Another week flies by - was up in White Mountains, just spectacular there! I continue to mostly limp along, I guess that is the new reality. All-in-all, I guess I am ok with limping along on the MFI side, as that is actually stellar compared to my MFI tracking and index. But somehow, that doesn't make me feel warm and fuzzy.
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
Like I said, it was a tough week.
| Component | YTD |
| Overall | +8.04% |
| Select | +16.04% |
| Formula | +3.20% |
| Miscellaneous | -1.29% |
| Dividend | +11.78% |
| R3K | +9.56% |
| MFI Index | -2.23% |
Wow, my Select is doing much better than I expected. It was 12.6^ last week - let us see where the gains were:
| Stock | Last Week | Current | Dividend | Change |
| ATHM | 64.41 | 63.70 | - | -1.1% |
| RHI | 43.33 | 44.04 | 0.24 | 2.2% |
| YY | 73.69 | 72.29 | - | -1.9% |
| AKRX | 31.98 | 32.50 | - | 1.6% |
| AMGN | 167.29 | 169.74 | - | 1.5% |
| CA | 32.37 | 32.50 | 0.26 | 1.2% |
| ICHR | 20.36 | 19.88 | - | -2.4% |
| WNC | 20.51 | 20.27 | - | -1.2% |
| SIMO | 42.72 | 42.75 | - | 0.1% |
| MPAA | 24.74 | 26.09 | - | 5.5% |
| MD | 42.27 | 44.22 | - | 4.6% |
| GHC | 574.70 | 582.95 | - | 1.4% |
| WSTC | 23.34 | 23.36 | - | 0.1% |
| QCOM | 51.92 | 52.03 | - | 0.2% |
| KLAC | 90.26 | 90.48 | - | 0.2% |
| MSGN | 20.55 | 20.70 | - | 0.7% |
| TGNA | 20.61 | 21.13 | - | 2.5% |
| RGR | 49.25 | 48.85 | -0.8% | |
| TIME | 12.35 | 12.60 | 2.0% |
The 16% is right, perhaps the 12% last week was off. The Formula component just struggles, struggles, struggles. Not helped by GME sell off on Friday.
| Stock | Last Week | Current | Dividend | Change |
| SYNT | 18.01 | 18.06 | - | 0.3% |
| CSCO | 30.37 | 31.44 | - | 3.5% |
| HPQ | 18.51 | 19.31 | - | 4.3% |
| GILD | 72.11 | 73.79 | - | 2.3% |
| GME | 21.22 | 19.40 | - | -8.6% |
| CA | 32.37 | 32.50 | 0.26 | 1.2% |
| TGNA | 20.61 | 21.13 | - | 2.5% |
| OMC | 76.76 | 73.13 | - | -4.7% |
| CPLA | 67.00 | 66.40 | 0.41 | -0.3% |
| BKE | 14.05 | 15.10 | - | 7.5% |
| RGR | 49.25 | 48.85 | - | -0.8% |
| LDOS | 55.34 | 55.86 | - | 0.9% |
| PBI | 12.74 | 12.64 | 0.19 | 0.7% |
MFI Select
These are stocks that I view as "magic formula stocks", but very free form. I pick some of my own stocks from my own screen instead of official screen. I started in August 2012 (a reboot after I quit MFI for a year). It has been extremely successful. I have 4 tranches of 5 stocks apiece that I buy and hold for a year. I just started a new tranche August 15, 2017. Here are the 4 tranches:
| 11/15/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| MPAA | $26.55 | $26.09 | $0.00 | -1.7% | 13.6% |
| ATHM | $22.61 | $63.70 | $0.00 | 181.7% | 13.6% |
| AMGN | $145.14 | $169.74 | $3.15 | 19.1% | 13.6% |
| RHI | $43.23 | $44.04 | $0.94 | 4.0% | 13.6% |
| CA | $31.11 | $32.50 | $0.77 | 6.9% | 13.6% |
| Totals | 42.0% | 13.6% | |||
| 2/1/2017 | Start | Current | Dividend | Pct Gain | R3K Gain |
| AKRX | $19.10 | $32.50 | $0.00 | 70.2% | 7.6% |
| YY | $41.08 | $72.29 | $0.00 | 76.0% | 7.6% |
| KLAC | $85.11 | $90.48 | $1.67 | 8.3% | 7.6% |
| WNC | $17.65 | $20.27 | $0.06 | 15.2% | 7.6% |
| RGR | $52.75 | $48.85 | $1.15 | -5.2% | 7.6% |
| Totals | 32.9% | 7.6% | |||
| 5/6/2017 | Start | Current | Dividend | Pct Gain | R3K Gain |
| WSTC | $24.15 | $23.36 | $0.00 | -3.3% | 2.1% |
| TGNA | $25.75 | $21.13 | $0.07 | -17.7% | 2.1% |
| TIME | $15.05 | $12.60 | $0.04 | -16.0% | 2.1% |
| MSGN | $23.55 | $20.70 | $0.00 | -12.1% | 2.1% |
| QCOM | $54.93 | $52.03 | $0.57 | -4.2% | 2.1% |
| Totals | -10.7% | 2.1% | |||
| 8/15/2017 | Start | Current | Dividend | Pct Gain | R3K Gain |
| GHC | $591.10 | $582.95 | $0.00 | -1.4% | -0.7% |
| ICHR | $19.80 | $19.88 | $0.00 | 0.4% | -0.7% |
| MD | $43.00 | $44.22 | $0.00 | 2.8% | -0.7% |
| SIMO | $43.05 | $42.75 | $0.00 | -0.7% | -0.7% |
| RHI | $44.15 | $44.04 | $0.24 | 0.3% | -0.7% |
| Totals | 0.3% | -0.7% |
Nice to see the most recent tranche off to a decent start versus the Russell 3000 benchmark. Here is a summary of all my tranches:
| Category/Tranche | August | November | February | May | Total |
| Initial Investment | 25,000 | 25,000 | 25,000 | 25,000 | 100,000 |
| Current Tranche | 0.3% | 42.0% | 32.9% | -10.7% | 16.2% |
| Previous Tranche | -0.1% | 8.0% | 10.7% | 19.1% | 15.8% |
| Tranche -2 | 2.8% | 69.4% | -14.3% | -25.2% | 8.2% |
| Tranche -3 | 11.2% | 14.2% | 8.5% | 18.3% | 13.0% |
| Tranche -4 | 41.4% | 43.7% | 78.3% | 33.0% | 49.1% |
| Tranche -5 | 14.1% | 0.0% | 0.0% | 0.0% | 3.5% |
| MFI Overall Gain | 84.9% | 326.8% | 143.8% | 25.2% | 145.2% |
| Current Balance | 46,213 | 106,697 | 60,957 | 31,290 | 245,158 |
| R3K Current Tranche | -0.7% | 13.6% | 7.6% | 2.1% | 5.6% |
| R3K Overall Gain | 90.2% | 93.6% | 74.1% | 62.8% | 80.2% |
| R3K Balance | 47,552 | 48,390 | 43,524 | 40,711 | 180,177 |
| Annualized IRR | 13.0% | 35.4% | 21.5% | 5.3% | 18.8% |
This assumes I started with $100,000, spread evenly over the four tranches. That $100,000 would be $245,158 today. Note in reality, I have continuously added money every year - so this is more theoretical... but still a useful measure and directionally correct.
Here is a table showing month by month what the $100,000 has grown to vs the benchmark:
| 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 | 64.98% | 245,158 | 180,177 |
My lead stayed about the same from a week ago (so the 12% to 16% I saw earlier has to have a mistake).
MFI Formula
This is like my MFI Select, except I started in October 2014 and my stocks are not "selected", but are based on a formula and random number generator. While backtesting has shown this approach to be highly effective - it has struggled since I started with real $.
| 10/3/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| CPLA | $58.15 | $66.40 | $1.64 | 17.0% | 14.5% |
| LDOS | $43.01 | $55.86 | $0.96 | 32.1% | 14.5% |
| GME | $27.70 | $19.40 | $1.13 | -25.9% | 14.5% |
| PBI | $18.15 | $12.64 | $0.75 | -26.2% | 14.5% |
| CSCO | $31.72 | $31.44 | $1.10 | 2.6% | 14.5% |
| Totals | -0.1% | 14.5% | |||
| 12/30/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| GILD | $71.69 | $73.79 | $1.04 | 4.4% | 9.4% |
| HPQ | $15.00 | $19.31 | $0.40 | 31.4% | 9.4% |
| TGNA | $21.33 | $21.13 | $0.21 | 0.0% | 9.4% |
| CA | $31.99 | $32.50 | $0.77 | 4.0% | 9.4% |
| SYNT | $19.79 | $18.06 | $0.00 | -8.7% | 9.4% |
| Totals | 6.2% | 9.4% | |||
| 4/1/2017 | Start | Current | Dividend | Pct Gain | R3K Gain |
| BKE | $18.45 | $15.10 | $0.50 | -15.5% | 3.7% |
| CSCO | $33.76 | $31.44 | $0.58 | -5.1% | 3.7% |
| GILD | $67.50 | $73.79 | $0.52 | 10.1% | 3.7% |
| OMC | $85.53 | $73.13 | $0.55 | -13.9% | 3.7% |
| SYNT | $16.76 | $18.06 | $0.00 | 7.7% | 3.7% |
| Totals | -3.3% | 3.7% | |||
| 7/1/2017 | Start | Current | Dividend | Pct Gain | R3K Gain |
| CSCO | $30.98 | $31.44 | $0.00 | 1.5% | 0.7% |
| GME | $20.95 | $19.40 | $0.00 | -7.4% | 0.7% |
| HPQ | $17.60 | $19.31 | $0.00 | 9.7% | 0.7% |
| RGR | $60.70 | $48.85 | $0.23 | -19.1% | 0.7% |
| SYNT | $16.21 | $18.06 | $0.00 | 11.4% | 0.7% |
| Totals | -0.8% | 0.7% | |||
| Category/Tranche | October | January | April | July | Total |
| Initial Investment | 249,820 | 249,939 | 250,180 | 249,728 | 999,667 |
| Current Tranche | -0.1% | 6.2% | -3.3% | -0.8% | 0.5% |
| Previous Tranche | 5.5% | 9.3% | 25.2% | 26.7% | 16.1% |
| Tranche -2 | 0.5% | 11.0% | -0.2% | -12.5% | -0.3% |
| MFI Overall Gain | 5.9% | 28.8% | 20.7% | 10.0% | 16.4% |
| Current Balance | 264,563 | 321,991 | 301,985 | 274,780 | 1,163,319 |
| R3K Current Tranche | 14.5% | 9.4% | 3.7% | 0.7% | 7.1% |
| R3K Overall Gain | 29.3% | 22.3% | 21.0% | 17.2% | 22.5% |
| R3K Balance | 323,125 | 305,735 | 302,839 | 292,769 | 1,224,469 |
| Annualized IRR | 2.0% | 10.0% | 8.1% | 4.5% | 6.2% |
Wow, those are some mediocre current tranche figures. You can see from green table above that my 4 open tranches are up a composite 50 basis points (woo-hoo). That lags the benchmark substantially, which is 7.1%. But that is frankly just the way MFI is acting of late. My 12 open tracking portfolios are down 20 basis points (so similar to my +50 basis) and the open R3K are up 7.0%.
So it is not my formula of the formula. It is the overall pool of MFI stocks - they are struggling big time. I will write more about them this weekend. What does this mean? is MFI a bust? Or are we just in one of the periods Greenblatt warned us about? I do not have an answer - but in today's world there seem to be more disruptive companies (Uber, Airbnb, Amazon etc) than in the past. So trailing 12 month earnings may be less reliable of the future than 10 or 20 years ago. You should ask yourself before buying any stock using MFI - what is the likelihood of company getting back to earnings from past 12 months?
Dividends & Misc
I am not going to even talk about Miscellaneous. It is not very good, but I do have some riskier positions that could provide some good returns. My dividend portfolio gets more boring every week. But that is on purpose. I am retired and I fully intend to have some widows and orphans type investments.
| Stock | Initial | Current | Div/Sh | Gain/Loss | Yield |
| LADR | 13.01 | 13.56 | - | 4.3% | 8.8% |
| FDEU | 18.40 | 18.40 | 0.36 | 2.0% | 7.9% |
| FCH-PA | 28.45 | 28.22 | - | -0.8% | 6.9% |
| NS | 41.04 | 39.05 | - | -4.9% | 11.2% |
| TK | 5.24 | 9.45 | 0.06 | 81.3% | 2.3% |
| PSXP | 47.39 | 46.98 | 0.38 | -0.1% | 5.2% |
| JQC | 8.20 | 8.42 | 0.60 | 10.0% | 7.5% |
| OIBAX | 5.85 | 6.00 | 0.38 | 9.0% | 4.0% |
| FSFR | 8.68 | 8.72 | - | 0.5% | 8.7% |
| DSL | 19.47 | 20.72 | 1.20 | 12.6% | 8.7% |
| KCLI | 49.32 | 49.30 | 0.27 | 0.5% | 2.4% |
| RILY | 15.58 | 15.85 | 0.13 | 2.6% | 1.6% |
| ISBC | 13.15 | 13.09 | 0.08 | 0.2% | 2.4% |
| VTIBX | 10.92 | 10.94 | - | 0.2% | 1.1% |
| EVG | 14.49 | 14.39 | 0.08 | -0.2% | 6.4% |
| TGONF | 10.91 | 12.33 | 1.76 | 29.2% | 5.7% |
| NRZ | 16.22 | 16.62 | 0.38 | 4.8% | 12.0% |
| SBRA | 23.53 | 21.62 | 0.65 | -5.4% | 6.7% |
| BCRH | 19.93 | 19.25 | - | -3.4% | 6.2% |
| GLDI | 9.23 | 9.29 | 0.04 | 1.1% | 5.7% |
| DHF | 3.34 | 3.51 | 0.09 | 7.8% | 8.0% |
| BKE | 14.15 | 15.10 | - | 6.7% | 6.6% |
| O | 25.14 | 58.04 | 20.39 | 212.0% | 4.4% |
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