Saturday, October 14, 2017

MFI Weekend Update 10/14/17

MFI Weekend Update

Another week zips past.  We are in Knoxville this morning.  We came to Tennessee to look at houses, thinking very seriously about leaving CT as empty nesters and retired.  Financially, it is a slam dunk - I have never seen a state like Connecticut just keep grabbing your money.

We first went to Nashville.  It is a very fun city, but didn't strike me as a place I wanted to live.  Then Knoxville (which was really more of an after thought when I planned this trip) and we both really liked it.

People are friendly, it is beautiful here with tons of lakes and the Smokey Mountains.  The downtown is going through a renaissance. Weather, while a bit muggy at times, will be a big improvement on CT.  We would keep our NH condo and spend decent chunks of summer there.  You do get 4 seasons here and beautiful fall foliage.  And so much less expensive than New England.

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

It was essentially a flat week for me.  I could almost skip summarizing the week.


 Component   YTD   4th Q 
 Overall  +14.58% +0.94%
 MFI Select  +25.87% +1.33%
 MFI Formula  +10.18% +0.57%
 Miscellaneous  +9.34% +2.19%
 Dividend  +13.85% +0.02%
 R3K  +15.20% +1.39%
 MFI Index  +4.21% -0.07%
 GARIX  +6.17% +1.22%

You'll see that overall I continue to trail the R3K benchmark.  I am ok with that as I have a number of securities that are bond like, so not exactly high flyers but hopefully safer.  The MFI Index turned negative for the 4th quarter, it was down 1% on the week.

Here are my MFI stocks for the week.  See if you can pick out the big winner.


 Portfolio   Stock   Last Week   Current   Dividend   Change 
 Formula   HPQ              20.58         21.71                       -   5.5%
 Formula   GILD              82.14         81.17                       -   -1.2%
 Formula   SYNT              19.58         19.39                       -   -1.0%
 Formula   CSCO              33.75         33.47                       -   -0.8%
 Formula   OMC              75.42         75.14                       -   -0.4%
 Formula   GME              20.02         19.71                       -   -1.5%
 Formula   TGNA              22.97         21.72                       -   -5.5%
 Formula   CA              33.86         33.88                       -   0.1%
 Formula   DIN              45.04         43.40                       -   -3.6%
 Formula   BKE              17.15         15.55                  0.25 -7.9%
 Formula   RGR              52.75         49.70                       -   -5.8%

For my Formula stocks, BKE, RGR and TGNA struggled.  HPQ soared.


 Stock   Last Week   Current   Dividend   Change 
 ATHM              61.42         60.46                       -   -1.6%
 RHI              51.14         49.01                       -   -4.2%
 YY              88.74         93.22                       -   5.0%
 AKRX              32.83         33.22                       -   1.2%
 AMGN            185.82       183.01                       -   -1.5%
 CA              33.86         33.88                       -   0.1%
 ICHR              26.41         32.67                       -   23.7%
 WNC              22.44         22.35                       -   -0.4%
 SIMO              51.20         51.93                       -   1.4%
 MPAA              29.24         29.49                       -   0.9%
 MD              43.62         42.17                       -   -3.3%
 GHC            579.35       559.90                       -   -3.4%
 WSTC              23.49         23.50                       -   0.1%
 QCOM              52.49         52.82                       -   0.6%
 KLAC            102.47       105.30                       -   2.8%
 MSGN              22.05         20.75                       -   -5.9%
 TGNA              22.97         21.72                       -   -5.5%
 RGR              52.75         49.70 -5.8%
 TIME              12.95         12.70 -1.9%

ICHR announced a new major deal and shot up.  RHI really hurt me, not sure what drove its drop.

MFI Select

 I have two magic formula portfolios with real money. I call the first one MFI Select as I pick whatever stocks I want, sometimes not even from the official screen (I have my own screening approach to supplement official screens).  The portfolio has 4 tranches of 5 stocks each, which I buy and hold for a year.  I have boon doing this since August 2012, which was my MFI reboot. (I had used MFI from 2006-mid 2011 and quit for a year as results were subpar. I studies it for a year and then the reboot).

Here is how $100,000 spread over the 4 tranches would have performed 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
8/1/2017 57.76%        239,924            182,163
9/1/2017 68.85%        251,265            182,419
10/1/2017 75.60%        262,489            186,886
Current 75.68%        265,156            189,475

This shows that MFI Select has substantially outperformed the Russell 3000 benchmark.  Here are my current 4 tranches:


11/15/2016  Start   Current   Dividend   Pct Gain   R3K Gain 
 MPAA  $26.55 $29.49 $0.00 11.1% 19.4%
 ATHM  $22.61 $60.46 $0.00 167.4% 19.4%
 AMGN  $145.14 $183.01 $3.15 28.3% 19.4%
 RHI  $43.23 $49.01 $0.94 15.5% 19.4%
 CA  $31.11 $33.88 $0.77 11.4% 19.4%
 Totals  46.7% 19.4%
2/1/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 AKRX  $19.10 $33.22 $0.00 73.9% 13.2%
 YY  $41.08 $93.22 $0.00 126.9% 13.2%
 KLAC  $85.11 $105.30 $1.67 25.7% 13.2%
 WNC  $17.65 $22.35 $0.06 27.0% 13.2%
 RGR  $52.75 $49.70 $1.15 -3.6% 13.2%
 Totals  50.0% 13.2%
5/6/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 WSTC  $24.15 $23.50 $0.00 -2.7% 7.3%
 TGNA  $25.75 $21.72 $0.14 -15.1% 7.3%
 TIME  $15.05 $12.70 $0.04 -15.3% 7.3%
 MSGN  $23.55 $20.75 $0.00 -11.9% 7.3%
 QCOM  $54.93 $52.82 $1.14 -1.8% 7.3%
 Totals  -9.4% 7.3%
8/15/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 GHC  $591.10 $559.90 $0.00 -5.3% 4.5%
 ICHR  $19.80 $32.67 $0.00 65.0% 4.5%
 MD  $43.00 $42.17 $0.00 -1.9% 4.5%
 SIMO  $43.05 $51.93 $0.00 20.6% 4.5%
 RHI  $44.15 $49.01 $0.24 11.6% 4.5%
 Totals  18.0% 4.5%


3 of 4 are doing very well as the tables above show.  You can see impact of ICHR pop.  Here is a table giving overall color:


 Category/Tranche   August   November   February   May   Total 
 Initial Investment         25,000             25,000           25,000        25,000         100,000
 Current Tranche  18.0% 46.7% 50.0% -9.4% 26.1%
 Previous Tranche  -0.1% 8.0% 10.7% 19.1% 15.3%
 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  117.5% 340.9% 175.2% 27.0% 165.2%
 Current Balance         54,370           110,236           68,804        31,745         265,156
 R3K Current Tranche  4.5% 19.4% 13.2% 7.3% 11.1%
 R3K Overall Gain  100.1% 103.5% 83.1% 71.3% 89.5%
 R3K Balance         50,022             50,871           45,766        42,817         189,475
 Annualized IRR  16.2% 35.2% 24.0% 5.5% 20.3%

You can see that current tranches are up an aggregate 26.1% versus 11.1% for R3K.  You can also see annualized IRR of 20.3%.  My actually results vary somewhat as this is more hypothetical, assuming $100,000 start and never adding $, just rolling over.  In reality, I have often added $ at anniversary dates and tried to keep my balance by tranches closer.


 Me v Hypo   August   November   February   May   Total 
 With Adds         63,249             83,850           70,499        47,558         265,156
 Hypothetical         54,370           110,236           68,804        31,745         265,156

This table shows the difference. Hypothetically November is $110.236 of total 265,156 as for whatever reason that quarter's tranche has done the best.  But my splits are a bit tempered as I have added less $ to successful Nov in attempt to keep 4 tranches "balanced".  Nov is still easily the largest.

MFI Formula

The formula approach is taking stocks with a yield of at least 2.4% and (generally) market cap over $600m from official screen.  Same tables.


 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
10/1/2017 -2.56%        124,448            127,007
Current -3.87%        124,905            128,775

Still trailing benchmark.


12/30/2016  Start   Current   Dividend   Pct Gain   R3K Gain 
 GILD  $71.69 $81.17 $1.56 15.4% 15.1%
 HPQ  $15.00 $21.71 $0.53 48.3% 15.1%
 TGNA  $21.33 $21.72 $0.28 3.1% 15.1%
 CA  $31.99 $33.88 $0.77 8.3% 15.1%
 SYNT  $19.79 $19.39 $0.00 -2.0% 15.1%
 Totals  14.6% 15.1%
4/1/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 BKE  $18.45 $15.55 $0.75 -11.7% 9.1%
 CSCO  $33.76 $33.47 $0.87 1.7% 9.1%
 GILD  $67.50 $81.17 $1.04 21.8% 9.1%
 OMC  $85.53 $75.14 $1.10 -10.9% 9.1%
 SYNT  $16.76 $19.39 $0.00 15.7% 9.1%
 Totals  3.3% 9.1%
7/1/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 CSCO  $30.98 $33.47 $0.29 9.0% 5.9%
 GME  $20.95 $19.71 $0.38 -4.1% 5.9%
 HPQ  $17.60 $21.71 $0.13 24.1% 5.9%
 RGR  $60.70 $49.70 $0.23 -17.7% 5.9%
 SYNT  $16.21 $19.39 $0.00 19.6% 5.9%
 Totals  6.2% 5.9%
10/1/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 DIN  $43.14 $43.40 $0.00 0.6% 1.4%
 GILD  $82.85 $81.17 $0.00 -2.0% 1.4%
 GME  $20.50 $19.71 $0.00 -3.9% 1.4%
 HPQ  $20.22 $21.71 $0.00 7.4% 1.4%
 OMC  $74.80 $75.14 $0.00 0.5% 1.4%
 Totals  0.5% 1.4%

Not terrible, just not as good as I'd like.


 Category/Tranche   October   January   April   July   Total 
 Initial Investment      249,820        249,939     250,180      249,728         999,667
 Current Tranche  0.5% 14.6% 3.3% 6.2% 6.1%
 Previous Tranche  7.0% 9.3% 25.2% 26.7% 16.5%
 Tranche -2  5.5% 11.0% -0.2% -12.5% 1.0%
 Tranche -3  0.5% 0.0% 0.0% 0.0% 0.1%
 MFI Overall Gain  14.0% 39.0% 29.0% 17.7% 24.9%
 Current Balance      284,740        347,477     322,787      294,043      1,249,047
 R3K Current Tranche  1.4% 15.1% 9.1% 5.9% 7.9%
 R3K Overall Gain  36.0% 28.6% 27.3% 23.3% 28.8%
 R3K Balance      339,771        321,484     318,500      307,977      1,287,733
 Annualized IRR  4.4% 12.5% 10.5% 7.4% 8.7%

8.7% IRR.  Current tranches are trailing 6.1% to 7.9%.  Compared to MFI in total, that is "better".


Dividends and Misc

Not a great week for my dividend stocks, but these are really all about the income.


 Dividend Stocks  Start  Current   Divvy   Overall Pct Gain   Weekly Pct Gain   9/30/17 Price   Yield 
 FDEU    18.40       19.39      0.57 8.5% 0.0%        19.42 6.4%
 EVG    14.46       14.28      0.18 0.0% 0.0%        14.24 9.0%
 PSXP    47.39       53.35      0.38 13.4% 0.0%        52.56 4.6%
 KCLI    49.31       49.00      0.22 -0.2% 0.0%        49.75 7.5%
 LADR    13.01       13.81      0.30 8.5% 0.0%        13.78 8.7%
 ISBC    13.25       13.65      0.06 3.5% 0.0%        13.64 2.4%
 NS    41.04       37.85           -   -7.8% 0.0%        40.59 2.3%
 RLJ-PA    28.45       28.85      0.49 3.1% 0.0%        27.82 6.8%
 JQC      8.20         8.48      1.54 22.2% 0.0%           8.49 11.6%
 TK      5.24         8.98      0.06 72.3% 0.0%           8.93 6.7%
 DSL    19.47       21.29      1.35 16.3% 0.0%        21.25 2.4%
 OIBAX      5.85         5.96      0.42 9.0% 0.0%           5.95 8.5%
 FSFR      8.68         8.90      0.19 4.8% 0.0%           8.80 4.4%
 RILY    15.58       16.55      0.13 7.1% 0.0%        17.05 8.5%
 SBRA    23.13       21.10      0.52 -6.5% 0.0%        21.94 1.6%
 TGONF    11.04       12.78      1.61 30.3% 0.0%        12.80 6.8%
 VTIBX    10.92       10.92      0.02 0.2% 0.0%        10.89 5.5%
 GLDI      9.29         9.20      0.10 0.2% 0.0%           9.07 1.1%
 CPLP      3.54         3.56           -   0.6% 0.0%           3.50 11.8%
 NRZ    16.22       17.21      0.88 11.5% 0.0%        16.73 11.6%
 DHF      3.34         3.51      0.14 9.2% 0.0%           3.53 8.0%
 BKE    14.15       15.55      0.25 11.7% 0.0%        16.85 6.4%
 CA    34.79       33.88      0.26 -1.9% 0.0%        17.85 3.0%
 O    25.38       56.87    20.66 205.5% 0.0%        57.19 4.5%
 Totals  8.8%

Had a little trouble, this nets to a 6.4% yield.

On the Miscellaneous side, I have been buying some shipping stocks. I had TK, and have bought SHIP, SSW and SBLK.  I have been adding to EXXI as an energy play.  Then I still have the reconstruction plays, BLDR and FIX.  My other big holding is MTG (and BAC warrants of course). is up 11%... that is a stock I really like as LT hold.

Ok... now really done.

3 comments:

John Carney said...

Marsh,

Trust me! Fayetteville, AR! Your kids will marry hogs and be happy.

Marsh_Gerda said...

JC, pretty funny. Not sure that is a big selling point! Big Q is, will my wife be happy?

John Carney said...

We have done 56 years. Realationships are the hardest, rasing kids next hardest and making enough money to do the first two. Seems you have it easy as you are down to just one.

Think Sam Walton and Wal Mart for this area. We got low cost theater tickets, world class museum, and 36 miles of Arkansas Greenway and more than 60 miles coming. Lots of good music. Hot in August and that is where a condo comes in. Leave In January also.

Good Luck on a relocation. It is a no brainer to leave the big city. No Jones here and its big money in your pocket over time.