Sorry to say that for this tracking portfolio, we are the red car. 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
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 12 percentage points. That is on top of a 6 point loss back in October. And 10 of 11 open portfolios are trailing. And to summarize the fiery car, the 12 point loss was the worst since May 2015.
Here are the 50 stocks in descending performance order (from the portfolio that just hit a year):
| Stock | Initial Price | End Price | Percent Change | Mkt Cap |
| MYGN | 17.46 | 33.26 | 90.5% | 1,194 |
| MDCA | 6.00 | 11.30 | 88.3% | 316 |
| ACHI | 2.25 | 3.90 | 73.3% | 240 |
| AVID | 4.33 | 7.38 | 70.4% | 176 |
| MCFT | 13.50 | 22.47 | 66.5% | 252 |
| AAPL | 110.02 | 174.97 | 59.0% | 596,530 |
| MBUU | 18.22 | 28.66 | 57.3% | 322 |
| TGNA | 13.90 | 21.05 | 51.4% | 4,792 |
| HPQ | 14.72 | 21.24 | 44.3% | 25,882 |
| VEC | 23.10 | 32.50 | 40.7% | 248 |
| TDC | 27.35 | 36.76 | 34.4% | 3,547 |
| TRNC | 12.88 | 17.30 | 34.3% | 469 |
| NSR | 25.00 | 33.50 | 34.0% | 1,364 |
| CSCO | 29.05 | 36.49 | 25.6% | 150,330 |
| SYNT | 20.17 | 25.18 | 24.8% | 1,696 |
| RPXC | 10.65 | 12.96 | 21.7% | 531 |
| IRMD | 11.35 | 13.50 | 18.9% | 115 |
| HSII | 20.74 | 24.40 | 17.6% | 395 |
| GHC | 481.46 | 566.05 | 17.6% | 2,727 |
| PDLI | 2.54 | 2.88 | 13.4% | 420 |
| BBSI | 57.85 | 64.80 | 12.0% | 426 |
| HRB | 23.12 | 25.66 | 11.0% | 5,254 |
| SSNI | 14.70 | 16.17 | 10.0% | 761 |
| USNA | 63.20 | 69.35 | 9.7% | 1,539 |
| BPT | 18.36 | 20.05 | 9.2% | 457 |
| SPOK | 17.51 | 18.45 | 5.4% | 375 |
| CA | 31.03 | 32.63 | 5.2% | 13,130 |
| MCK | 141.95 | 144.66 | 1.9% | 32,334 |
| DLX | 68.66 | 68.55 | -0.2% | 3,394 |
| GILD | 73.33 | 72.46 | -1.2% | 99,732 |
| RGR | 51.21 | 49.95 | -2.5% | 996 |
| IDCC | 79.97 | 74.40 | -7.0% | 2,773 |
| UTHR | 134.55 | 125.01 | -7.1% | 6,117 |
| MPAA | 26.35 | 24.45 | -7.2% | 492 |
| AMCX | 54.36 | 49.89 | -8.2% | 3,845 |
| AGX | 65.31 | 59.68 | -8.6% | 997 |
| BKE | 23.48 | 21.20 | -9.7% | 1,247 |
| MSGN | 19.90 | 17.50 | -12.1% | 1,494 |
| AWRE | 5.85 | 4.70 | -19.7% | 132 |
| ESRX | 76.90 | 61.18 | -20.4% | 48,407 |
| NHTC | 24.78 | 18.09 | -27.0% | 298 |
| GME | 24.15 | 17.42 | -27.9% | 2,680 |
| VIAB | 36.78 | 26.29 | -28.5% | 14,936 |
| PBI | 13.99 | 9.90 | -29.2% | 2,759 |
| SWHC | 23.82 | 13.28 | -44.2% | 1,338 |
| UIS | 15.00 | 7.65 | -49.0% | 751 |
| FPRX | 60.89 | 27.01 | -55.6% | 1,732 |
| AGTC | 9.90 | 4.00 | -59.6% | 179 |
| DHX | 6.60 | 1.95 | -70.5% | 331 |
| ICON | 9.69 | 1.79 | -81.5% | 545 |
ICON and DHX both down over70%. That hurts. But you'd have to have cut out the bottom 9 stocks just to match the benchmark. This was a tough month (right after Trump was elected as you may recall - and I do not think that is coincidental) to start an MFI portfolio.
Note - the MFI stocks I tracked jumped over 10% in the first three weeks after Trump was elected last November. They then proceeded to give back a lot of those gains. So if you bought 11/25/16, you were at a relatively inflated point.
Here is a listing of every portfolio I have ever 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% | 19.2% | 0 |
| 12/30/2016 | 3.7% | 17.7% | 0 |
| 1/27/2017 | 3.4% | 14.9% | 0 |
| 2/24/2017 | 2.0% | 11.3% | 0 |
| 3/31/2017 | 0.9% | 11.4% | 0 |
| 4/28/2017 | -3.4% | 10.3% | 0 |
| 5/26/2017 | 0.1% | 9.0% | 0 |
| 6/29/2017 | -1.5% | 8.4% | 0 |
| 7/28/2017 | -0.9% | 6.1% | 0 |
| 8/25/2017 | 7.5% | 7.4% | 1 |
| 9/29/2017 | -3.0% | 3.5% | 0 |
| 10/27/2017 | -0.1% | 1.1% | 0 |
You can see that the 9/29/17 tracking portfolio is off to a very poor start, down 3.0% versus +3.5% for the benchmark. I am not sure if this is telling us that value stocks are still out of favor. Perhaps it is market telling us tax reform is less likely. Not sure, but it is not a favorable trend. What do readers think?
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 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 13.4%). And the 11 open dividend portfolios are up 7.1%, while the open portfolios (all stocks) are up a meager 0.8%. That implies that for all my open portfolios, stocks that do not pay a dividend of at least 2.6% are down 1.5%. Hopefully readers can see why I strongly prefer stocks on the MFI list that pay a dividend.
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 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 13.4%). And the 11 open dividend portfolios are up 7.1%, while the open portfolios (all stocks) are up a meager 0.8%. That implies that for all my open portfolios, stocks that do not pay a dividend of at least 2.6% are down 1.5%. Hopefully readers can see why I strongly prefer stocks on the MFI list that pay a dividend.
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 | 204,046 |
| Total Russell 3K | 254,371 |
| Dividend | 471,256 |
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