Monday, October 30, 2017

Not Iconic(x)

Not Iconic(x)

Magic Formula Investing stocks continue to struggle post October 1st.  My MFI Index is now down 2.7% for the month.

My 12 open tracking portfolios are up a composite 0.3% versus 8.3% for benchmark.

The latest casualty is ICON, which is down a brutal 50% today as Wal Mart is ending their relationship. That is the risk of these small cap names.  And ICON is in 8 of the 12 open tracking tranches.

Struggle For Me Too

Even though I dodged the ICON trap door, today is a tough day for me MFI picks. off about 1.2%.  RHI and RGR are major albatrosses.  YY is my only stock significantly in the red.  It can get a bit depressing to have these days,
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Sunday, October 29, 2017

MFI Tracking Portfolio, October 28th, 2016

MFI Tracking Portfolio Results - October 28th, 2016

Another month/year has flown by. And so it is time to look at another monthly tracking portfolio as we hit the end of June 2017.  As my faithful readers know, I have been tracking the Magic Formula Stocks as described by Joel Greenblatt in The Little Book That Beats the Stock Market since January 2006.  Every month I take the top 50 stocks over $100m market cap from his website and track how that portfolio of stocks fares versus the Russell 3000 for the next 12 months.  It has been an uphill struggle as the tracking portfolios have under-performed, driven in part by Chinese reverse merger fiascos, for-profit education stocks and home health care stocks all being proverbial albatrosses.

I also encourage new readers to read Guide To New Readers

Onward

 Fearless readers will recall we had a 29 month "losing streak"..  Then we had a 13 month winning streak. This month, MFI lost to the benchmark by almost 6 percentage points.

Here are the 50 stocks in descending performance order (from the portfolio that just hit a year):


Stock  Initial Price   End Price  Percent Change 52 week low  Mkt Cap 
MBUU              14.57           31.69 117.5%        14.28            258
ENTA              23.93           49.65 107.5%        22.17            456
MCFT              11.20           22.97 105.1%        10.84            208
WNC              10.97           22.42 104.5%        10.74            706
VEC              16.54           31.97 93.3%        16.39            177
MYGN              19.66           34.86 77.3%        15.15         1,359
ACHI                2.35             3.89 65.5%          1.47            252
HPQ              13.67           21.50 57.3%        13.94       24,052
LDOS              40.42           62.36 54.3%        41.16         3,022
NSR              22.91           33.50 46.2%        21.10         1,249
HSII              17.10           24.75 44.8%        17.37            326
BLBD              14.85           21.40 44.1%        13.85            319
TGNA              12.23           17.29 41.4%        12.01         4,214
BBSI              44.33           61.27 38.2%        43.00            325
IRMD                9.60           12.70 32.3%          7.85            102
AGX              54.63           68.50 25.4%        54.00            834
TDC              26.95           33.51 24.3%        26.27         3,495
WILN                1.43             1.76 23.1%          1.26            174
GHC            468.97         575.20 22.7%      440.55         2,603
HRB              21.91           26.27 19.9%        19.85         4,980
CSCO              29.53           34.43 16.6%        29.12     153,837
SSNI              14.07           16.12 14.6%          9.68            721
SYNT              20.19           22.82 13.0%        15.82         1,696
CSGS              36.96           41.70 12.8%        35.48         1,222
MPAA              26.10           29.07 11.4%        21.75            486
CA              29.77           32.87 10.4%        30.01       12,730
MCK            123.14         135.62 10.1%      114.53       28,049
SPOK              16.61           17.90 7.8%        14.45            355
AMCX              48.91           52.55 7.4%        46.17         3,515
GILD              71.82           77.07 7.3%        63.76       98,334
IDCC              68.65           72.50 5.6%        67.55         2,381
UTHR            118.14         120.05 1.6%      112.01         5,371
MSGN              19.40           19.70 1.5%        18.50         1,454
BPT              18.92           18.95 0.1%        15.00            471
KORS              50.12           49.02 -2.2%        32.38         8,675
ESRX              65.09           62.19 -4.5%        55.80       40,973
CPLA              69.07           65.50 -5.2%        65.15            811
FPRX              48.68           45.94 -5.6%        25.97         1,380
PDLI                3.29             3.05 -7.3%          1.93            541
BKE              19.18           17.25 -10.0%        13.50         1,019
GME              22.35           19.34 -13.5%        18.47         2,486
NHTC              22.27           19.08 -14.3%        18.05            269
UIS              10.50             8.60 -18.1%          6.90            526
PBI              17.14           13.86 -19.1%        12.31         3,357
AVID                6.59             4.46 -32.3%          3.99            262
VIAB              36.74           24.66 -32.9%        23.45       14,920
ICON                7.84             4.91 -37.4%          4.76            409
SWHC              25.71           14.52 -43.5%          7.46         1,444
INSY              10.76             5.74 -46.7%          5.18            815
DHX                5.35             2.40 -55.1%          1.75            269


DHX and the scummy INSY were the big losers.  B4 stocks (including boat companies MBUU and MCFT) were up over 100%. Here is a listing of every portfolio I have tracked:


Date MFI R3K Lead
1/6/2006 16.0% 10.9% 1
2/17/2006 21.2% 14.6% 1
3/29/2006 13.0% 9.6% 1
4/7/2006 10.3% 12.1% 0
5/12/2006 20.4% 18.6% 1
5/31/2006 29.2% 23.3% 1
6/30/2006 22.4% 20.0% 1
7/31/2006 19.7% 17.3% 1
8/31/2006 13.0% 13.3% 0
9/28/2006 12.7% 14.6% 0
10/27/2006 10.3% 12.0% 0
11/29/2006 -0.3% 4.8% 0
12/28/2006 -6.9% 3.4% 0
1/26/2007 -10.2% -6.6% 0
2/27/2007 -3.7% -1.0% 0
3/26/2007 -9.8% -5.5% 0
4/27/2007 -10.9% -5.0% 0
5/29/2007 -11.5% -6.3% 0
7/3/2007 -30.0% -15.6% 0
7/30/2007 -19.9% -11.5% 0
8/30/2007 -12.5% -8.7% 0
9/27/2007 -19.0% -18.2% 0
11/2/2007 -40.4% -34.3% 0
11/28/2007 -40.1% -38.3% 0
12/28/2007 -36.3% -40.0% 1
1/25/2008 -36.4% -35.9% 0
2/26/2008 -51.7% -41.5% 0
3/24/2008 -40.9% -36.8% 0
4/25/2008 -25.6% -31.0% 1
5/28/2008 -22.2% -33.6% 1
7/2/2008 -11.7% -25.3% 1
7/29/2008 -10.5% -20.9% 1
8/29/2008 -13.8% -17.9% 1
9/26/2008 -4.3% -10.0% 1
10/31/2008 18.7% 13.9% 1
11/26/2008 50.9% 27.7% 1
12/26/2008 48.9% 32.3% 1
1/23/2009 59.3% 36.4% 1
2/27/2009 92.8% 55.6% 1
3/27/2009 85.8% 48.1% 1
4/24/2009 69.7% 45.8% 1
5/29/2009 31.8% 22.8% 1
6/29/2009 21.3% 24.0% 0
7/29/2009 19.5% 15.9% 1
8/28/2009 7.4% 8.8% 0
9/25/2009 12.6% 12.4% 1
10/30/2009 22.7% 18.3% 1
11/27/2009 24.3% 13.6% 1
12/31/2009 23.7% 18.1% 1
1/22/2010 19.0% 20.6% 0
2/26/2010 18.6% 23.6% 0
3/25/2010 10.0% 15.4% 0
4/23/2010 7.1% 11.4% 0
5/28/2010 19.3% 25.4% 0
6/29/2010 16.7% 25.7% 0
7/29/2010 5.4% 20.1% 0
9/2/2010 7.3% 10.1% 0
9/24/2010 -4.3% 0.3% 0
10/29/2010 -2.9% 10.4% 0
11/26/2010 -8.5% 1.4% 0
1/3/2011 -11.4% 0.1% 0
1/28/2011 -7.6% 4.9% 0
2/25/2011 -5.5% 5.0% 0
3/24/2011 -4.4% 7.4% 0
4/21/2011 -16.0% 3.2% 0
5/27/2011 -12.0% -0.4% 0
6/24/2011 -9.5% 5.0% 0
7/29/2011 -4.3% 8.1% 0
8/26/2011 12.0% 21.6% 0
9/30/2011 23.5% 29.6% 0
10/28/2011 0.4% 11.5% 0
11/25/2011 13.9% 24.0% 0
12/29/2011 9.9% 15.9% 0
1/27/2012 7.4% 16.6% 0
2/24/2012 7.8% 13.3% 0
3/23/2012 9.1% 15.2% 0
4/27/2012 10.5% 15.3% 0
5/25/2012 23.4% 27.5% 0
6/22/2012 26.1% 24.6% 1
7/27/2012 30.4% 25.7% 1
8/24/2012 26.0% 19.8% 1
9/28/2012 39.3% 22.1% 1
10/26/2012 48.3% 28.9% 1
11/23/2012 45.7% 32.1% 1
12/31/2012 52.3% 33.0% 1
1/25/2013 39.5% 22.0% 1
2/22/2013 46.5% 26.4% 1
3/28/2013 40.1% 21.2% 1
4/26/2013 35.0% 20.5% 1
5/24/2013 20.4% 19.2% 1
6/28/2013 26.9% 24.1% 1
7/29/2013 17.8% 19.0% 0
8/30/2013 17.5% 24.6% 0
9/27/2013 12.9% 17.7% 0
10/25/2013 11.8% 15.4% 0
11/29/2013 12.3% 15.6% 0
12/31/2013 12.7% 11.9% 1
1/31/2014 14.2% 13.0% 1
2/28/2014 15.4% 13.9% 1
3/28/2014 6.1% 12.3% 0
4/25/2014 8.6% 15.8% 0
5/30/2014 5.9% 11.7% 0
6/27/2014 2.5% 9.2% 0
7/25/2014 3.3% 8.7% 0
8/29/2014 -2.2% 1.0% 0
9/26/2014 -0.6% -0.9% 1
10/31/2014 4.3% 4.4% 0
11/28/2014 -2.9% 2.9% 0
12/31/2014 -9.3% 0.3% 0
1/30/2015 -12.4% -2.8% 0
2/27/2015 -19.0% -7.3% 0
3/27/2015 -17.1% -1.9% 0
4/24/2015 -15.4% -0.8% 0
5/29/2015 -14.1% 0.1% 0
6/26/2015 -8.7% 0.4% 0
7/30/2015 3.96% 4.02% 0
8/28/2015 5.6% 10.2% 0
9/25/2015 6.5% 13.8% 0
10/30/2015 2.0% 4.0% 0
11/27/2015 8.9% 8.4% 1
12/31/2015 13.7% 12.6% 1
1/29/2016 22.6% 22.4% 1
2/26/2016 27.8% 25.4% 1
3/24/2016 26.5% 19.6% 1
4/22/2016 13.7% 14.8% 0
5/27/2016 14.3% 15.6% 0
6/30/2016 23.2% 16.1% 1
7/29/2016 13.9% 16.0% 0
8/26/2016 10.6% 14.6% 0
9/30/2016 18.6% 18.5% 1
10/28/2016 18.3% 24.1% 0
11/25/2016 7.4% 17.9% 0
12/30/2016 4.2% 16.4% 0
1/27/2017 4.1% 13.6% 0
2/24/2017 1.2% 10.1% 0
3/31/2017 2.5% 10.2% 0
4/28/2017 -3.1% 9.1% 0
5/26/2017 1.7% 7.8% 0
6/29/2017 -0.7% 7.2% 0
7/28/2017 0.4% 5.0% 0
8/25/2017 6.7% 6.2% 1
9/29/2017 -2.6% 2.4% 0


You can see that the 9/29/17 tracking portfolio is off to a very poor start, down 2.6% versus 2.4% for the benchmark.  That kind of mirrors what I wrote about for my own real $ MFI portfolios in my MFI weekend update yesterday (MFI Weekend Update 10/28/17).

Subsets

I also have historically tracked 3 subsets of the larger portfolios:  (1) dividend stocks (those with a yield per Yahoo of at least 2.6%),  (2) new stocks (those new to the tracking portfolios in past 12 months and (3) Dogs.   It is like the dogs of the Dow in that you take the worst five performing stocks from the prior year that renew or all those that dropped more that 29%.

I am starting a new subset - stocks with momentum.

I am officially stopping the dogs and new subsets.  It takes time and they have never really shown any advantage.  The dividend approach has proven merit.  In this portfolio, the dividend subset did better than standard MFI. (up 22.6%). (My new momentum approach was up 13.6%).



Finally, I like to track cash as it is more "honest" than percentages as if you go up by 25% and then down by 25%, that is a different result than up by 5% then down by 5%.  So I track what you would have today if you had spread $100,000 over the first twelve portfolios evenly. I think it is obvious why my formula approach is a function of dividend subset.

Category Value
Total      204,974
Total Russell 3K      251,540
Dividend      468,153



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