFI Select

I have two groups of MFI stocks with real money.  The first (and oldest) is MFI Select. This is 4 baskets of 5 stocks that I buy and hold for a year.  I have been doing this since my reboot in August 2012.  

This approach has done very well for me.  Note I am trying to avoid stocks that are on the screen, but in my view are not a true Jake's Bubble Gum Shop (ie a one hit wonder).  To be fair,  I have also had several stocks that did very well..

Here is my month by month performance, assuming I put in $100,000 spread over the 4 baskets evenly:

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
2/1/2017	47.65%	212,330	164,675
3/1/2017	52.99%	222,583	169,589
Current	52.72%	220,666	167,941

It was a tough week.  Here are the individual stock movements:

Stock	Last Week	Current	Dividend	Change
RHI	49.54	48.19	-	-2.7%
ATHM	33.26	31.90	-	-4.1%
CA	32.43	31.86	-	-1.8%
AMGN	168.61	165.74	-	-1.7%
MPAA	27.98	28.01	-	0.1%
AKRX	22.32	22.75	-	1.9%
MSGN	23.05	22.50	-	-2.4%
VLO	68.90	65.78	-	-4.5%
BRCD	12.47	12.52	-	0.4%
YY	51.01	46.30	-	-9.2%
CSCO	34.23	34.08	-	-0.4%
KLAC	94.69	95.72	-	1.1%
RGR	53.55	51.90	-	-3.1%
GILD	69.06	67.51	-	-2.2%
CBI	29.76	28.83	-	-3.1%
GNC	7.40	7.00	-	-5.4%
WNC	21.14	20.48	-	-3.1%
Average				-2.4%

You can see my two Chinese names, ATHM and YY got hit pretty hard.

Here are the 4 tranches:

5/6/2016	Start	Current	Dividend	Pct Gain	R3K Gain
BRCD	$7.97	$12.52	$0.17	59.2%	16.5%
CBI	$37.82	$28.83	$0.00	-23.8%	16.5%
HSII	$18.51	$25.50	$0.39	39.9%	16.5%
RHI	$38.51	$48.19	$0.90	27.5%	16.5%
UTHR	$107.99	$140.05	$0.00	29.7%	16.5%
Totals				26.5%	16.5%
8/15/2016	Start	Current	Dividend	Pct Gain	R3K Gain
CSCO	$31.20	$34.08	$0.26	10.1%	8.2%
GNC	$19.79	$7.00	$0.38	-62.7%	8.2%
VLO	$54.73	$65.78	$1.30	22.6%	8.2%
MSGN	$16.68	$22.50	$0.00	34.9%	8.2%
GILD	$79.33	$67.51	$1.46	-13.1%	8.2%
Totals				-1.6%	8.2%
11/15/2016	Start	Current	Dividend	Pct Gain	R3K Gain
MPAA	$26.55	$28.01	$0.00	5.5%	8.1%
ATHM	$22.61	$31.90	$0.00	41.1%	8.1%
AMGN	$145.14	$165.74	$1.00	14.9%	8.1%
RHI	$43.23	$48.19	$0.46	12.5%	8.1%
CA	$31.11	$31.86	$0.26	3.2%	8.1%
Totals				15.4%	8.1%
2/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
AKRX	$19.10	$22.75	$0.00	19.1%	2.4%
YY	$41.08	$46.30	$0.00	12.7%	2.4%
KLAC	$85.11	$95.72	$0.54	13.1%	2.4%
WNC	$17.65	$20.48	$0.00	16.0%	2.4%
RGR	$52.75	$51.90	$0.44	-0.8%	2.4%
Totals				12.0%	2.4%

All-in-all pretty darned good.  Even satisfactory as Greenblatt might say. Just that one stinker, GNC.

Category/Tranche	August	November	February	May	Total
Initial Investment	25,000	25,000	25,000	25,000	100,000
Current Tranche	-1.6%	15.4%	12.0%	26.5%	12.6%
Previous Tranche	2.8%	8.0%	10.7%	-25.2%	-2.9%
Tranche -2	11.2%	69.4%	-14.3%	18.3%	21.2%
Tranche -3	41.4%	14.2%	8.5%	33.0%	24.3%
Tranche -4	14.1%	43.7%	78.3%	0.0%	34.0%
MFI Overall Gain	81.4%	246.9%	105.6%	48.7%	120.7%
Current Balance	45,350	86,734	51,397	37,185	220,666
R3K Current Tranche	8.2%	8.1%	2.4%	16.5%	8.8%
R3K Overall Gain	80.8%	84.1%	65.6%	54.9%	67.9%
R3K Balance	41,779	46,035	41,396	38,732	167,941
Annualized IRR	13.8%	33.0%	19.0%	10.7%	19.1%

Still clocking an annualized IRR of over 19%.  Current open tranches leading by almost 4 points.

MFI Formula

These are stocks picked by formula rather than my selecting. Formula is based on my backtesting - stocks have to have yield of 2.4% or greater and be in upper 2/3 in market cap.  I then randomly select 5 names.  I will be retiring a tranche in a weeks (4/1) and starting a new one.  I have been also planning to dedicate more $, but I am starting to re-think that.  Not so much that I do not believe in MFI Formula... rather the whole market seems extended.  

Same tables.

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
2/1/2017	1.32%	114,809	113,486
3/1/2017	-5.09%	112,930	118,024
Current	-2.88%	113,624	116,503

Stock	Last Week	Current	Dividend	Change
CPLA	82.25	82.20	-	-0.1%
HPQ	17.56	17.23	-	-1.9%
ILG	19.26	19.37	-	0.6%
PBI	12.84	12.54	-	-2.3%
GILD	69.06	67.51	-	-2.2%
CA	32.43	31.86	-	-1.8%
SYNT	17.64	16.38	-	-7.1%
TGNA	26.07	25.53	-	-2.1%
XPER	35.80	37.25	-	4.1%
LDOS	53.95	52.62	-	-2.5%
TIME	19.15	19.35	-	1.0%
CSCO	34.23	34.08	-	-0.4%
GME	24.64	20.70	-	-16.0%
HRB	24.45	22.42	-	-8.3%
CALM	38.50	37.35		-3.0%
VIAB	43.40	43.06		-0.8%
Average				-2.7%

You can see the GME implosion.  I am so fed up with retail, but am committed to following Formula on this part of my investing (check emotions at the door).  But here are my thoughts about retail recently (MFI Diary: Clearance Bin).

4/1/16 Stocks	Start	Current	Dividend	Pct Gain	R3K Gain
CALM	$51.27	$37.35	$0.44	-26.3%	16.4%
HPQ	$12.10	$17.23	$0.51	46.5%	16.4%
TIME	$15.24	$19.35	$0.76	31.9%	16.4%
ILG	$13.85	$19.37	$0.51	43.5%	16.4%
XPER	$30.79	$37.25	$0.80	23.6%	16.4%
Totals				23.9%	16.4%
7/1/2016	Start	Current	Dividend	Pct Gain	R3K Gain
ILG	$16.76	$19.37	$0.39	17.9%	11.9%
VIAB	$44.00	$43.06	$0.60	-0.8%	11.9%
CPLA	$53.22	$82.20	$1.21	56.7%	11.9%
HRB	$23.62	$22.42	$0.66	-2.3%	11.9%
PBI	$17.69	$12.54	$0.56	-25.9%	11.9%
Totals				9.1%	11.9%
10/3/2016	Start	Current	Dividend	Pct Gain	R3K Gain
CPLA	$58.15	$82.20	$0.82	42.8%	9.0%
LDOS	$43.01	$52.62	$0.00	22.3%	9.0%
GME	$27.70	$20.70	$0.75	-22.6%	9.0%
PBI	$18.15	$12.54	$0.38	-28.8%	9.0%
CSCO	$31.72	$34.08	$0.52	9.1%	9.0%
Totals				4.6%	9.0%
12/30/2016	Start	Current	Dividend	Pct Gain	R3K Gain
GILD	$71.69	$67.51	$0.52	-5.1%	4.1%
HPQ	$15.00	$17.23	$0.13	15.8%	4.1%
TGNA	$21.33	$25.53	$0.14	20.3%	4.1%
CA	$31.99	$31.86	$0.26	0.4%	4.1%
SYNT	$19.79	$16.38	$0.00	-17.2%	4.1%
Totals				2.8%	4.1%

As mentioned, just a week left on the 4/1 tranche - which looks like a nice winner (only one of the 4 leading).  Some logistics.  I will sell CALM this week.  The other four I will sell April 3rd.  I will buy 5 new names April 3rd.  In my tables (below), the April 2016 tranche will move from Current to "Previous".  And the April 2017 tranche will become current.  It is actually a fair amount of effort switching over.

Category/Tranche	October	January	April	July	Total
Initial Investment	249,820	249,939	250,180	249,728	999,667
Current Tranche	4.6%	2.8%	23.9%	9.1%	9.1%
Previous Tranche	5.5%	9.3%	-0.2%	-12.5%	1.3%
Tranche -2	0.5%	11.0%	-	-	2.9%
MFI Overall Gain	10.8%	24.7%	23.6%	-4.5%	13.7%
Current Balance	276,846	311,751	309,110	238,537	1,136,244
R3K Current Tranche	9.0%	4.1%	16.4%	11.9%	10.3%
R3K Overall Gain	23.0%	16.3%	15.1%	11.6%	16.5%
R3K Balance	307,401	290,787	288,061	278,768	1,165,017
Annualized IRR	4.2%	10.4%	11.2%	-2.6%	5.8%

Dividend Portfolio

Those who only care about MFI can stop here.  I do have a dividend portfolio as I approach retirement and want to create an income stream for my "golden" years.  So not sexy, but real investing.  Most dividends get plowed back in.  I have sold a couple names this year - I am nervous about impact of interest rate hikes here and want to keep some proverbial dry powder.

Dividend Stocks	Start	Current	Divvy	Overall Pct Gain	Weekly Pct Gain	1/1/17 Price	% Chg Since 1/1/17
CSQ	9.14	10.96	2.42	46.4%	-1.4%	10.27	8.6%
AOD	7.64	8.15	1.83	30.6%	-1.5%	7.58	9.4%
SBRA	22.46	25.74	0.41	16.4%	0.0%	24.42	5.4%
PSXP	47.04	50.23	1.08	9.1%	-1.3%	48.64	4.4%
TGONF	10.24	12.33	2.02	40.2%	0.1%	12.14	3.0%
JQC	7.85	8.75	0.79	21.5%	-1.4%	8.85	0.5%
PSX	80.00	78.90	3.51	3.0%	0.0%	86.41	-8.0%
DSL	18.45	19.78	1.45	15.0%	0.1%	18.99	6.4%
GLDI	10.63	9.40	0.86	-3.5%	0.0%	8.94	6.7%
PEO	20.49	18.98	0.10	-6.9%	-1.7%	20.17	-5.4%
O	24.55	59.46	19.71	222.5%	-0.7%	57.48	3.9%
DHF	3.19	3.36	0.09	8.0%	0.3%	3.36	1.8%
OIBAX	5.08	5.75	2.34	59.4%	0.5%	5.61	3.3%
Totals				25.0%			3.4%

I am thrilled with the 3.4% gain so far.  Again, this is a steady eddy type of portfolio.

Miscellaneous

This continues to be a volatile (and smallest) component.  It dropped a lot this week - mostly due to BAC warrants dropping like 20%.  But those are a very long term investment (I have since 2012) and I may use this dip as a buying opportunity.  I do have some options in here and have been buying a bit of biotech (a basket approach) and some M&A arbitrage.  Again, I do not go into detail as I am not comfortable if people follow me.

Have a great weekend.