Weekend Update 9/9/2017

Weekend Update 9/9/17

Back home after a week up in the White Mountains.  Very weird now.  No kids in the house. Not working. Just me and my wife. All day.  I am trying to get into better shape. We ran a 5K last week and had my best time in years.  Plan to run 3 miles today as part of routine... perhaps a bike ride as well.  Best time of year in Southern New England.  49 right now.  Will be 70 later.

Had to pull out Marvin the Martian today.  I am really put out by Equifax.  For them to keep so much personal information on people and then get hacked is so wrong. And then for 3 of their senior officers to sell $1.8m of stock after knowing about the breach, but before making public is as illegal as it gets. Lawsuits will be flying. And insider trading should put these guys in prison.

I worked at a job where I was subject to insider trading regulations. We were preached to all the time on what we were and were not allowed to do regarding stock and speaking to the public. And if any sort of non-public material information was out there - a memo from our General Counsel would go out prohibiting any trading - even if he did not describe why. So I have zero sympathy for these clowns. And yes, I am very angry, very angry indeed!

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.

Any opinions you read are my own unless they end up being really bad.

The Past Week

Sometimes being a value investor just sucks. By definition, you are buying stocks that are out-of-favor and at times, a catalyst to put them back into favor can take a long time. And at times, there is a reason they are out-of-favor.  Then sometimes you just make bad decisions.  I enjoy investing and watching the markets - but at times I feel like just going with some indices, a few mutual funds and go play golf.  It is difficult to outperform.

Here is where I stand year to date:

Component	YTD
Overall	+8.29%
Select	+18.69%
Formula	+4.63%
Miscellaneous	-1.91%
Dividend	+10.66%
R3K	+10.55%
MFI Index	-2.20%

Look at that MFI Index, down 2.2%.  That is atrocious in a year where the market is up over 10%. My two MFI approaches are at least in the black, Select at 18.69% and Formula at 4.63% - pretty decent when you recall they each started with about 40% cash (now down to about 10% cash).

Here are how my MFI stocks did during week:

Stock	Last Week	Current	Dividend	Change
ATHM	65.33	65.45	-	0.2%
RHI	45.28	45.49	-	0.5%
YY	74.35	78.01	-	4.9%
AKRX	32.94	33.11	-	0.5%
AMGN	178.71	180.64	-	1.1%
CA	33.26	33.16	-	-0.3%
ICHR	23.10	22.57	-	-2.3%
WNC	20.94	20.50	-	-2.1%
SIMO	46.58	47.14	-	1.2%
MPAA	27.09	26.28	-	-3.0%
MD	44.09	41.98	-	-4.8%
GHC	583.00	563.70	-	-3.3%
WSTC	23.40	23.37	-	-0.1%
QCOM	52.05	49.64	-	-4.6%
KLAC	94.08	94.35	-	0.3%
MSGN	21.60	20.75	-	-3.9%
TGNA	21.58	21.11	-	-2.2%
RGR	46.25	46.25		0.0%
TIME	12.90	13.05		1.2%

Stock	Last Week	Current	Dividend	Change
SYNT	18.13	18.26	-	0.7%
CSCO	32.30	31.48	-	-2.5%
HPQ	19.36	19.12	-	-1.2%
GILD	83.75	85.10	-	1.6%
GME	18.67	19.15	-	2.6%
CA	33.26	33.16	-	-0.3%
TGNA	21.58	21.11	-	-2.2%
OMC	71.94	72.83	-	1.2%
CPLA	66.85	65.90	-	-1.4%
BKE	14.55	14.35	-	-1.4%
RGR	46.25	46.25	-	0.0%
LDOS	58.74	57.11	-	-2.8%
PBI	12.90	12.62	-	-2.2%

Not much to be excited about. The Russell 3000 was down 60 basis points.

MFI Select

Now I will run the gentle reader through my two MFI portfolios of real money.  The first I call MFI Select.  I started this portfolio in August 2012, when I rebooted MFI. I had stopped MFI for a year as I was underperforming. I spent the year studying all my data and then the reboot. MFI Select is very free form, I buy whatever I want (four tranches of five stocks, which I buy and hold for a year).  Most my picks are from the official screen, but I run my own screens (I publish top 200 from my screens here once a month or so MFI Diary: Top 200 List - 4/15/17) and may go from it as well.

Here are my four tranches:

11/15/2016	Start	Current	Dividend	Pct Gain	R3K Gain
MPAA	$26.55	$26.28	$0.00	-1.0%	14.6%
ATHM	$22.61	$65.45	$0.00	189.5%	14.6%
AMGN	$145.14	$180.64	$3.15	26.6%	14.6%
RHI	$43.23	$45.49	$0.94	7.4%	14.6%
CA	$31.11	$33.16	$0.77	9.0%	14.6%
Totals				46.3%	14.6%
2/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
AKRX	$19.10	$33.11	$0.00	73.4%	8.6%
YY	$41.08	$78.01	$0.00	89.9%	8.6%
KLAC	$85.11	$94.35	$1.67	12.8%	8.6%
WNC	$17.65	$20.50	$0.06	16.5%	8.6%
RGR	$52.75	$46.25	$1.15	-10.1%	8.6%
Totals				36.5%	8.6%
5/6/2017	Start	Current	Dividend	Pct Gain	R3K Gain
WSTC	$24.15	$23.37	$0.00	-3.2%	3.0%
TGNA	$25.75	$21.11	$0.14	-17.5%	3.0%
TIME	$15.05	$13.05	$0.04	-13.0%	3.0%
MSGN	$23.55	$20.75	$0.00	-11.9%	3.0%
QCOM	$54.93	$49.64	$1.14	-7.6%	3.0%
Totals				-10.6%	3.0%
8/15/2017	Start	Current	Dividend	Pct Gain	R3K Gain
GHC	$591.10	$563.70	$0.00	-4.6%	0.2%
ICHR	$19.80	$22.57	$0.00	14.0%	0.2%
MD	$43.00	$41.98	$0.00	-2.4%	0.2%
SIMO	$43.05	$47.14	$0.00	9.5%	0.2%
RHI	$44.15	$45.49	$0.24	3.6%	0.2%
Totals				4.0%	0.2%

So except for the egg I laid in May, pretty solid. This table summarizes all tranches, open and closed.

Category/Tranche	August	November	February	May	Total
Initial Investment	25,000	25,000	25,000	25,000	100,000
Current Tranche	4.0%	46.3%	36.5%	-10.6%	19.1%
Previous Tranche	-0.1%	8.0%	10.7%	19.1%	15.9%
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	91.7%	339.7%	150.4%	25.2%	151.8%
Current Balance	47,928	109,919	62,612	31,299	251,758
R3K Current Tranche	0.2%	14.6%	8.6%	3.0%	6.6%
R3K Overall Gain	91.9%	95.3%	75.7%	64.3%	81.8%
R3K Balance	47,983	48,823	43,915	41,079	181,800
Annualized IRR	13.7%	36.0%	22.1%	5.3%	19.3%

You can see my current tranches in aggregate are up 19.1%. That is way ahead of R3K at 6.6%. And my annualized IRR is 19.3%.  Very satisfactory.  These figures are hypothetical as they assume I started with $100,000 over the four tranches and never added money. Neither of those points are true and I have added money every year. But my actual IRR is also very good.

Here is a month by month table of how the initial $100,000 has changed:

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
9/1/2017	68.85%	251,265	182,419
Current	69.96%	251,758	181,800

You can see 2017 has been very good, going from 209,503 to 251,758. That is over 20%.

MFI Formula

My second approach of real $ was started 3 years ago, October 2014. It is formula-driven, from stocks from official screen that have a dividend yield of 2.4% or greater.  While that works great in back testing, it has been a bit more challenged since I started.

10/3/2016	Start	Current	Dividend	Pct Gain	R3K Gain
CPLA	$58.15	$65.90	$1.64	16.1%	15.6%
LDOS	$43.01	$57.11	$0.96	35.0%	15.6%
GME	$27.70	$19.15	$1.51	-25.4%	15.6%
PBI	$18.15	$12.62	$0.75	-26.3%	15.6%
CSCO	$31.72	$31.48	$1.10	2.7%	15.6%
Totals				0.4%	15.6%
12/30/2016	Start	Current	Dividend	Pct Gain	R3K Gain
GILD	$71.69	$85.10	$1.04	20.2%	10.4%
HPQ	$15.00	$19.12	$0.40	30.1%	10.4%
TGNA	$21.33	$21.11	$0.28	0.3%	10.4%
CA	$31.99	$33.16	$0.77	6.0%	10.4%
SYNT	$19.79	$18.26	$0.00	-7.7%	10.4%
Totals				9.8%	10.4%
4/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
BKE	$18.45	$14.35	$0.50	-19.5%	4.7%
CSCO	$33.76	$31.48	$0.58	-5.0%	4.7%
GILD	$67.50	$85.10	$0.52	26.8%	4.7%
OMC	$85.53	$72.83	$0.55	-14.2%	4.7%
SYNT	$16.76	$18.26	$0.00	8.9%	4.7%
Totals				-0.6%	4.7%
7/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
CSCO	$30.98	$31.48	$0.00	1.6%	1.6%
GME	$20.95	$19.15	$0.38	-6.8%	1.6%
HPQ	$17.60	$19.12	$0.00	8.6%	1.6%
RGR	$60.70	$46.25	$0.23	-23.4%	1.6%
SYNT	$16.21	$18.26	$0.00	12.6%	1.6%
Totals				-1.5%	1.6%

All four tranches are losing. As I said, "challenged".

Category/Tranche	October	January	April	July	Total
Initial Investment	249,820	249,939	250,180	249,728	999,667
Current Tranche	0.4%	9.8%	-0.6%	-1.5%	2.2%
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	6.4%	33.2%	24.1%	9.3%	18.3%
Current Balance	265,904	332,805	310,513	272,908	1,182,130
R3K Current Tranche	15.6%	10.4%	4.7%	1.6%	8.1%
R3K Overall Gain	30.5%	23.4%	22.1%	18.3%	23.6%
R3K Balance	326,017	308,484	305,573	295,424	1,235,498
Annualized IRR	2.1%	11.2%	9.2%	4.1%	6.7%

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
9/1/2017	-6.09%	117,879	123,973
Current	-5.34%	118,213	123,552

While results have been suboptimal, losing by 5.3 points since I started 3 years ago; I am not throwing in the towel.  If you compare IWD (Russell Value ETF) versus IWF (Russell Growth ETF) over the past two years, you see growth up 29.2% and value up 21.1%.  So I am just reflecting the growth versus value broader market trend. At some point I believe that will change. Sure Amazon, Netflix, Tesla and Facebook are great companies in their own ways - but growth can get overpriced.  I am old enough to have seen that first hand.

Dividends/Miscellaneous

I also have two investment approaches that are not MFI.  These will need some clean-up in how I track when I head into 2018 as I have made a lot of changes here with my retirement and moving formerly owned company stock into these two pots.

Here are my dividend holdings:

Stock	Initial	Current	Div/Sh	Gain/Loss	Yield
FDEU	18.40	18.65	0.48	4.0%	7.8%
KCLI	49.31	48.80	0.22	-0.6%	2.5%
NS	41.04	40.18	-	-2.1%	10.9%
LADR	13.01	13.06	0.30	2.7%	9.2%
RLJ-PA	28.45	27.67	-	-2.7%	7.1%
PSXP	47.39	47.14	0.38	0.3%	5.2%
TK	5.24	9.12	0.06	75.0%	2.4%
OIBAX	5.85	6.04	0.40	10.0%	3.9%
JQC	8.20	8.40	0.60	9.7%	7.5%
FSFR	8.68	8.81	-	1.6%	8.6%
DSL	19.47	20.86	1.20	13.3%	8.6%
RILY	15.58	16.50	0.13	6.8%	1.6%
ISBC	13.15	12.87	0.08	-1.5%	2.5%
GLDI	9.29	9.47	0.03	2.3%	5.6%
VTIBX	10.92	10.98	0.01	0.6%	1.1%
EVG	14.49	14.38	0.15	0.3%	6.4%
TGONF	10.91	12.77	1.76	33.2%	5.5%
SBRA	23.53	22.78	0.65	-0.4%	6.3%
BCRH	19.26	14.05	-	-27.0%	8.5%
NRZ	16.22	16.36	0.38	3.2%	12.2%
DHF	3.34	3.53	0.09	8.4%	8.0%
BKE	14.15	14.35	-	1.4%	7.0%
O	25.14	59.33	20.39	217.1%	4.3%

BCRH had a horrible week as it is leveraged to Hurricane Irma.  I think the sell off is way, way over done, it is trading at 68% of book value. Then RLJ-PA was FCH-PA last week. This is a preferred stock that pays a $1.95 dividend.  I view these stocks/securities as pretty much my retirement income list. No real intent to change with any regularity and certainly do not want more in #.  I do still have quite a bit of cash and over next couple of years just intend to increase positions here.

Here are my largest Miscellaneous holdings:

FIX

BLDR

NYRT

MTG

BAC-WTA

NXPI

FIX and BLDR are decent value stocks (in my view) that may also be decent plays on rebuilding post all these storms. 

NYRT is a former REIT that is in liquidation, so theoretically their downside is limited. Though it has found a way to go down!

MTG is a mortgage insurance company, just seems cheap.

BAC Warrants have been held by me forever, they expire in 2019 and their prices fluctuate all over the place,

NXPI is being bought by QCOM and I am essentially believing that the bid will be increased.

Have a great weekend everyone... Go Cowboys!