Saturday, July 08, 2017

Weekend Update 7/7/17

Weekend Update

Good morning everyone.  Full summer here.  I am going to type this up quickly and then take a bike ride to Talcott Mountain.

You have found your way to The MFI Diary, a blog I have been maintaining since 2006 (MFI being magic formula investing from The Little Book That Beats the Market by Joel Greenblatt). .In it I track performance of my own actual MFI investments along with detailed tracking of picking stocks from the MFI screen and my MFI Index (an index comprised of 50 stocks from screen and reconstituted once a year).

People need to know I am just a guy with a spreadsheet, no finance expertise.  So please use what I write for information/entertainment - but if you choose to buy some of the names I buy you should do your own due diligence.

Past Week

This past week was not so great for my stocks.  A lot of it was TK, which had really popped with a short squeeze and kind of fell back to earth a bit.  I am still up 28% on the trade - but it was 48%.  Here is how I stand against the indexes:


Component YTD
Overall +6.66%
Select +12.04%
Formula +4.05%
Miscellaneous -3.75%
Dividend +8.49%
R3K +8.82%
MFI Index +1.49%


That 6.66% was 7.13% a week ago. So not real good as IWV edged up a bit.  The MFI Index dropped by a full percentage point - so that is always an indicator it was a tough week for value stocks.

I did never get around to selling my 7/1 MFI Formula portfolio (busy week).  I will close it out this weekend and select my five new stocks and buy/sell on Monday.

MFI Select

I have two MFI portfolios - "Select" and "Formula", each consisting of 4 tranches of five stocks.  Select has been running since August 2012 when I performed my MFI reboot (after sitting out for a year).  It has been very successful.  It is pretty free form, I can pick whatever stocks I want, from the official screen or my homemade screen (which always seems to pick up a few names omitted from official screen).

I did also do some analysis this week on whether the price movement of an MFI stock on the screen today over the past 6 months is a predictor of future performance.  My analysis was a bit muddy, at first it seemed like a good approach as I added data.  But when I added 2012, it became pretty borderline as a bunch of stocks that year had major (like over 100%) bouncebacks post substantial drops (like HLF, QCOR and NUS).  So I think if you exclude stocks that have dropped say 30% in past 6 months you will weed out a lot of stinkers - but you will also miss some very big winners.  I will continue to build out data base and see if a second element (such as market cap or dividend) helps.

Here are individual stocks for the week:


Stock Last Week Current Dividend Change
MSGN  22.45   22.75   -    1.3%
ATHM  45.36   45.97   -    1.3%
AKRX  33.54   33.55   -    0.0%
AMGN  172.23   171.43   -    -0.5%
MPAA  28.24   27.84   -    -1.4%
YY  58.03   56.83   -    -2.1%
RHI  47.93   49.17   -    2.6%
CA  34.47   34.34   -    -0.4%
WNC  21.98   22.06   -    0.4%
RGR  62.15   61.70   -    -0.7%
KLAC  91.51   94.57   -    3.3%
QCOM  55.22   55.35   -    0.2%
WSTC  23.32   23.31   -    0.0%
TGNA  23.29   23.00   -    -1.2%
TIME  14.35   14.00   -    -2.4%
VLO  67.46   68.18   -    1.1%
CSCO  31.30   30.90   0.29  -0.4%
GILD  70.78   69.25  -2.2%
GNC  8.43   8.33  -1.2%
Average -0.1%


So KLAC bounced back as tech sell off abated. Here are my 4 tranches:


8/15/2016 Start Current Dividend Pct Gain R3K Gain
 CSCO  $31.20  $30.90  $0.26  -0.1% 13.0%
 GNC  $19.79  $8.33  $0.38  -56.0% 13.0%
 VLO  $54.73  $68.18  $2.00  28.2% 13.0%
 MSGN  $16.68  $22.75  $0.00  36.4% 13.0%
 GILD  $79.33  $69.25  $1.98  -10.2% 13.0%
Totals -0.3% 13.0%
11/15/2016 Start Current Dividend Pct Gain R3K Gain
 MPAA  $26.55  $27.84  $0.00  4.9% 12.8%
 ATHM  $22.61  $45.97  $0.00  103.3% 12.8%
 AMGN  $145.14  $171.43  $2.00  19.5% 12.8%
 RHI  $43.23  $49.17  $0.70  15.4% 12.8%
 CA  $31.11  $34.34  $0.51  12.0% 12.8%
Totals 31.0% 12.8%
2/1/2017 Start Current Dividend Pct Gain R3K Gain
 AKRX  $19.10  $33.55  $0.00  75.7% 6.9%
 YY  $41.08  $56.83  $0.00  38.3% 6.9%
 KLAC  $85.11  $94.57  $1.08  12.4% 6.9%
 WNC  $17.65  $22.06  $0.06  25.3% 6.9%
 RGR  $52.75  $61.70  $0.92  18.7% 6.9%
Totals 34.1% 6.9%
5/6/2017 Start Current Dividend Pct Gain R3K Gain
 WSTC  $24.15  $23.31  $0.00  -3.5% 1.4%
 TGNA  $25.75  $23.00  $0.07  -10.4% 1.4%
 TIME  $15.05  $14.00  $0.04  -6.7% 1.4%
 MSGN  $23.55  $22.75  $0.00  -3.4% 1.4%
 QCOM  $54.93  $55.35  $0.57  1.8% 1.4%
Totals -4.4% 1.4%

Kind of same story here as a week ago.

Category/Tranche August November February May Total
Initial Investment  25,000   25,000   25,000   25,000   100,000 
Current Tranche -0.3% 31.0% 34.1% -4.4% 16.3%
Previous Tranche 2.8% 8.0% 10.7% 19.1% 8.8%
Tranche -2 11.2% 69.4% -14.3% -25.2% 10.3%
Tranche -3 41.4% 14.2% 8.5% 18.3% 20.6%
Tranche -4 14.1% 43.7% 78.3% 33.0% 42.3%
MFI Overall Gain 83.8% 293.7% 146.0% 33.9% 139.4%
Current Balance  45,953   98,426   61,511   33,470   239,361 
R3K Current Tranche 13.0% 12.8% 6.9% 1.4% 8.5%
R3K Overall Gain 88.8% 92.3% 72.9% 61.7% 78.9%
R3K Balance  47,198   48,066   43,231   40,436   178,931 
Annualized IRR 13.2% 34.3% 22.5% 7.2% 19.3%

Then here is 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 45.60%  209,503   163,936 
2/1/2017 45.20%  212,330   167,146 
3/1/2017 48.80%  222,583   173,829 
4/1/2017 55.70%  229,473   173,735 
5/1/2017 55.80%  231,497   175,712 
6/1/2017 53.40%  230,599   177,203 
7/1/2017 60.28%  239,060   178,782 
Current 60.43%  239,361   178,931 

MFI Formula


Stock Last Week Current Dividend Change
CPLA  85.60   85.05   -    -0.6%
GILD  70.78   69.25   -    -2.2%
SYNT  16.96   16.16   -    -4.7%
CSCO  31.30   30.90   0.29  -0.4%
TGNA  23.29   23.00   -    -1.2%
HPQ  17.48   17.35   -    -0.7%
CA  34.47   34.34   -    -0.4%
PBI  15.10   14.95   -    -1.0%
OMC  82.90   81.50   -    -1.7%
BKE  17.80   17.40   -    -2.2%
LDOS  51.69   52.07   -    0.7%
ILG  27.49   27.43   -    -0.2%
VIAB  33.57   33.20   -    -1.1%
HRB  30.91   31.37   -    1.5%
GME  21.61   20.91   -    -3.2%
 -   
Average -1.2%

Just not a very good week.  GME is one that would be weeded out by 6 month rule.  As would SYNT. Here are four tranches with July being closed out (I will try to write specifically about it this weekend).

7/1/2016 Start Current Dividend Pct Gain R3K Gain
ILG $16.76  $27.49  $0.54  67.2% 16.8%
VIAB $44.00  $33.57  $0.80  -21.9% 16.8%
CPLA $53.22  $85.60  $1.62  63.9% 16.8%
HRB $23.62  $30.91  $0.90  34.7% 16.8%
PBI $17.69  $15.10  $0.75  -10.4% 16.8%
Totals 26.7% 16.8%
10/3/2016 Start Current Dividend Pct Gain R3K Gain
 CPLA  $58.15  $85.05  $1.23  48.4% 13.8%
 LDOS  $43.01  $52.07  $0.96  23.3% 13.8%
 GME  $27.70  $20.91  $1.13  -20.4% 13.8%
 PBI  $18.15  $14.95  $0.56  -14.5% 13.8%
 CSCO  $31.72  $30.90  $1.10  0.9% 13.8%
Totals 7.5% 13.8%
12/30/2016 Start Current Dividend Pct Gain R3K Gain
 GILD  $71.69  $69.25  $1.04  -1.9% 8.7%
 HPQ  $15.00  $17.35  $0.40  18.3% 8.7%
 TGNA  $21.33  $23.00  $0.21  8.8% 8.7%
 CA  $31.99  $34.34  $0.51  8.9% 8.7%
 SYNT  $19.79  $16.16  $0.00  -18.3% 8.7%
Totals 3.2% 8.7%
4/1/2017 Start Current Dividend Pct Gain R3K Gain
 BKE  $18.45  $17.40  $0.25  -4.3% 3.0%
 CSCO  $33.76  $30.90  $0.58  -6.7% 3.0%
 GILD  $67.50  $69.25  $0.52  3.4% 3.0%
 OMC  $85.53  $81.50  $0.55  -4.1% 3.0%
 SYNT  $16.76  $16.16  $0.00  -3.6% 3.0%
Totals -3.1% 3.0%

You can see that next week, when the July tranche moves from "current" to history - my current tranches will not be in great shape as other three are trailing by average of 6 points.  That is not very good.


Category/Tranche October January April July Total
Initial Investment  249,820   249,939   250,180   249,728   999,667 
Current Tranche 7.5% 3.2% -3.1% 26.7% 5.9%
Previous Tranche 5.5% 9.3% 25.2% -12.5% 8.1%
Tranche -2 0.5% 11.0% -0.2%  -    2.8%
MFI Overall Gain 14.0% 25.1% 21.0% 10.9% 17.8%
Current Balance  284,685   312,736   302,757   276,956   1,177,134 
R3K Current Tranche 13.8% 8.7% 3.0% 16.8% 10.6%
R3K Overall Gain 28.5% 21.5% 20.2% 16.4% 21.7%
R3K Balance  320,962   303,678   300,794   290,784   1,216,218 
Annualized IRR 4.8% 9.3% 8.7% 5.2% 7.0%

I am committed to this approach - although I am considering making Sept and April be based on a formula of momentum and July and January on dividends.  That would alleviate (a bit) my getting overweight in certain stocks.  But I need to hammer our momentum approach (that was one reason I waited a week - I was hopeful I could find something).


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 
4/1/2017 -1.86%  116,227   118,091 
5/1/2017 1.11%  120,403   119,296 
6/1/2017 -2.65%  117,824   120,472 
7/1/2017 -2.40%  119,144   121,545 
Current -3.91%  117,713   121,623 


You can see in this table, going from 7/1/17 to current was not great.


Dividends/Misc

For the week, my dividend portfolio held its own, but the ever volatile Misc dropped again, now down 3.75%.  I know, I need to unplug Misc.  I did sell two stocks from it this week.


Stock Initial Current Div/Sh Gain/Loss Yield
 JQC   8.20   8.54   0.49  10% 7.4%
 TK   5.24   6.80   -    30% 3.2%
 PSXP   48.20   50.20   -    4% 4.7%
 TGONF   10.47   12.90   1.97  42% 5.3%
 DHF   3.34   3.52   0.07  7% 9.2%
 FDEU   18.21   18.61   0.48  5% 7.8%
 SBRA   24.01   23.16   0.43  -2% 7.4%
 RILY   13.85   18.50   -    34% 1.7%
 NRZ   16.51   15.34   0.50  -4% 13.0%
 DSL   18.49   20.69   1.86  22% 8.7%
 KCLI   49.00   50.40   -    3% 2.2%
 O   24.91   54.69   20.12  200% 4.6%
 OIBAX   5.09   5.83   2.38  61% 4.0%

SBRA and NRZ are not exactly setting the world afire.  RILY and TK have been great recent buys.  I am getting a fair amount of cash pretty soon - so I will have to decide how to invest that.  I will likely continue to build this portfolio out to create a nice income stream as I approach 60.

Have a great week everyone.

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