Saturday, April 28, 2018

MFI Diary - Weekend Update 4/28/18

MFI Diary - Weekend Update 4/28/18

Another week zips by... looks like Spring has finally made it to New England.  Kind of a quiet week overall, although I did get quite a few earnings in during the week (more good than bad).  More on that to come.

Welcome to the occasionally amusing MFI Diary.  This is a diary I have been maintaining since February 2006 (damn, that is a long time) tracking my "experiences" 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 half of my blog.

I did create a guide recently for new readers to my blog that point you to some fascinating/interesting posts. I encourage you to give it a whirl (Guide To New Readers).  (PS - I continue to struggle to make thislink 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 non-economist, non-CFA with a spreadsheet and not a stock advisor (pretty clear as I ended 1st quarter in the red overall).  You should do your own due diligence before acting on anything you read here.

Onwards.


Last Week

Kind of an up and down week.  At one point, I was doing great and had actually caught up with the benchmark.  But then Thursday and Friday happened and I fell back again. So overall a push.  Which surprises me as most of my earnings were pretty decent.

AMGN, DDR, ISBC, NRZ, NS, QCOM, RHI, TUP, KLAC and SALT all had solid earnings and their stocks went up.  WDC and CAAP were my big down stocks on earnings.  I did make a few trades, the big one was I got out of my fixed preferred: RLJ-PA.  I just decided that with interest rates on upward bent, I would prefer a preferred (see what I did there? I told you occasionally amusing) that has a floating interest rate feature.

Here is my weekly, quarterly and YTD results:



 Component   YTD   2nd Quarter   Week Change 
 Overall  -1.3% +1.8% +0.1%
 MFI Select  -2.8% -4.6% -2.6%
 MFI Formula  +6.0% +4.7% +2.8%
 MFI Combined  +1.4% -0.1% +0.0%
 Miscellaneous  -7.2% +3.1% -0.8%
 Dividend  -0.5% +2.7% +0.6%
 Dividend Index  -2.4% +1.2% +0.5%
 R3K Index  +0.4% +1.1% -0.1%
 Blended Index  -0.9% +1.2% +0.2%
 MFI Index  +9.1% +2.0% -0.8%
 GARIX  -0.5% -0.6% -0.4%


You can see it was a good week (kind of) for my dividend portfolio, MFI Formula and the Dividend Index.  Those all have common theme of paying some sort of dividend.  Coincidence?  You tell me.  My MFI Select is really struggling of late (down 4.6% since April 1st).  CASA was flying high and crashed somewhat with a secondary offering.  Seems like a good segue into discussing...

MFI Select

I am going to go a bit faster today (apologies), but I have places to go and people to see today.  So I will cut and paste a bit.

I have two portfolios of MFI stocks involving real money.  I call in first (and oldest) MFI Select.  That is because I allow myself to pick whatever stocks I want, even those not on the official screen (although they always have to have MFI qualities of good companies at good prices).  I started MFI Select in August 2012 after quitting MFI for a year due to frustration at sub par results (it can be a challenging investing approach to stick with).  My MFI Select  portfolio consists of 4 tranches of 5 stocks apiece.  I buy and hold the stocks in each tranche for a year.  Here are the 4 open tranches:


5/6/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 WSTC  $24.15 $23.50 $0.00 -2.7% 13.0%
 TGNA  $25.75 $20.22 $0.28 -20.4% 13.0%
 TIME  $15.05 $18.50 $0.08 23.5% 13.0%
 MSGN  $23.55 $21.60 $0.00 -8.3% 13.0%
 QCOM  $54.93 $51.11 $2.28 -2.8% 13.0%
 Totals  -2.1% 13.0%
8/15/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 GHC  $591.10 $608.60 $3.81 3.6% 10.0%
 ICHR  $19.80 $21.83 $0.00 10.3% 10.0%
 MD  $43.00 $46.92 $0.00 9.1% 10.0%
 SIMO  $43.05 $46.20 $0.60 8.7% 10.0%
 RHI  $44.15 $61.17 $0.76 40.3% 10.0%
 Totals  14.4% 10.0%
11/15/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 MSGN  $16.67 $21.60 $0.00 29.6% 4.9%
 CELG  $100.60 $91.18 $0.00 -9.4% 4.9%
 EVC  $5.78 $4.80 $0.10 -15.2% 4.9%
 SIMO  $46.88 $46.20 $0.30 -0.8% 4.9%
 VIAB  $24.41 $30.75 $0.40 27.6% 4.9%
 Totals  6.4% 4.9%
2/1/2018  Start   Current   Dividend   Pct Gain   R3K Gain 
 AGX  $43.55 $40.75 $0.25 -5.9% -4.5%
 CASA  $18.81 $22.81 $0.00 21.3% -4.5%
 KLAC  $109.80 $102.18 $0.59 -6.4% -4.5%
 THO  $136.33 $107.78 $0.37 -20.7% -4.5%
 WDC  $87.74 $80.88 $0.50 -7.2% -4.5%
 Totals  -3.8% -4.5%

You can see WDC and THO struggling in February tranche.  My May tranche is (thankfully) almost done.  I am seeing some great ideas to create my 5 new holdings.


 Category/Tranche   August   November   February   May   Total 
 Initial Investment         25,000             25,000           25,000        25,000         100,000
 Current Tranche  14.4% 6.4% -3.8% -2.1% 3.0%
 Previous Tranche  -0.1% 42.6% 74.9% 19.1% 35.1%
 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  110.8% 355.9% 208.9% 37.1% 178.2%
 Current Balance         52,710           113,981           77,217        34,273         278,182
 R3K Current Tranche  10.0% 4.9% -4.5% 13.0% 5.8%
 R3K Overall Gain  110.7% 115.0% 92.7% 80.3% 99.7%
 R3K Balance         52,671             53,738           48,180        45,075         199,664
 Annualized IRR  14.0% 32.1% 24.0% 6.5% 19.2%

Well, my current tranches are now up a mere 3.0%, which is now trailing the open tranches of the benchmark at 5.8%.  It isn't always roses in investing.  Annualized IRR has fallen to 19.2%, still great but we were pushing 21% just a few weeks back.  The CASA drop has hurt... I believe that will stop bleeding.

Here is the growth of hypothetical $100,000:


 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
4/1/2018 96.21%        293,665            197,451
Current 78.52%        278,182            199,664

Avert your eyes if you have a sensitive stomach!  Quite a drop since April 1st.  Here is a table showing how the stocks have done since the start of the quarter so you can see the problem areas:


 Stock   Last Week   Current   Dividend   Change 
 MSGN              23.05         21.60                       -   -6.3%
 SIMO              48.12         46.20                       -   -4.0%
 VIAB              29.20         30.75                       -   5.3%
 CASA              27.96         22.81                       -   -18.4%
 KLAC            106.57       102.18                       -   -4.1%
 THO            112.39       107.78                       -   -4.1%
 AGX              44.80         40.75                       -   -9.0%
 WDC              90.80         80.88                       -   -10.9%
 EVC                4.55            4.80                       -   5.5%
 ICHR              23.26         21.83                       -   -6.1%
 CELG              88.41         91.18                       -   3.1%
 RHI              56.83         61.17                       -   7.6%
 MD              55.44         46.92                       -   -15.4%
 QCOM              54.70         51.11                       -   -6.6%
 GHC            599.80       608.60                       -   1.5%
 TGNA              20.60         20.22                       -   -1.9%
 Average  -4.0%

Oh yeah, I forgot that Jim Chanos said he was shorting MD.  Great.  Pretty ugly performance given market has been up a bit.

MFI Formula

My second real $ MFI portfolio is MFI Formula.  It is the opposite of MFI Select => here all my stocks are picked via a formula and a random number generator (I know, it can be gut-wrenching to not have control at the micro level).  I started this approach in October 2014 and it also has 4 tranches with each tranche having 5 stocks.  As it is a formula and random number generator, I do get a fair # of duplicates within the 4 tranches.  Here are the open tranches... actually same series of tables:


7/1/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 CSCO  $30.98 $44.71 $0.91 47.3% 11.5%
 GME  $20.95 $13.86 $1.14 -28.4% 11.5%
 HPQ  $17.60 $21.61 $0.40 25.0% 11.5%
 RGR  $60.70 $56.40 $0.67 -6.0% 11.5%
 SYNT  $16.21 $28.99 $0.00 78.8% 11.5%
 Totals  23.4% 11.5%
10/1/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 DIN  $43.14 $80.67 $1.60 90.7% 6.8%
 GILD  $82.85 $73.86 $1.09 -9.5% 6.8%
 GME  $20.50 $13.86 $0.76 -28.7% 6.8%
 HPQ  $20.22 $21.61 $0.27 8.2% 6.8%
 OMC  $74.80 $73.91 $1.15 0.3% 6.8%
 Totals  12.2% 6.8%
1/2/2018  Start   Current   Dividend   Pct Gain   R3K Gain 
 AMGN  $177.11 $177.46 $1.32 0.9% -0.2%
 GME  $18.06 $13.86 $0.38 -21.1% -0.2%
 GILD  $71.64 $73.86 $0.57 3.9% -0.2%
 HRB  $26.34 $28.22 $0.24 8.0% -0.2%
 OMC  $72.81 $73.91 $0.60 2.3% -0.2%
 Totals  -1.2% -0.2%
4/3/2018  Start   Current   Dividend   Pct Gain   R3K Gain 
 AMGN  $166.46 $177.46 $0.00 6.6% 3.1%
 VIAB  $29.20 $30.75 $0.00 5.3% 3.1%
 GILD  $72.71 $73.86 $0.00 1.6% 3.1%
 TUP  $47.32 $45.48 $0.00 -3.9% 3.1%
 EGOV  $13.29 $14.90 $0.00 12.2% 3.1%
 Totals  4.4% 3.1%
Definitely a better trend on this side of my MFI investing coin.


 Category/Tranche   October   January   April   July   Total 
 Initial Investment      249,820        249,939     250,180      249,728         999,667
 Current Tranche  12.2% -1.2% 4.4% 23.4% 8.7%
 Previous Tranche  7.0% 16.5% 21.3% 26.7% 17.6%
 Tranche -2  5.5% 9.3% 25.2% -12.5% 6.9%
 Tranche -3  0.5% 11.0% -0.2% 0.0% 2.8%
 MFI Overall Gain  27.2% 39.7% 58.1% 36.8% 40.4%
 Current Balance      317,871        349,046     395,476      341,629      1,404,022
 R3K Current Tranche  6.8% -0.2% 3.1% 11.5% 5.3%
 R3K Overall Gain  43.2% 34.7% 33.6% 29.9% 35.3%
 R3K Balance      357,838        336,564     334,259      324,288      1,352,948
 Annualized IRR  7.0% 10.6% 16.0% 11.7% 11.3%

Annualized IRR up to 11.3%.  Current tranches beating benchmark 8.7% to 5.3%. Woo-hoo!


 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
4/1/2018 -0.16%        133,734            133,898
Current 5.11%        140,402            135,293

And we're actually breaking into a bit of a lead longer term over benchmark.  double woo-hoo!  Here is performance for the week:


 Stock   Last Week   Current   Dividend   Change 
 GILD              73.70         73.86                       -   0.2%
 AMGN            171.56       177.46                       -   3.4%
 OMC              73.74         73.91                       -   0.2%
 GME              12.88         13.86                       -   7.6%
 HPQ              21.53         21.61                       -   0.4%
 VIAB              30.66         30.75                       -   0.3%
 EGOV              14.30         14.90                       -   4.2%
 TUP              41.69         45.48                       -   9.1%
 DIN              74.09         80.67                       -   8.9%
 SYNT              28.14         28.99                       -   3.0%
 HRB              27.10         28.22                       -   4.1%
 CSCO              44.09         44.71                       -   1.4%
 RGR              56.25         56.40                       -   0.3%

What???!  GME up 7.6%?Must be a typo!  No, it actually went up.  Call the Wall Street Journal!  DIN has been unbelievable... dare I say it has gone up too far and too fast?  Not one stock in the red this past week, that is pretty remarkable.

Dividend Portfolio

That completes my discussion of things MFI.  Now I will talk about my other two investing approaches: Dividend and Miscellaneous.  My dividend portfolio is my largest portfolio.  It is not meant to be exciting, but rather produce income for me and wife as I am retired.  So it isn't just stocks, it has Closed end funds, mutual funds with bonds and preferred stocks.  I know that some of these may not perform well on an absolute basis in a rising interest rate environment, but I want some relative certainty on retirement income.  I have tried to pick some names that flex with interest rates, such as GLOP-PB, which has a floating (with Libor) feature.

I did sell the rest of my RLJ-PA this week and added to my ISBC.  RLJ just seems destined to keep going down... it just was not a smart buy.  I discussed last week how KCLI is "safe" due to low price to BV.  While I belive that is true still, they did lay a real egg in quarterly earnings this week.  Their investments and underwriting both seem subpar.  And there is some risk to their book value dropping as increasing interest rates will decrease the value of longer tenured bonds.  Nothing is a slam dunk.



 Dividend Stocks  Start  Current   Divvy   Overall Pct Gain   Weekly Pct Gain   12/30/17 Price   Yield   2018   Adj 2018 
 TK      7.43         8.90      0.08 20.7% -0.8%           9.32 2.5% -4.5% 2.2%
 OIBAX      5.91         5.92      0.25 4.3% -1.3%           5.96 3.9% -0.7% -0.7%
 LADR    13.35       13.90      0.61 8.6% -1.6%        13.63 9.1% 2.0% 1.0%
 KCLI    48.14       41.00      0.52 -13.7% -4.1%        45.25 2.6% -9.4% -8.9%
 NS    29.41       21.46      0.91 -23.9% 0.8%        29.95 11.2% -28.3% -16.1%
 CPLP      3.50         3.23      0.14 -3.8% -1.5%           3.36 9.9% -3.9% -3.5%
 AMID    11.87       11.65      0.18 -0.3% 1.3%        13.35 14.2% -12.7% -2.2%
 TGP    18.28       18.35      0.14 1.2% -1.9%        20.15 3.1% -8.9% -8.5%
 GLOP-PB    25.36       26.30      0.33 5.0% 3.6%        25.36 8.0% 3.7% 3.7%
 KNOP    21.30       20.60      0.52 -0.8% -1.0%        20.75 10.1% -0.7% -0.7%
 JQC      8.18         8.03      0.80 8.0% 0.6%           8.22 6.1% -2.3% -2.3%
 ISBC    13.33       13.64      0.17 3.6% 0.3%        13.88 2.6% -1.7% -1.7%
 PSXP    47.39       49.87      2.42 10.3% -0.5%        52.35 5.7% -4.7% -4.7%
 EVG    14.46       13.58      0.64 -1.7% 1.7%        14.35 6.8% -5.4% -5.4%
 FDEU    18.40       17.76      1.18 2.9% -0.7%        18.83 8.2% -5.7% -5.7%
 NRZ    16.56       17.35      1.67 14.8% 4.8%        17.88 11.5% -3.0% -3.0%
 SBRA    22.15       18.36      0.62 -14.3% 6.7%        18.77 9.8% -2.2% -2.0%
 DSL    19.47       20.14      2.44 16.0% -0.1%        20.19 8.9% -0.2% -0.2%
 OCSI      8.68         8.15      0.57 0.5% 1.1%           8.40 9.3% -3.0% -3.0%
 TGONF    11.04       12.86      1.96 34.3% 0.6%        13.30 5.5% -3.3% -3.3%
 TOO      2.33         2.71      0.01 16.5% 5.4%           2.36 1.5% 14.8% 12.2%
 DDR      7.00         7.43           -   6.2% 10.1%           7.00 10.2% 6.1% 6.2%
 O    26.04       51.45    21.44 179.9% 3.9%        57.02 5.1% -9.8% -9.6%
 Totals  3.4% 0.5% 6.8% -0.5%

The DDR purchase is off to a nice start... should have bought more!  KCLI at -4.1% is the one stinker for the week... and that hurt a bit as this list is largely in order of size.

Here are my small banks I also own in a basket here:

 Bank   Start   Current   Dividends   Change   2018 Change   Yield 
 ACBI          16.99          19.90                 -   17.1% 13.1% 0.0%
 ASB          25.69          26.70            0.15 4.5% 5.1% 2.3%
 FBIZ          23.69          25.81            0.14 9.6% 16.7% 2.2%
 FULT          18.81          17.25            0.23 -7.0% -3.6% 2.7%
 FNB          14.47          13.29            0.12 -7.3% -3.8% 3.7%
 MSBI          32.96          31.69            0.22 -3.2% -2.4% 2.7%
 NRIM          37.47          35.15            0.45 -5.0% 3.8% 2.7%
 PACW          48.30          52.40            0.50 9.5% 4.0% 4.1%
 SONA          17.13          16.37            0.08 -3.9% 2.1% 2.1%
 WNEB          10.88          10.80            0.04 -0.4% -0.9% 1.5%
 Total  1.4% 3.4% 2.4%
Up 3.4% in 2018 is nothing to sneeze at.  PACW just increased dividend from 50 cents a quarter to 60 cents.  Not bad.

Finally, here is dividend index that I compare against:


 Ticker  12/30/2017  Current   Dividend   YTD Change   Weekly Change   Yield 
 AMLP                10.79          10.09               0.21 -4.6% 0.7%         8.34%
 NML                  9.38             8.53               0.22 -6.7% -0.2% 7.74%
 EPD                26.51          26.48               0.84 3.1% -0.4% 6.35%
 ETP                17.92          17.94               0.57 3.3% -1.2% 12.32%
 FDD                13.73          14.41               0.15 6.0% 0.6% 2.42%
 VGK                59.15          59.69               0.38 1.5% -0.3% 2.68%
 DDAIF                84.57          79.58               3.25 -2.1% -0.5% 5.65%
 NVS                83.96          77.27               2.75 -4.7% -0.8% 3.86%
 NOBL                64.04          62.25               0.33 -2.3% -0.1% 1.87%
 VYM                85.63          83.41               0.62 -1.9% 0.3% 2.94%
 MRK                56.27          59.47               0.48 6.5% 1.1% 3.19%
 PEP              119.92        101.71               0.81 -14.5% -0.8% 3.18%
 VNQ                82.98          76.39               0.98 -6.8% 3.1% 4.75%
 RQI                12.65          11.50               0.32 -6.6% 0.6% 4.80%
 TCO                65.43          55.10               0.63 -14.8% 0.3% 4.58%
 SLG              100.93          98.62               0.78 -1.5% 2.7% 3.22%
 T                38.88          33.04               0.98 -12.5% -4.7% 5.99%
 VZ                52.93          51.57               1.12 -0.5% 7.7% 4.55%
 CHL                50.54          47.55                    -   -5.9% 2.2% 3.88%
 DTEGY                17.66          17.68                    -   0.1% 2.2% 3.86%
 DSU                11.70          11.49               0.28 0.6% 0.3% 4.17%
 HIO                  5.07             4.82               0.12 -2.6% 0.8% 4.62%
 MUB              110.74        107.91               0.84 -1.8% -0.2% 2.30%
 PRHYX                  6.76             6.60               0.09 -1.0% -0.5% 5.40%
 NEA                13.75          12.81               0.24 -5.1% -0.2% 5.56%
 JNK                36.72          35.87               0.66 -0.5% -0.3% 5.61%
 VWITX                14.13          13.79               0.12 -1.5% -0.4% 2.80%
 PHMIX                  9.09             8.96               0.13 0.0% -0.4% 2.80%
 UTG                30.94          28.37               0.64 -6.2% 1.0% 4.20%
 XLU                52.65          51.71               0.42 -1.0% 2.8% 3.31%
 DUK                84.11          80.50               0.89 -3.2% 3.6% 4.37%
 EIX                63.24          65.79               0.54 4.9% 2.6% 3.48%
 PFF                38.07          37.10               0.72 -0.7% -0.5% 5.62%
 JPC                10.34             9.86               0.26 -2.1% -0.1% 4.62%
 WFC-PL          1,309.99    1,280.00             18.75 -0.9% 0.5% 5.80%
 TIP              114.08        112.52               0.84 -0.6% 0.1% 2.38%
 SHY                83.85          83.30               0.32 -0.3% 0.0% 1.11%
 TLT              126.86        118.89               1.02 -5.5% 0.4% 2.60%
 Totals                       -                    -                      -   -2.4% 0.6% 4.39%

It had a good week as interestingly the utilities (XLU, DUK and EIX) did well.


Miscellaneous

Not a good week here, down 0.8% after a great week previously.  I did sell SALT for a quick 7%.  So that was not the "problem".  OMER got fast tracked for OMER721, so that was good.  Gold/miners continue to be strong as seen in this table:


 Miner   Start   Current   Change   2018 Change 
 TORXF            9.90          10.15 2.5% 6.8%
 SAND            4.48             4.65 3.8% -6.8%
 NSU            2.38             2.75 15.5% 12.7%
 KLDX            2.41             2.43 0.8% -6.9%
 KL          14.49          17.23 18.9% 12.2%
 GSS            0.87             0.71 -18.2% -20.4%
 FSM            4.24             5.74 35.4% 10.0%
 EXK            2.14             3.04 42.1% 27.2%
 BTG            2.61             2.86 9.6% -7.7%
 EGO            1.18             0.96 -19.1% -33.2%
 Total  9.1% -0.6%

So what were the problem stocks?  NMM, HIL and MTG were all down 3% or more.  NMM is really frustrating as they seem so cheap - it is more distrust of management at this time.  I should have sold HIL at 5.70 (almost did).  I did buy more MTG (50% increase) when they bottomed out mid week (I got in at 10.08 and they closed at 10.36... they actually dropped below $10, which is ridiculous).

Oh well, gotta run.  Have a great weekend everyone.  I will follow up with a tracking report later this weekend.

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