Friday, November 17, 2017

MFI Weekend Update 11/18/17

MFI Weekend Update 11/18/17

Kind of a strange week for my portfolio.  I know we have been spoiled by low volatility for a stretch, but I sure saw some ups and downs.  I was down 2.8% the first 3 days of the week (market was down 0.8%).  While I had many stocks down, EXXI was the big culprit, off 45% for the week.

But the final two days I did rally (though not EXXI) up 2.1%.  The broader market was up 70 basis points.  So not a very good week (overall), but at least improved a lot last two days.

But the damage was primarily in my Misc and Dividend portfolios.  MFI was actually quite good.

You have found your way to the MFI Diary.  This is a blog following the investment approach described by Joel Greenblatt in The Little Book That Beats The Market.  I have been writing this blog and following his investment approach since early 2006.

I did create a guide recently for new readers to my blog that point you to some key/interesting posts. I encourage you to give it a whirl (Guide To New Readers).  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

Well, as I laid out above, it was a tale of two weeks (in a single week).  The excitement of the week was my newest tranche, which you will see is off to a snappy start.  Here are how all my portfolios, along with MFI Index are faring for the year and 4th quarter:


 Component   YTD   4th Q 
 Overall  +11.33% -1.92%
 MFI Select  +28.96% +3.82%
 MFI Formula  +13.65% +3.73%
 Miscellaneous  -0.42% -6.93%
 Dividend  +9.86% -3.48%
 R3K  +16.36% +2.40%
 MFI Index  +0.74% -3.39%
 GARIX  +7.52% +2.51%


So looking at Q4, you can see I am sucking in Q4, down 1.9%.  But my two MFI portfolios are each up about 3.8%.  YTD, kind of the same story - MFI for me is hanging in there very very well; but Misc is actually now in the red for the year (it has been crushed a couple times this quarter with the EXXI beat down this week and SELB the week before).  I do knowingly take more risk in my Misc portfolio and I am afraid I am often running through a dynamite factory with a lit match.

Here are my MFI stocks for the week (actually very very strong week):


 Portfolio   Stock   Last Week   Current   Dividend   Change 
 Formula   SYNT              23.39         25.12                       -   7.4%
 Formula   HPQ              21.23         21.75                       -   2.4%
 Formula   GILD              73.77         72.44                       -   -1.8%
 Formula   CSCO              33.99         35.90                       -   5.6%
 Formula   OMC              67.55         69.44                       -   2.8%
 Formula   GME              16.43         16.31                       -   -0.7%
 Formula   CA              32.45         32.51                       -   0.2%
 Formula   DIN              46.63         45.20                       -   -3.1%
 Formula   TGNA              20.10         21.01                       -   4.5%
 Formula   BKE              19.00         20.75                       -   9.2%
 Formula   RGR              49.35         50.20                       -   1.7%

Look at those stocks.  SYNT continues to be so so good for my portfolio.  BKE has really bounced back.  I had bought BKE for my dividend portfolio and did well with them, but then sold them (at the very least a week or two too early).  CSCO also had a strong week.


 Stock   Last Week   Current   Dividend   Change 
 SIMO              47.17         47.84                       -   1.4%
 MSGN              17.20         17.30                       -   0.6%
 YY              88.90       107.23                       -   20.6%
 CELG            100.60       104.10                       -   3.5%
 EVC                5.78            6.20                       -   7.3%
 ICHR              27.98         28.13                       -   0.5%
 AKRX              33.21         33.40                       -   0.6%
 VIAB              24.41         26.15                       -   7.1%
 RHI              52.90         54.90                       -   3.8%
 MD              44.47         49.91                       -   12.2%
 QCOM              64.57         66.72                       -   3.3%
 KLAC            102.44       101.65                       -   -0.8%
 TIME              10.95         16.40                       -   49.8%
 GHC            558.65       568.05                       -   1.7%
 WNC              19.84         18.97                       -   -4.4%
 RGR              49.35         50.20                       -   1.7%
 TGNA              20.10         21.01                       -   4.5%

Wow, wow, wow. Whatta week!  Look at the performance.  YY (a very large holding, recall these are in descending order or size) popped 20%.  MD up 12% on Activist action.  TIME, which I bought as I thought they might be taken out, finally had MDP step to the plate talking $17-$20.  Recall TIME was at $10 just a couple weeks ago, so up 60% since then.

MFI Select

Th is is a portfolio of MFI stocks (five stocks in 4 tranches) that I have been maintaining since August 2012.  Each tranche I buy and hold for a year.  It has done very well for me and had a great week (as I discussed above).  I did just start a new tranche this week.

I give myself the luxury in this portfolio to really pick whatever stocks I want.  They can be on the official list or from my own screens. This portfolio was started in August 2012.  I had quit MFI in the summer of 2011 out of frustration. I studied problems and data for a year and came out with my reboot - here is a good post on my reboot thoughts (Finding the Magic in MFI).

Here are the four tranches:


2/1/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 AKRX  $19.10 $33.40 $0.00 74.9% 14.3%
 YY  $41.08 $107.23 $0.00 161.0% 14.3%
 KLAC  $85.11 $101.65 $2.26 22.1% 14.3%
 WNC  $17.65 $18.97 $0.18 8.5% 14.3%
 RGR  $52.75 $50.20 $1.36 -2.3% 14.3%
 Totals  52.8% 14.3%
5/6/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 WSTC  $24.15 $23.50 $0.00 -2.7% 8.4%
 TGNA  $25.75 $21.01 $0.14 -17.9% 8.4%
 TIME  $15.05 $16.40 $0.04 9.2% 8.4%
 MSGN  $23.55 $17.30 $0.00 -26.5% 8.4%
 QCOM  $54.93 $66.72 $1.14 23.5% 8.4%
 Totals  -2.9% 8.4%
8/15/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 GHC  $591.10 $568.05 $1.27 -3.7% 5.5%
 ICHR  $19.80 $28.13 $0.00 42.1% 5.5%
 MD  $43.00 $49.91 $0.00 16.1% 5.5%
 SIMO  $43.05 $47.84 $0.00 11.1% 5.5%
 RHI  $44.15 $54.90 $0.24 24.9% 5.5%
 Totals  18.1% 5.5%
11/15/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 MSGN  $16.67 $17.30 $0.00 3.8% 0.6%
 CELG  $100.60 $104.10 $0.00 3.5% 0.6%
 EVC  $5.78 $6.20 $0.00 7.3% 0.6%
 SIMO  $46.88 $47.84 $0.00 2.0% 0.6%
 VIAB  $24.41 $26.15 $0.00 7.1% 0.6%
 Totals  4.7% 0.6%

Love the 11/15/17 start, up 4.7% in first 2 days.  Here is a table showing overall returns.


 Category/Tranche   August   November   February   May   Total 
 Initial Investment         25,000             25,000           25,000        25,000         100,000
 Current Tranche  18.1% 4.7% 52.8% -2.9% 15.8%
 Previous Tranche  -0.1% 42.6% 10.7% 19.1% 22.5%
 Tranche -2  2.8% 8.0% -14.3% -25.2% -7.2%
 Tranche -3  11.2% 69.4% 8.5% 18.3% 26.8%
 Tranche -4  41.4% 14.2% 78.3% 33.0% 41.7%
 Tranche -5  14.1% 43.7% 0.0% 0.0% 14.5%
 MFI Overall Gain  117.7% 349.0% 180.5% 36.1% 170.8%
 Current Balance         54,417           112,247           70,119        34,021         270,804
 R3K Current Tranche  5.5% 0.6% 14.3% 8.4% 7.2%
 R3K Overall Gain  102.1% 105.0% 84.9% 73.0% 91.3%
 R3K Balance         50,529             51,248           46,226        43,249         191,251
 Annualized IRR  15.9% 35.0% 24.0% 7.0% 20.5%

You can see my annualized IRR (with this very good week) has gone back over 20% (20.5%).

Here is a table that shows if I had started in August 2012 with $100,000 what I would have today (month by month). Hint, at a 20.5% annualized IRR things start to look good!


 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
11/1/2017 68.17%        259,061            190,888
Current 79.26%        270,804            191,548

Never a straight line, but to take $100,000 to 270,804 in a 5 1/4 years is satisfactory.  After a poor October, you can see November is rocking.  You can also see that 2017 starting at 209,503 and growing to 270,804 is strong.  Note this is hypothetical and assumes I have never added money to tranches beyond initial investment. In reality, I generally increased amounts this year by 35% and have also increased in the past.

MFI Formula

My MFI Formula portfolio is also real money.  I started it in October 2014.  Unlike my Select portfolio, where I give myself free rein to pick stocks, here I pick by formula.  The idea is that takes out my biases and it is a formula that backtested to 2006 has worked very very well.  Of course so far it has been sub par (though not terrible).  It is losing (slightly) to the benchmark, but way outperforming the broader MFI Index that I track and GARIX (a mutual fund based on MFI principles). So it is a partial win right now as value stocks have been a bit out of favor.

Same tables.


12/30/2016  Start   Current   Dividend   Pct Gain   R3K Gain 
 GILD  $71.69 $72.44 $1.56 3.2% 16.2%
 HPQ  $15.00 $21.75 $0.53 48.5% 16.2%
 TGNA  $21.33 $21.01 $0.28 -0.2% 16.2%
 CA  $31.99 $32.51 $0.77 4.0% 16.2%
 SYNT  $19.79 $25.12 $0.00 26.9% 16.2%
 Totals  16.5% 16.2%
4/1/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 BKE  $18.45 $20.75 $0.75 16.5% 10.2%
 CSCO  $33.76 $35.90 $0.87 8.9% 10.2%
 GILD  $67.50 $72.44 $1.04 8.9% 10.2%
 OMC  $85.53 $69.44 $1.10 -17.5% 10.2%
 SYNT  $16.76 $25.12 $0.00 49.9% 10.2%
 Totals  13.3% 10.2%
7/1/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 CSCO  $30.98 $35.90 $0.29 16.8% 7.0%
 GME  $20.95 $16.31 $0.38 -20.3% 7.0%
 HPQ  $17.60 $21.75 $0.13 24.3% 7.0%
 RGR  $60.70 $50.20 $0.44 -16.6% 7.0%
 SYNT  $16.21 $25.12 $0.00 55.0% 7.0%
 Totals  11.8% 7.0%
10/1/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 DIN  $43.14 $45.20 $0.00 4.8% 2.4%
 GILD  $82.85 $72.44 $0.00 -12.6% 2.4%
 GME  $20.50 $16.31 $0.00 -20.4% 2.4%
 HPQ  $20.22 $21.75 $0.00 7.6% 2.4%
 OMC  $74.80 $69.44 $0.00 -7.2% 2.4%
 Totals  -5.6% 2.4%

The 10/1 tranche is off to a terrible start.  GME is being treated like they will not survive more than a couple more years.  GILD got a big boost with purchase of KITE, but then market immediately threw that out the window when earnings came in.  Never easy.


 Category/Tranche   October   January   April   July   Total 
 Initial Investment      249,820        249,939     250,180      249,728         999,667
 Current Tranche  -5.6% 16.5% 13.3% 11.8% 9.1%
 Previous Tranche  7.0% 9.3% 25.2% 26.7% 16.6%
 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  7.1% 41.3% 41.5% 24.0% 28.5%
 Current Balance      267,531        353,205     354,006      309,752      1,284,493
 R3K Current Tranche  2.4% 16.2% 10.2% 7.0% 9.0%
 R3K Overall Gain  37.4% 29.9% 28.6% 24.6% 30.1%
 R3K Balance      343,228        324,715     321,714      311,098      1,300,755
 Annualized IRR  2.2% 12.7% 14.1% 9.4% 9.6%

You know, considering that my MFI Index is trailing R3K in 2017 by over 15 points, I am pretty happy to have my 4 open tranches at +9.0% versus R3K at 9.1%.  And my overall annualized IRR of 9.6%, while not super satisfactory is at least decent. 


 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
11/1/2017 -3.85%        125,890            129,739
Current -1.63%        128,449            130,076

Month by month table shows the Formula approach lagging the benchmark.  But it is close and I have been gaining some ground of late. I still have confidence in this approach and will add money at end of year.


Misc & Dividend Portfolios

As I mentioned at outset, Misc has been volatile and as of late not very good.  I keep telling myself I will make this portfolio smaller (or even discontinue), but the perfume of easy money on some riskier stocks/warrants is always out there.  We are often our own worst enemy.  I will try and wind down some positions by year end (I did sell one today).

The dividend side has also been a struggle of late. I worry less about that as long as I feel income stream is safe.  I actually turned on reinvestment component on SBRA, CPLP and NS as I felt they were beyond cheap.


 Dividend Stocks  Start  Current   Divvy   Overall Pct Gain   Weekly Pct Gain   9/30/17 Price   Yield 
 TK      6.20         8.54      0.08 39.2% -6.4%           8.93 2.6%
 CPLP      3.54         3.22      0.08 -6.7% -1.2%           3.50 9.9%
 EVG    14.46       13.95      0.18 -2.3% -0.5%        14.24 6.6%
 KNOP    21.44       20.25           -   -5.6% -3.1%        21.44 10.3%
 LADR    13.01       13.71      0.30 7.7% 0.4%        13.78 9.2%
 FDEU    18.40       18.04      0.69 1.8% -3.0%        19.42 8.0%
 KCLI    49.31       48.60      0.49 -0.4% 0.0%        49.75 2.2%
 ISBC    13.25       13.97      0.15 6.6% 5.8%        13.64 2.6%
 RLJ-PA    28.45       27.54      0.49 -1.5% -0.6%        27.82 7.1%
 PSXP    47.39       47.32      1.03 2.0% -1.7%        52.56 5.5%
 SBRA    22.34       19.05      0.93 -10.6% -2.1%        21.94 9.4%
 OIBAX      5.85         5.92      0.44 8.7% 0.3%           5.95 4.4%
 JQC      8.20         8.11      2.02 23.5% -1.1%           8.49 7.0%
 DSL    19.47       20.18      1.65 12.1% -1.9%        21.25 8.9%
 OCSI      8.68         8.55      0.19 0.7% -0.6%           8.80 8.9%
 RILY    15.58       17.80      0.13 15.1% 7.9%        17.05 1.3%
 NS    40.74       29.10      1.06 -26.0% -8.3%        40.59 15.1%
 TGONF    11.04       13.20      1.79 35.8% 1.0%        12.80 5.3%
 VTIBX    10.92       10.98      0.03 0.8% 0.2%        10.89 1.0%
 TGP    18.12       17.25           -   -4.8% -4.2%        17.85 3.2%
 GLDI      9.29         9.08      0.19 -0.2% 1.5%           9.07 6.6%
 NRZ    16.22       17.46      0.88 13.1% 1.1%        16.73 11.5%
 DHF      3.34         3.34      0.16 4.8% -1.2%           3.53 8.3%
 O    25.50       56.48    20.80 203.1% 0.4%        57.19 4.5%
 Totals  4.6% -0.8% 6.6%

This table tells you a lot.  The NS yield is up to 15.1% as the stock fell another 8.3% this week.  You can see my shipping income plays, TK, CPLP, KNOP and TGP had tough weeks.  Shipping is always a tough sector, but I am in these stocks for a reason as I believe prices for charters are firming.  I will be patient.

If/when I sell some Misc names, I will likely move some dollars into here. JQC, KNOP, NS, TGONF and KCLI all seem very tempting at today's prices.

On the Misc side, I have exposure to Bio tech, Energy, some shipping and some small bank stocks (FUNC and OFED).  So certainly some high risk names.  I will likely sell at least one shipping name next week (SBLK) as they report on Monday (fingers crossed).

Finally, here is the graph that illustrates what I am doing now that I am in retirement.  it shows by calendar quarter how my dividend income has grown as (1) I reinvested dividends and (2) added additional capital. It benchmarks the dividend income to $100,000 the first year.  So you can see it is growing rapidly.  This is really the "picture that tells 1000 words".  While the true numbers are masked by the factoring, this income stream (should it remain on trajectory) is making retirement possible and comfortable.



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