Saturday, March 03, 2018

MFI Diary - Weekend Update 3/2/2018

MFI Diary - Weekend Update 3/2/2018

Haven't posted Schloss wisdom in a while.  We all need reminding from time to time.  Welcome to the almost world-famous MFI Diary.  This is a diary I have been maintaining since February 2006 (damn, that is a long time) tracking my "adventures" in investing real money in the methods discussed in "The Little Book That Beats The Markets".  I also spend some time discussing my MFI (Magic Formula Investing) Index and various MFI tracking portfolios that I have created over time.

And as a free bonus, I also discuss how my non-MFI investments are doing (generally poorly) in 2nd have of my blog.

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).  (PS - I continue to struggle to make this link work.  You can instead go to Blog archive on left margin of this blog and you will find a link in October 2017). 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.

Onwards.

Last Week

Never dull with DJT as president.  I do think as an investor that you have to tune out the political babble.  Otherwise you'll drive yourself insane trying to think, "what will tariffs, that may or may not happen, do do stock ABCD?".  Not time well-spent in my view.


As we move into March, the one thing that is clearly working in 2018 is MFI. Hey what do you know?  My real money MFI portfolios continue to outperform and the MFI Index (a basket of 50 stocks that I reconstitute once a year) is doing very, very well.



 Component   YTD   Week Change 
 Overall  -2.2% -0.8%
 MFI Select  +2.2% -0.5%
 MFI Formula  +6.4% +0.3%
 MFI Combined  +4.2% -0.1%
 Miscellaneous  -10.7% -1.1%
 Dividend  -3.2% -1.2%
 Dividend Index  -3.9% -1.5%
 R3K Index  +0.7% -1.9%
 Blended Index  -1.2% -1.8%
 MFI Index  +8.8% -0.7%
 GARIX  +0.3% -2.1%


So a quick gander at this table shows that I am down overall 2.2% for the year and was down 0.8% in a rough week.  The blended index (my overall benchmark) is down 1.2% overall and 1.8% on the week (so I caught up a bunch this week).

But on MFI side, my combined (real money) is up 4.2% on the year and was virtually flat in this tough week.  And the Index is up 8.8%.  Value stocks seem to be making a comeback baby!

MFI Select

I have two portfolios of real money in MFI.  The first/oldest is MFI Select, which has been in existence since August 2012.  It consists of four tranches of five MFI stocks which I buy and hold for a year.  I do give myself free form in how I select the stocks.  Usually from the official list, but at times from my own screens.  I started the approach after quitting MFI (due to subpar returns) in JUly 2011.  I studied what was going wrong (too many bad stocks) and came back with an approach geared to minimize stocks that might drop 30% or more.


5/6/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 WSTC  $24.15 $23.50 $0.00 -2.7% 13.4%
 TGNA  $25.75 $22.81 $0.21 -10.6% 13.4%
 TIME  $15.05 $18.50 $0.08 23.5% 13.4%
 MSGN  $23.55 $24.25 $0.00 3.0% 13.4%
 QCOM  $54.93 $64.74 $2.28 22.0% 13.4%
 Totals  7.0% 13.4%
8/15/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 GHC  $591.10 $575.90 $2.54 -2.1% 10.4%
 ICHR  $19.80 $25.30 $0.00 27.8% 10.4%
 MD  $43.00 $54.87 $0.00 27.6% 10.4%
 SIMO  $43.05 $45.72 $0.60 7.6% 10.4%
 RHI  $44.15 $57.98 $0.76 33.0% 10.4%
 Totals  18.8% 10.4%
11/15/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 MSGN  $16.67 $24.25 $0.00 45.5% 5.2%
 CELG  $100.60 $89.33 $0.00 -11.2% 5.2%
 EVC  $5.78 $6.50 $0.05 13.3% 5.2%
 SIMO  $46.88 $45.72 $0.30 -1.8% 5.2%
 VIAB  $24.41 $34.09 $0.20 40.5% 5.2%
 Totals  17.3% 5.2%
2/1/2018  Start   Current   Dividend   Pct Gain   R3K Gain 
 AGX  $43.55 $40.40 $0.00 -7.2% -4.2%
 CASA  $18.81 $21.95 $0.00 16.7% -4.2%
 KLAC  $109.80 $113.01 $0.59 3.5% -4.2%
 THO  $136.33 $120.45 $0.00 -11.6% -4.2%
 WDC  $87.74 $88.25 $0.00 0.6% -4.2%
 Totals  0.4% -4.2%

These are the tables of my current open 4 tranches.  You can see how each tranche is doing against the Russell 3000 (R3K).  Three of the four are leading.  Here is a table showing individual stocks for the past week:


 Stock   Last Week   Current   Dividend   Change 
 MSGN              25.05         24.25                       -   -3.2%
 SIMO              45.13         45.72                       -   1.3%
 VIAB              33.74         34.09                       -   1.0%
 CASA              19.64         21.95                       -   11.8%
 KLAC            110.47       113.01                       -   2.3%
 THO            125.00       120.45                       -   -3.6%
 AGX              39.25         40.40                       -   2.9%
 WDC              89.14         88.25                       -   -1.0%
 EVC                6.90            6.50                       -   -5.8%
 ICHR              25.75         25.30                       -   -1.7%
 CELG              95.61         89.33                       -   -6.6%
 RHI              57.85         57.98                       -   0.2%
 MD              57.35         54.87                       -   -4.3%
 QCOM              63.32         64.74                       -   2.2%
 GHC            601.45       575.90                       -   -4.2%
 TGNA              23.52         22.81                       -   -3.0%

I can see CASA is going to be like ICHR, some wild week by week swings.  CELG dropped to ball on FDA study and sold off sharply.  TGNA should show a 7 cent dividend, but I am going to be lazy and not redo.

Here is a table summarizing all my tranches since August 2012:


 Category/Tranche   August   November   February   May   Total 
 Initial Investment         25,000             25,000           25,000        25,000         100,000
 Current Tranche  18.8% 17.3% 0.4% 7.0% 10.1%
 Previous Tranche  -0.1% 42.6% 74.9% 19.1% 35.6%
 Tranche -2  2.8% 8.0% 10.7% -25.2% -0.9%
 Tranche -3  11.2% 69.4% -14.3% 18.3% 21.2%
 Tranche -4  41.4% 14.2% 8.5% 33.0% 24.3%
 Tranche -5  14.1% 43.7% 78.3% 0.0% 34.0%
 MFI Overall Gain  118.9% 402.6% 222.2% 49.9% 198.4%
 Current Balance         54,731           125,650           80,550        37,485         298,417
 R3K Current Tranche  10.4% 5.2% -4.2% 13.4% 6.2%
 R3K Overall Gain  111.4% 115.7% 93.4% 80.9% 100.3%
 R3K Balance         52,851             53,922           48,345        45,227         200,345
 Annualized IRR  15.2% 35.6% 25.9% 8.8% 21.4%

So one can see any tranche in summary here.  So the recent 2/1/18 tranche is at intersection of February and Current Tranche and is 0.4%.  The February 2017 tranche would be February/Previous Tranche at 74.9% (whoa, I loved that tranche! Though I note it is down almost 13% since I sold it due to AKRX crash and burn).

Then this table shows how $100,000 spread over the first four tranches would have grown over time versus benchmark.  Note this assumes no additional money added after the $100,000.  In reality, I add money at most anniversary dates.


 Date   Differential   MFI Value   R3K Value 
1/1/2013 -1.78%        102,798            104,575
4/1/2013 -0.43%        106,804            107,234
7/1/2013 4.29%        114,888            110,597
10/1/2013 19.67%        138,655            118,990
1/1/2014 26.63%        157,138            130,503
4/1/2014 30.38%        162,991            132,616
7/1/2014 39.23%        177,971            138,740
10/1/2014 29.38%        168,321            138,944
1/1/2015 28.17%        174,306            146,140
4/1/2015 29.95%        178,565            148,612
7/1/2015 62.69%        211,437            148,743
10/1/2015 43.12%        181,175            138,052
1/1/2016 63.33%        209,514            146,186
4/1/2016 47.34%        195,770            148,430
7/1/2016 50.41%        201,092            150,680
10/1/2016 42.98%        198,563            155,582
1/1/2017 45.60%        209,503            163,936
4/1/2017 55.70%        229,473            173,735
7/1/2017 60.28%        239,060            178,782
10/1/2017 75.60%        262,489            186,886
1/1/2018 92.19%        291,114            198,926
Current 98.07%        298,417            200,345

This is definitely a table to celebrate.  My hypothetical $100,000 is now 298.417.  Well ahead of the benchmark of 200.345.  For those that like to think about compound annual growth rates, I am growing at a phenomenal 21.4%.  The only problem is I wish I had had more conviction when I started (but recall it didn't work so well when I stopped in July 2011).

MFI Formula

This is my second real money portfolio.  I started it in October 2014.  It is the opposite of Select, in that I pick the stocks via a formula and random number generator.  I know you think, whoa, how can you do that?  Turn over the reins to a random number generator?  Guess what?  Computers can drive better than people.  And computers, with good programming, can pick stocks better than people.  I am reading a great book about that right now (Machine, Platform, Crowd: Harnessing Our Digital Future).  I am even thinking about the Crown component and having my readers here help.

Same tables:


4/1/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 BKE  $18.45 $21.30 $2.75 30.3% 15.2%
 CSCO  $33.76 $44.06 $1.16 34.0% 15.2%
 GILD  $67.50 $78.69 $1.56 18.9% 15.2%
 OMC  $85.53 $75.65 $1.65 -9.6% 15.2%
 SYNT  $16.76 $27.31 $0.00 62.9% 15.2%
 Totals  27.3% 15.2%
7/1/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 CSCO  $30.98 $44.06 $0.58 44.1% 11.9%
 GME  $20.95 $15.93 $1.14 -18.5% 11.9%
 HPQ  $17.60 $23.57 $0.27 35.4% 11.9%
 RGR  $60.70 $47.60 $0.44 -20.9% 11.9%
 SYNT  $16.21 $27.31 $0.00 68.5% 11.9%
 Totals  21.7% 11.9%
10/1/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 DIN  $43.14 $78.69 $0.97 84.7% 7.2%
 GILD  $82.85 $78.69 $0.52 -4.4% 7.2%
 GME  $20.50 $15.93 $0.76 -18.6% 7.2%
 HPQ  $20.22 $23.57 $0.13 17.2% 7.2%
 OMC  $74.80 $75.65 $0.55 1.9% 7.2%
 Totals  16.2% 7.2%
1/2/2018  Start   Current   Dividend   Pct Gain   R3K Gain 
 AMGN  $177.11 $185.08 $1.32 5.2% 0.2%
 GME  $18.06 $15.93 $0.38 -9.7% 0.2%
 GILD  $71.64 $78.69 $0.00 9.8% 0.2%
 HRB  $26.34 $24.69 $0.00 -6.3% 0.2%
 OMC  $72.81 $75.65 $0.00 3.9% 0.2%
 Totals  0.6% 0.2%

Soak it in baby!  This group of tables is as good as I have see my Formula approach do since I started it in 2014.  All 4 are cooking with gas.  And Mr Random was not kind to me with 1/2/18 tranche.  The 7 stocks that Mr Random did not pick are up 13%!!!!  Here is performance this past week (astonishingly good given R3K was down 1.9%):


 Stock   Last Week   Current   Dividend   Change 
 GILD              80.91         78.69                       -   -2.7%
 OMC              77.31         75.65                       -   -2.1%
 GME              15.97         15.93                  0.34 1.9%
 SYNT              26.98         27.31                       -   1.2%
 CSCO              44.00         44.06                       -   0.1%
 HPQ              22.13         23.57                       -   6.5%
 AMGN            186.67       185.08                       -   -0.9%
 HRB              26.82         24.69                       -   -7.9%
 BKE              22.00         21.30                       -   -3.2%
 DIN              68.99         78.69                       -   14.1%
 RGR              49.90         47.60                       -   -4.6%

Note that these lists are generally in order from largest to smallest.  But I only reorder once a quarter when I add a new tranche.  So DIN has moved from 9th to 7th of late.  Then here is table summarizing all tranches:


 Category/Tranche   October   January   April   July   Total 
 Initial Investment      249,820        249,939     250,180      249,728         999,667
 Current Tranche  16.2% 0.6% 27.3% 21.7% 14.8%
 Previous Tranche  7.0% 16.5% 25.2% 26.7% 19.6%
 Tranche -2  5.5% 9.3% -0.2% -12.5% 0.5%
 Tranche -3  0.5% 11.0% 0.0% 0.0% 2.9%
 MFI Overall Gain  31.7% 42.2% 58.9% 35.0% 42.0%
 Current Balance      329,062        355,380     397,645      337,121      1,419,207
 R3K Current Tranche  7.2% 0.2% 15.2% 11.9% 8.6%
 R3K Overall Gain  43.7% 35.1% 34.5% 30.3% 35.9%
 R3K Balance      359,061        337,719     336,434      325,392      1,358,607
 Annualized IRR  8.4% 11.7% 17.2% 11.9% 12.3%

Yes, I am grinning like a cheshire cat.  Current tranche up in aggregate 14.8% while R3K current tranches at 8.6%.  Yes a 6 point lead feels good.  And annualized IRR at 12.3% is very very respectable.  So MFI, for me and my approaches, is working.

And here is table I love right now... though I know pendulum can swing the other way:


 Date   Differential   Value   R3K Value 
10/1/2014 0.00%        100,000            100,000
1/1/2015 -0.33%        100,664            100,995
4/1/2015 5.09%        106,781            101,695
7/1/2015 4.82%        106,423            101,604
10/1/2015 6.39%        100,703              94,312
1/1/2016 -3.36%          96,830            100,012
4/1/2016 0.34%        102,371            101,548
7/1/2016 -0.19%        103,022            103,216
10/1/2016 -0.85%        106,377            107,230
1/1/2017 1.57%        113,406            111,832
4/1/2017 -1.86%        116,227            118,091
7/1/2017 -2.40%        119,144            121,545
10/1/2017 -2.56%        124,448            127,007
1/1/2018 -3.63%        131,460            135,086
Current 6.06%        141,921            135,859

Strong move in 2018, right?  From down 3.6% to ahead by 6 points.   You might say, that can't be right, the first table at top of blog just shows MFI Formula up 6.4% on the year.  How can you have gained 9 points on benchmark?  Two answers to the keen-eyed reader: (1) recall this is more hypothetical, and assumes no reinvestments - so mixture amongst the four open tranches is different in reality and more importantly (2) my real results have a 30% cash ballast component as I allocated cash to grow out both my MFI portfolios during 2018... the hypothetical table above always assumes 100% invested.

Dividend Portfolio

For those that came here for MFI stuff, probably time to get off the train.  I am now going to review
my other two wheels of investing tricycle: Dividends and Miscellaneous.  Given how these two wheels struggle, it is fair to wonder why I bother and just have a unicycle.

My dividend portfolio is actually my largest.  For those who care I am (right now) 45% dividend, 33% MFI and 22% Misc.  MFI is slated to grow 38% by year end as I have allocated more money to it.

Keep in mind that I am retired, so the goal of my dividend portfolio is to supply a steady stream of income to me and my lovely wife.  I know there are challenges for this portfolio as the bias will be for interest rates to rise, which obviously hurts bonds.  So I do try to have more equity-type investments in here... though I certainly have fixed income as well.

 Dividend Stocks  Start  Current   Divvy   Overall Pct Gain   Weekly Pct Gain   12/30/17 Price   Yield   2018 
 OIBAX      5.91         6.05      0.23 6.2% 0.2%           5.96 3.8% 1.5%
 TK      7.43         7.88      0.08 7.0% -1.4%           9.32 2.8% -15.5%
 KCLI    48.89       44.00      0.60 -8.8% -1.1%        45.25 2.5% -2.8%
 KNOP    21.30       20.00      0.52 -3.7% -2.0%        20.75 10.4% -3.6%
 GLOP-PB    25.36       25.25           -   -0.4% 0.8%        25.36 8.1% -0.4%
 CPLP      3.53         3.15      0.16 -6.4% -2.2%           3.36 10.2% -6.3%
 TGP    18.28       18.65      0.14 2.8% -2.4%        20.15 3.0% -7.4%
 NS    37.37       20.81      1.83 -39.4% -11.9%        29.95 11.5% -30.5%
 LADR    13.01       15.00      0.62 20.1% 0.6%        13.63 8.4% 10.1%
 JQC      8.18         8.01      0.72 6.7% -1.1%           8.22 7.1% -2.6%
 PSXP    47.39       49.15      1.71 7.3% -2.5%        52.35 5.5% -6.1%
 FDEU    18.40       18.02      1.06 3.7% -3.8%        18.83 8.1% -4.3%
 ISBC    13.25       13.89      0.24 6.7% 0.3%        13.88 2.6% 0.1%
 EVG    14.46       13.59      0.48 -2.7% -0.4%        14.35 6.8% -5.3%
 RILY    15.58       19.05      0.21 23.7% 0.5%        18.10 2.5% 5.2%
 RLJ-PA    28.45       25.98      0.98 -5.2% 0.7%        27.01 7.5% -3.8%
 NRZ    16.56       16.37      1.17 5.9% -1.2%        17.88 12.2% -8.4%
 SBRA    22.15       17.09      0.62 -20.1% -1.3%        18.77 10.5% -9.0%
 DSL    19.47       19.71      2.14 12.2% -0.1%        20.19 9.1% -2.4%
 OCSI      8.68         7.72      0.38 -6.6% 0.3%           8.40 9.8% -8.1%
 TGONF    11.04       13.20      1.96 37.4% 1.9%        13.30 5.4% -0.8%
 AMID    13.25       11.70      0.41 -8.6% -1.3%        13.35 14.1% -12.4%
 TOO      2.33         2.53      0.01 8.8% -6.6%           2.36 1.6% 7.2%
 O    25.82       49.73    21.40 175.5% -0.9%        57.02 5.3% -12.8%
 Totals  1.6% -1.2% 6.4% -3.2%

So you can see overall yield of 6.4%.  The portfolio is down 3.2% so far for the year.  Funny (but not ha-ha funny) that some of my stocks (not fixed income) are dragging me down such as NS, AMID and TK.  But this is meant to be a portfolio for the patient.  I do very little trading and even less selling.  I keep thinking about selling my two preferred holdings, but then I remind myself that this component is about income.  I can take risk and focus on capital gains in the other wheels of my tricycle.

I also have a basket of smallish banks in my dividend portfolio.  They have not done as well as I had hoped for but at least they are positive in 2018 (I started around Dec 1st):


 Bank   Start   Current   Dividends   Change   2018 Change   Yield 
 ACBI          16.99          17.65                 -   3.9% 0.3% 0.0%
 ASB          25.69          25.05            0.15 -1.9% -1.4% 2.4%
 FBIZ          23.69          24.40            0.14 3.6% 10.3% 2.3%
 FULT          18.81          18.40            0.11 -1.6% 2.8% 2.4%
 FNB          14.47          14.14            0.12 -1.5% 2.3% 3.4%
 MSBI          32.96          31.95            0.22 -2.4% -1.6% 2.8%
 NRIM          37.47          34.45            0.21 -7.5% 1.8% 2.8%
 PACW          48.30          52.93            0.50 10.6% 5.0% 3.8%
 SONA          17.13          15.40            0.08 -9.6% -3.9% 2.1%
 WNEB          10.88          10.15            0.04 -6.3% -6.9% 1.6%
 Total  -1.3% 0.9% 2.4%

Finally, I measure my dividends against a list of 50 income securities as profiled by Barron's in December:

 Ticker  12/30/2017  Current   Dividend   YTD Change   Weekly Change   Yield 
 AMLP                10.79          10.15               0.21 -4.0% -2.1% 8.28%
 NML                  9.38             8.59               0.11 -7.2% -4.3% 7.68%
 EPD                26.51          25.11               0.42 -3.7% -2.4% 6.67%
 ETP                17.92          17.99               0.57 3.5% -6.4% 12.22%
 FDD                13.73          13.83                    -   0.7% -2.6% 2.76%
 VGK                59.15          58.06                    -   -1.8% -3.1% 2.76%
 DDAIF                84.57          83.91                    -   -0.8% -4.7% 4.13%
 NVS                83.96          83.05               2.75 2.2% -2.7% 3.30%
 NOBL                64.04          62.55                    -   -2.3% -2.3% 1.79%
 VYM                85.63          84.33                    -   -1.5% -2.1% 2.86%
 MRK                56.27          54.36                    -   -3.4% -0.9% 3.53%
 PEP              119.92        109.04               0.81 -8.4% -0.6% 2.92%
 VNQ                82.98          73.39                    -   -11.6% -2.0% 4.79%
 RQI                12.65          11.31               0.16 -9.3% -0.7% 3.44%
 TCO                65.43          59.87                    -   -8.5% -1.6% 4.24%
 SLG              100.93          97.85                    -   -3.1% 0.2% 3.25%
 T                38.88          36.35               0.49 -5.2% -1.0% 5.47%
 VZ                52.93          48.26               0.56 -7.8% -0.1% 4.87%
 CHL                50.54          46.30                    -   -8.4% -3.3% 3.98%
 DTEGY                17.66          15.98                    -   -9.5% -3.1% 4.29%
 DSU                11.70          11.46               0.14 -0.9% 0.0% 3.00%
 HIO                  5.07             4.88               0.06 -2.6% -0.4% 3.49%
 MUB              110.74        108.38               0.63 -1.6% -0.2% 2.29%
 PRHYX                  6.76             6.64               0.06 -0.9% -0.3% 5.40%
 NEA                13.75          12.98               0.12 -4.7% -0.6% 5.54%
 JNK                36.72          36.00               0.50 -0.6% -0.7% 5.65%
 VWITX                14.13          13.89               0.09 -1.0% 0.0% 0.00%
 PHMIX                  9.09             8.97               0.10 -0.3% 0.0% 2.80%
 UTG                30.94          27.90               0.32 -8.8% -2.4% 4.20%
 XLU                52.65          48.94                    -   -7.0% -2.8% 3.57%
 DUK                84.11          75.35               0.89 -9.4% -2.4% 4.67%
 EIX                63.24          59.59                    -   -5.8% -4.1% 3.66%
 PFF                38.07          37.27               0.54 -0.7% -0.1% 5.65%
 JPC                10.34             9.77               0.13 -4.3% 0.4% 3.33%
 WFC-PL          1,309.99    1,273.00                    -   -2.8% -0.2% 5.80%
 TIP              114.08        112.17               0.63 -1.1% 0.2% 2.32%
 SHY                83.85          83.43               0.24 -0.2% 0.0% 1.07%
 TLT              126.86        118.35               0.77 -6.1% 0.2% 2.59%
 Totals                       -                    -                      -   -3.9% -1.6% 4.16%

So even though I am down 3.2%, it weirdly makes me feel better to see the benchmark down 3.9%.

Miscellaneous

Ok, at least it is the smallest wheel, just 22%.  But it is struggling down over 10% for the year.  It does consist of some stocks where I am swinging for the fences: OMER, SELB and EXXI... so volatility, until we get a catalyst is to be expected.  But I am still not very happy about being down 10%.  SELB was up 13% this week, so a glimmer of hope. But OMER was down on repeated bad news about their one drug in production.

I also have a basket of ten mining stocks.  These do swing a bit as well but overall have been flat to slightly down:


 Miner   Start   Current   Change   2018 Change 
 TORXF            9.90             7.19 -27.4% -24.4%
 SAND            4.48             4.68 4.5% -6.2%
 NSU            2.38             2.29 -3.8% -6.1%
 KLDX            2.41             1.52 -36.9% -41.8%
 KL          14.49          15.80 9.0% 2.9%
 GSS            0.87             0.68 -21.2% -23.3%
 FSM            4.24             4.65 9.7% -10.9%
 EXK            2.14             2.36 10.3% -1.3%
 BTG            2.61             3.00 14.9% -3.2%
 EGO            1.18             1.10 -6.8% -23.1%
 Total  -4.8% -13.7%

Gad, worse that I remembered.  Off 13.7% in 2018.  Reminds me of a saying: "gold bulls and their money will always be separated".

Well, I think I have said what I came here to say.  Have a great weekend.


No comments: