Weekend Update 8/12/17

Weekend Update

Another week zooms by.  Plenty of material for political commentators and comedians.  Somehow, the markets continue to levitate near all-time highs.  I am hanging in there, despite owning 0% of FAANG.

My MFI portfolios are doing pretty well (my Miscellaneous approach is the one really struggling).  But my MFI Index (along with MFI tracking portfolios) is having a very tough year (down 2.8%).

You have found your way to the MFI Diary, a blog where I let readers know my thoughts and performance on real life, real dollar Magic Formula Portfolios (based of course on "The Little Book The Beats The Market" by Joel Greenblatt.  I also spend some effort tracking hypothetical portfolios based on downloads from the official website going back to January 2006.

Of course, I have to have a disclaimer - I am just a guy with a spreadsheet and not a stock advisor.  You should do your own due diligence before acting on anything you read here.

The Past Week

It was my second straight bad week.  I was down about 2 points while the R3K was down a point.  It was (as I mentioned) mostly my Miscellaneous investments.  These are riskier investments and it seems I am running through the dynamite factory with a lit match.

Component	YTD
Overall	+6.15%
Select	+13.92%
Formula	+4.16%
Miscellaneous	-15.40%
Dividend	+9.69%
R3K	+9.31%
MFI Index	-2.85%

Wow, my dividend portfolio was way down.  I wonder if I have made a mistake.  Nope.  It was just a bad, bad week.  RILY was down 15%.  SBRA was down 7%.  So looking at the table - in the MFI categories, in total I am really hanging in there.  But Miscellaneous, down 15% YTD.  Whoa.  Overall I am at 6.15%.  Obviously I'd like more, but at least not a disaster.  Recall, I am sitting on more cash than ever in my investing life.


MFI Select

This is the first of my 2 MFI real money investing approaches. It consists of 4 tranches, each containing 5 stocks.  I have been using this approach since August 2012 (I "gave up" on MFI in mid 2011, then restudied, learned from my mistakes and had a reboot).  The Select Portfolio is pretty much as its name, I get to select the stocks however I want.  So I actually run my own screens (which are based on the official book formulae) to supplement the official screen.

Here is how the stocks did this past week (see if your keen eye can spot the big winner).

Stock	Last Week	Current	Dividend	Change
ATHM	47.82	61.52	-	28.6%
MSGN	20.25	20.70	-	2.2%
AKRX	33.47	33.31	-	-0.5%
YY	73.49	78.92	-	7.4%
AMGN	173.85	169.43	-	-2.5%
RHI	44.22	43.41	-	-1.8%
CA	31.99	31.99	-	0.0%
MPAA	26.28	26.92	-	2.4%
WNC	19.03	20.59	-	8.2%
QCOM	52.62	52.72	-	0.2%
KLAC	88.83	90.34	-	1.7%
RGR	52.90	50.00	-	-5.5%
WSTC	23.34	23.34	-	0.0%
TGNA	21.58	21.26	-	-1.5%
TIME	13.75	13.55	-	-1.5%
VLO	68.53	66.15	-	-3.5%
CSCO	31.80	31.47	-	-1.0%
GILD	73.16	72.40		-1.0%
GNC	9.99	9.78		-2.1%

Recall these are sorted in order of size, so 28% gain on my largest holding ==> a very good week!  My two Chinese stocks, ATHM and YY have really been carrying this portfolio in the past 6 months.  Actually, I also had a few dividend (RGR and KLAC - but am too lazy to add right now).

Here are the 4 tranches:

8/15/2016	Start	Current	Dividend	Pct Gain	R3K Gain
CSCO	$31.20	$31.47	$1.10	4.4%	13.5%
GNC	$19.79	$9.78	$0.38	-48.7%	13.5%
VLO	$54.73	$66.15	$2.70	25.8%	13.5%
MSGN	$16.68	$20.70	$0.00	24.1%	13.5%
GILD	$79.33	$72.40	$1.98	-6.2%	13.5%
Totals				-0.1%	13.5%
11/15/2016	Start	Current	Dividend	Pct Gain	R3K Gain
MPAA	$26.55	$26.92	$0.00	1.4%	13.3%
ATHM	$22.61	$61.52	$0.00	172.1%	13.3%
AMGN	$145.14	$169.43	$2.00	18.1%	13.3%
RHI	$43.23	$43.41	$0.70	2.0%	13.3%
CA	$31.11	$31.99	$0.51	4.5%	13.3%
Totals				39.6%	13.3%
2/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
AKRX	$19.10	$33.31	$0.00	74.4%	7.4%
YY	$41.08	$78.92	$0.00	92.1%	7.4%
KLAC	$85.11	$90.34	$0.00	6.1%	7.4%
WNC	$17.65	$20.59	$0.06	17.0%	7.4%
RGR	$52.75	$50.00	$1.15	-3.0%	7.4%
Totals				37.3%	7.4%
5/6/2017	Start	Current	Dividend	Pct Gain	R3K Gain
WSTC	$24.15	$23.34	$0.00	-3.4%	1.8%
TGNA	$25.75	$21.26	$0.07	-17.2%	1.8%
TIME	$15.05	$13.55	$0.04	-9.7%	1.8%
MSGN	$23.55	$20.70	$0.00	-12.1%	1.8%
QCOM	$54.93	$52.72	$0.57	-3.0%	1.8%
Totals				-9.1%	1.8%

This week I will start a new tranche, replacing the 8/15 tranche, which has struggled due to GNC.  Obviously the November and February tranches are high flyers (wish I could always do that).  May is just plain terrible.  I will be allocating about a 50% increase per stock when I pick the 5 August replacements.

 

Category/Tranche	August	November	February	May	Total
Initial Investment	25,000	25,000	25,000	25,000	100,000
Current Tranche	-0.1%	39.6%	37.3%	-9.1%	18.4%
Previous Tranche	2.8%	8.0%	10.7%	19.1%	9.7%
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	84.2%	319.6%	152.0%	27.4%	145.8%
Current Balance	46,054	104,895	62,998	31,850	245,798
R3K Current Tranche	13.5%	13.3%	7.4%	1.8%	9.0%
R3K Overall Gain	89.6%	93.1%	73.7%	62.5%	79.7%
R3K Balance	47,409	48,280	43,425	40,619	179,733
Annualized IRR	13.0%	35.3%	22.6%	5.8%	19.2%

This table summarizes everything.  You'll see bottom right corner that I popped back over 19% annualized IRR again.  And you'll note my 4 current tranches are up an average of 18.4%, very good versus the R3K balance of 9.0%.

Finally, here is how I would be doing if I had invested $100,000 over the original 4 tranches and just continuously rolled the investments over:

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
8/1/2017	57.76%	239,924	182,163
Current	66.07%	245,798	179,733

Wow, what a pop in August!  It was a very good week.

MFI Formula

My MFI Formula approach has been in place since October 2014.  As the name suggests, I pick my stocks by formula.  I start with official screen and take a subset (top 2/3 market cap and dividend yield of 2.4% or greater). I have found through my backtesting to 2006 that this approach outperforms.  Of course, since I started it has underperformed, but I will be patient.

Here are same sets of tables.

Stock	Last Week	Current	Dividend	Change
SYNT	18.67	18.26	-	-2.2%
CSCO	31.80	31.47	-	-1.0%
HPQ	19.37	18.90	-	-2.4%
GILD	73.16	72.40	-	-1.0%
GME	21.93	21.76	-	-0.8%
CA	31.99	31.99	-	0.0%
TGNA	21.58	21.26	-	-1.5%
OMC	79.20	77.75	-	-1.8%
CPLA	69.65	66.95	-	-3.9%
BKE	16.55	15.60	-	-5.7%
RGR	52.90	50.00	-	-5.5%
LDOS	56.19	56.68	-	0.9%
PBI	12.84	12.68	-	-1.2%

Not a lot of stocks here up in past week.  I think just LDOS.

10/3/2016	Start	Current	Dividend	Pct Gain	R3K Gain
CPLA	$58.15	$66.95	$1.23	17.2%	14.3%
LDOS	$43.01	$56.68	$0.96	34.0%	14.3%
GME	$27.70	$21.76	$1.13	-17.4%	14.3%
PBI	$18.15	$12.68	$0.56	-27.0%	14.3%
CSCO	$31.72	$31.47	$1.10	2.7%	14.3%
Totals				1.9%	14.3%
12/30/2016	Start	Current	Dividend	Pct Gain	R3K Gain
GILD	$71.69	$72.40	$1.04	2.4%	9.2%
HPQ	$15.00	$18.90	$0.40	28.7%	9.2%
TGNA	$21.33	$21.26	$0.21	0.7%	9.2%
CA	$31.99	$31.99	$0.51	1.6%	9.2%
SYNT	$19.79	$18.26	$0.00	-7.7%	9.2%
Totals				5.1%	9.2%
4/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
BKE	$18.45	$15.60	$0.50	-12.7%	3.5%
CSCO	$33.76	$31.47	$0.58	-5.1%	3.5%
GILD	$67.50	$72.40	$0.52	8.0%	3.5%
OMC	$85.53	$77.75	$0.55	-8.5%	3.5%
SYNT	$16.76	$18.26	$0.00	8.9%	3.5%
Totals				-1.9%	3.5%
7/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
CSCO	$30.98	$31.47	$0.00	1.6%	0.5%
GME	$20.95	$21.76	$0.00	3.9%	0.5%
HPQ	$17.60	$18.90	$0.00	7.4%	0.5%
RGR	$60.70	$50.00	$0.23	-17.2%	0.5%
SYNT	$16.21	$18.26	$0.00	12.6%	0.5%
Totals				1.6%	0.5%

Just one of my 4 tranches here leading.

Category/Tranche	October	January	April	July	Total
Initial Investment	249,820	249,939	250,180	249,728	999,667
Current Tranche	1.9%	5.1%	-1.9%	1.6%	1.6%
Previous Tranche	5.5%	9.3%	25.2%	26.7%	16.2%
Tranche -2	0.5%	11.0%	-0.2%	-12.5%	-0.3%
MFI Overall Gain	8.0%	27.5%	22.5%	12.7%	17.7%
Current Balance	269,832	318,700	306,567	281,516	1,176,614
R3K Current Tranche	14.3%	9.2%	3.5%	0.5%	6.9%
R3K Overall Gain	29.1%	22.0%	20.8%	17.0%	22.2%
R3K Balance	322,397	305,042	302,150	292,101	1,221,690
Annualized IRR	2.7%	9.7%	9.0%	5.8%	6.8%

Not exactly setting the world afire.

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
8/1/2017	-1.96%	121,873	123,828
Current	-4.51%	117,661	122,171

Trailing by 4.51%, almost all time low water mark.  C'mon Formula!

Miscellaneous and Dividend

As I mentioned, Misc got thrashed this past week.  It was like bad news every day.  It was shared pain, BAC warrants down 7%, NVIV down 30%, HIL down 8% and SLSDF down 8%.  SLSDF announces earnings on 8/15 - I need some good news!

On the Dividend front, it was also a bad week as I mentioned at outset.  As I am retired now, I did use this week to expand my dividend holdings.  So again, not trying to get rich with these holdings, but rather build a dependable income stream.  I did add to OBIAX and bought VTIBX (not much better than a money market fund).   But I think it is important to not be all stocks/equity.

I did also buy EVG, BCRH and NS during the week.  Retirement, here I am.

Stock	Initial	Current	Div/Sh	Gain/Loss	Yield
LADR	13.01	13.50	-	3.8%	8.9%
FDEU	18.40	18.12	0.36	0.4%	8.0%
TK	5.24	9.53	0.06	82.8%	2.3%
JQC	8.20	8.46	0.60	10.5%	7.4%
OIBAX	5.85	5.96	0.38	8.3%	0.6%
FSFR	8.68	8.67	-	-0.1%	8.8%
DSL	19.47	20.56	1.05	11.0%	8.8%
KCLI	49.32	49.30	0.27	0.5%	2.4%
RILY	15.58	15.75	-	1.1%	1.7%
ISBC	13.15	13.06	0.08	0.0%	2.5%
VTIBX	10.92	10.94	-	0.2%	1.1%
EVG	14.49	14.48	-	-0.1%	6.3%
NS	41.89	40.92	-	-2.3%	10.7%
TGONF	10.91	12.55	1.76	31.2%	5.6%
NRZ	16.22	16.56	0.38	4.4%	12.1%
SBRA	23.53	21.45	0.29	-7.6%	8.0%
PSXP	48.20	46.62	0.62	-2.0%	5.3%
BCRH	19.93	19.25	-	-3.4%	6.2%
GLDI	9.23	9.29	-	0.7%	5.7%
DHF	3.34	3.42	0.09	5.1%	8.2%
O	25.02	56.48	20.47	207.5%	4.5%

So this is a very aggressive income portfolio - my overall yield is 5.9%.  I rationalize that I have largest cash position ever, so I can be more aggressive.  I think I have "enough" names, so will be going deeper in the future rather than broader.  Hmm, not sure why OIBAX is 0.6% yield, that is wrong.  Anyway, c'est fini! Have a great day everyone.