Friday, November 24, 2017

MFI Weekend Update 11/24/17

Weekend Update

Happy Black Friday.  Markets closed early.  I have done my online shopping.  I have eaten my share of leftovers.  Time to whip out a quick blog posting as the week is done.

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

It was actually a respectable week.  I was up about one percent overall.    Here are how all my portfolios, along with MFI Index are faring for the year and 4th quarter:


 Component   YTD   4th Q 
 Overall  +12.36% -1.01%
 MFI Select  +31.82% +6.12%
 MFI Formula  +13.89% +3.96%
 Miscellaneous  +0.64% -5.95%
 Dividend  +10.39% -3.02%
 R3K  +17.60% +3.49%
 MFI Index  +2.41% -1.80%
 GARIX  +7.30% +2.30%


You can see that Misc continues to struggle.  That does beg the question, why bother?  MFI is kind of my area of knowledge. Dividend portfolio is because I am now retired and want some form of income.  Misc is the area I have "fun" with, but having fun is a bit more expensive than makes sense.

So hand on heart, no more cash to Misc.  What is there is there. To buy something new, I need to sell something.  I also (at current time) do not see need to put more $ in dividend portfolios.  It is my largest portfolio and I did buy another slug of OIBAX this week.  And if interest rates/inflation start pinging up, it may make sense to wait for higher/safer yields.

So for 2018, my only "new" money will be to MFI.  I basically increased the two portfolios about 35% this year (in added dollars, exclusive of actual gains).  I will probably look at another 30% add in 2018.  That will make MFI easily the largest leg of my investing stool, but will also mean I will still maintain a healthy cash balance for opportunities down the road.

MFI Select

As my regular readers know I have two MFI-based portfolios with real cash.  My cash. I cheer very hard for these portfolios.  MFI Select is 4 tranches with 5 stocks in each tranche. I buy and hold for a year.  I allow myself totally free form on how I pick these stocks.  At times from the list but often I run my own screens and analysis.  I started this approach in August 2012 after quitting MFI for a year.  I used the year to analyze why MFI was not working particularly well for me.  The answer was I was getting to many "stinker" stocks... those that drop 30% or more in a year.  My approach to avoid these stinkers has really, really helped my Select portfolio.

Here are my 4 open tranches:


2/1/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 AKRX  $19.10 $32.61 $0.00 70.7% 15.5%
 YY  $41.08 $120.03 $0.00 192.2% 15.5%
 KLAC  $85.11 $105.04 $2.26 26.1% 15.5%
 WNC  $17.65 $19.11 $0.18 9.3% 15.5%
 RGR  $52.75 $49.95 $1.36 -2.7% 15.5%
 Totals  59.1% 15.5%
5/6/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 WSTC  $24.15 $23.50 $0.00 -2.7% 9.6%
 TGNA  $25.75 $21.05 $0.14 -17.7% 9.6%
 TIME  $15.05 $16.90 $0.04 12.6% 9.6%
 MSGN  $23.55 $17.50 $0.00 -25.7% 9.6%
 QCOM  $54.93 $68.80 $1.14 27.3% 9.6%
 Totals  -1.2% 9.6%
8/15/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 GHC  $591.10 $566.05 $1.27 -4.0% 6.7%
 ICHR  $19.80 $29.06 $0.00 46.8% 6.7%
 MD  $43.00 $49.10 $0.00 14.2% 6.7%
 SIMO  $43.05 $49.45 $0.30 15.6% 6.7%
 RHI  $44.15 $54.69 $0.48 25.0% 6.7%
 Totals  19.5% 6.7%
11/15/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 MSGN  $16.67 $17.50 $0.00 5.0% 1.7%
 CELG  $100.60 $104.50 $0.00 3.9% 1.7%
 EVC  $5.78 $6.45 $0.00 11.6% 1.7%
 SIMO  $46.88 $49.45 $0.00 5.5% 1.7%
 VIAB  $24.41 $26.29 $0.00 7.7% 1.7%
 Totals  6.7% 1.7%

You can see three very good tranches and one bad one (May for those challenged with numbers).  May though has bounced back, just a quarter ago it was down over 11% and now just off 1.2%.  TIME and QCOM being pursued has helped.  In my Feb tranche,  YY came very close this week to being a 3 bagger, it was up 199% on Tuesday.  But has since pulled back slightly.


 Category/Tranche   August   November   February   May   Total 
 Initial Investment         25,000             25,000           25,000        25,000         100,000
 Current Tranche  19.5% 6.7% 59.1% -1.2% 18.4%
 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  120.2% 357.5% 192.0% 38.4% 177.0%
 Current Balance         55,060           114,376           72,993        34,588         277,017
 R3K Current Tranche  6.7% 1.7% 15.5% 9.6% 8.4%
 R3K Overall Gain  104.3% 108.4% 86.9% 74.8% 93.6%
 R3K Balance         51,069             52,097           46,716        43,709         193,590
 Annualized IRR  16.1% 35.3% 24.9% 7.4% 20.9%

This table shows how every tranche (open and closed) has fared.  It assumes I started with $100,000 spread over the 4 tranches. That would be $277,017 right now.  That works out to an annualized IRR of 20.9%.

Then this final table shows how the $100,000 has grown to $277,017 month by month (note in reality I do add $ at anniversary dates, as I am thinking about increasing stakes 30% in 2018), so all these figures are not exact replicas of my real gains - although if these hypotheticals are doing well, you can certainly imply I am doing well.  (actually, to save space, I may start just showing quarterly changes).


 Date   Differential   MFI Value   R3K Value 
12/1/2012 -2.20%          99,765            101,965
3/1/2013 -2.23%        102,881            105,114
6/1/2013 4.75%        115,831            111,085
9/1/2013 10.46%        124,536            114,079
12/1/2013 23.70%        150,105            126,405
3/1/2014 25.66%        158,116            132,458
6/1/2014 31.44%        167,001            135,559
9/1/2014 35.90%        177,792            141,892
12/1/2014 30.22%        176,420            146,198
3/1/2015 25.15%        175,476            150,324
6/1/2015 51.53%        202,897            151,371
9/1/2015 36.41%        178,603            142,195
12/1/2015 73.49%        223,435            149,946
3/1/2016 56.48%        194,415            137,934
6/1/2016 51.44%        201,999            150,558
9/1/2016 67.04%        222,481            155,446
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 83.43%        277,017            193,590

You can see I have really accelerated in November 2017. Don't get too excited, but it is nice.  Here are how the stocks did in past week:


 Stock   Last Week   Current   Dividend   Change 
 SIMO              47.84         49.45                       -   3.4%
 MSGN              17.30         17.50                       -   1.2%
 YY            107.23       120.03                       -   11.9%
 CELG            104.10       104.50                       -   0.4%
 EVC                6.20            6.45                       -   4.0%
 ICHR              28.13         29.06                       -   3.3%
 AKRX              33.40         32.61                       -   -2.4%
 VIAB              26.15         26.29                       -   0.5%
 RHI              54.90         54.69                       -   -0.4%
 MD              49.91         49.10                       -   -1.6%
 QCOM              66.72         68.91                       -   3.3%
 KLAC            101.65       105.04                       -   3.3%
 TIME              16.40         16.90                       -   3.0%
 GHC            568.05       566.05                       -   -0.4%
 WNC              18.97         19.11                       -   0.7%
 RGR              50.20         49.95                       -   -0.5%
 TGNA              21.01         21.05                       -   0.2%
 Average  1.8%

These are in descending order of value.  So I do have large positions on SIMO and MSGN.  

MFI Formula

Same tables, but a bit faster.  I started this approach two years later, in October 2014.  It is kind of reverse of "select", in that I pick stocks by formula and random number generator.  It does cause more duplications as typically 10 to 12 stocks from a screen of 50 meet my formula and then I randomly pick 5, irregardless of whether I already hold.


12/30/2016  Start   Current   Dividend   Pct Gain   R3K Gain 
 GILD  $71.69 $72.46 $1.56 3.3% 17.5%
 HPQ  $15.00 $21.24 $0.53 45.1% 17.5%
 TGNA  $21.33 $21.05 $0.28 0.0% 17.5%
 CA  $31.99 $32.63 $1.02 5.2% 17.5%
 SYNT  $19.79 $25.18 $0.00 27.2% 17.5%
 Totals  16.2% 17.5%
4/1/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 BKE  $18.45 $21.20 $0.75 19.0% 11.4%
 CSCO  $33.76 $36.49 $0.87 10.7% 11.4%
 GILD  $67.50 $72.46 $1.04 8.9% 11.4%
 OMC  $85.53 $68.97 $1.10 -18.1% 11.4%
 SYNT  $16.76 $25.18 $0.00 50.2% 11.4%
 Totals  14.1% 11.4%
7/1/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 CSCO  $30.98 $36.49 $0.29 18.7% 8.1%
 GME  $20.95 $17.42 $0.38 -15.0% 8.1%
 HPQ  $17.60 $21.24 $0.13 21.4% 8.1%
 RGR  $60.70 $49.95 $0.44 -17.0% 8.1%
 SYNT  $16.21 $25.18 $0.00 55.3% 8.1%
 Totals  12.7% 8.1%
10/1/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 DIN  $43.14 $42.99 $0.00 -0.3% 3.5%
 GILD  $82.85 $72.46 $0.00 -12.5% 3.5%
 GME  $20.50 $17.42 $0.00 -15.0% 3.5%
 HPQ  $20.22 $21.24 $0.00 5.0% 3.5%
 OMC  $74.80 $68.97 $0.00 -7.8% 3.5%
 Totals  -6.1% 3.5%

On my open tranches, definitely not the eye-popping beats one sees in my select portfolio.  Give it time.  Then my December 31st tranche only has about a month left to go.  It is nip and tuck whether it'll be a winner.  It was winning last week, but HPQ stumbled a bit post earnings.


 Category/Tranche   October   January   April   July   Total 
 Initial Investment      249,820        249,939     250,180      249,728         999,667
 Current Tranche  -6.1% 16.2% 14.1% 12.7% 9.3%
 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  6.4% 40.9% 42.5% 25.0% 28.7%
 Current Balance      265,925        352,159     356,520      312,114      1,286,717
 R3K Current Tranche  3.5% 17.5% 11.4% 8.1% 10.1%
 R3K Overall Gain  38.9% 31.3% 30.0% 25.9% 31.5%
 R3K Balance      346,909        328,157     325,136      314,421      1,314,624
 Annualized IRR  2.0% 12.5% 14.3% 9.7% 9.6%

You see my annualized IRR is 9.6%.  Not terrible, but not as good as I'd like.  You can also see my 4 current tranches are up 9.3% whilst the russell 3000 is up 10.2%. So I have lost about a point there.  But when you think about how much MFI is struggling in 2017 (look at my very first table and you'll see my MFI Index (a way I track MFI performance broadly) is trailing the Russell 3000 by 15 points (and I'll publish more shortfalls this weekend as I analysis all my tracking portfolios).  So relative to MFI in general, my Formula portfolio is a big winner.

Here is the month by month.


 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 -2.79%        128,672            131,463

You can see month by month it has been a step forward and a step back. Then 1/2 a step back.


Dividends and Miscellaneous

As I mentioned, I have two other legs of my investing stool besides MFI.  If that is all you care about, you might as well stop here.  As I discussed in my Thanksgiving post, I do think dividend stocks and bonds have been under duress of late.  I see this everywhere I look.  I think it is either in anticipation of tax reform or higher interest rates.  I do suspect this is a trend that will continue, we can't stay with a 10 year below 3% forever.

So my dividend stocks/bonds/CEFs will likely underperform.  But they are there to create an income stream, not be sexy high fliers.  Hopefully I do not see them getting impaired (I did see an article that said the first crash will be junk bonds Investors are fleeing junk bonds in near record numbers).  But that is why I have three legs of a stool... 4 if you count cash (and you should).


 Dividend Stocks  Start  Current   Divvy   Overall Pct Gain   Weekly Pct Gain   9/30/17 Price   Yield 
 OIBAX      5.91         5.95      0.16 3.4% 0.5%           5.95 4.4%
 VTIBX    10.96       11.01      0.01 0.5% 0.3%        10.89 1.0%
 KCLI    48.89       47.96      0.33 -1.2% -1.3%        49.75 2.3%
 KNOP    21.30       20.70           -   -2.8% 2.2%        21.44 10.0%
 TK      6.20         8.45      0.08 37.7% -1.1%           8.93 2.6%
 CPLP      3.54         3.28      0.08 -5.0% 1.9%           3.50 9.8%
 JQC      8.18         8.14      1.57 18.8% 0.4%           8.49 7.0%
 ISBC    13.25       14.17      0.15 8.1% 1.4%        13.64 2.5%
 LADR    13.01       13.93      0.30 9.4% 1.6%        13.78 9.0%
 EVG    14.46       13.80      0.26 -2.8% -1.1%        14.24 6.7%
 FDEU    18.40       18.65      0.69 5.1% 3.4%        19.42 7.8%
 RLJ-PA    28.45       27.50      0.49 -1.6% -0.1%        27.82 7.1%
 TGP    17.89       17.25           -   -3.6% 0.0%        17.85 3.2%
 RILY    15.58       18.50      0.21 20.1% 3.9%        17.05 0.9%
 PSXP    47.39       46.73      1.03 0.8% -1.2%        52.56 5.5%
 NS    37.98       27.89      0.82 -24.4% -4.2%        40.59 15.7%
 SBRA    22.34       19.24      0.93 -9.7% 1.0%        21.94 9.4%
 OCSI      8.68         8.60      0.19 1.3% 0.6%           8.80 8.8%
 DSL    19.47       20.25      1.65 12.5% 0.3%        21.25 8.9%
 TGONF    11.04       13.12      1.79 35.1% -0.6%        12.80 5.3%
 GLDI      9.29         9.00      0.24 -0.5% -0.9%           9.07 6.7%
 NRZ    16.22       17.83      0.88 15.4% 2.1%        16.73 11.2%
 DHF      3.34         3.39      0.16 6.3% 1.5%           3.53 8.1%
 MAC    65.01       64.26           -   -1.2% -1.2%        65.01 4.6%
 O    25.50       56.39    20.80 202.7% -0.2%        57.19 4.5%
 Totals  3.6% 0.4% 6.2%

The misc side continues to struggle.  Bio tech stocks are out of favor, shipping is not exactly en fuego and energy shows few green shoots.  MTG has been my most consistent winner.

1 comment:

Unknown said...

Can you describe how you avoid the "stinkers"?

Also, I keep trying to see the new reader page, but the Blogger App is telling me that my gmail account does not have permission to view the page.

Thanks for all your writing!