Just Three Weeks Left On 10/1/2017 MFI Formula Tranche

Just Three Weeks Left On 10/1/2017 MFI Formula Tranche

Well, when you have 8 MFI tranches, it is never long until one is reaching the one year anniversary date.  And so it is with my 10/1/2017 MFI Formula tranche.  While we have 3+ weeks to go, this tranche is looking likely to be a nice winner (fingers crossed).

It is up a snappy 22.2% versus 15.9% for the benchmark.  Here are the 5 names:

10/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
DIN	$43.14	$91.68	$2.23	117.7%	15.9%
GILD	$82.85	$72.22	$1.66	-10.8%	15.9%
GME	$20.50	$16.13	$1.14	-15.8%	15.9%
HPQ	$20.22	$24.71	$0.40	24.2%	15.9%
OMC	$74.80	$69.87	$1.75	-4.3%	15.9%
Totals				22.2%	15.9%

Yes, it helps to have a stock more than double.  DIN has been unbelievable.  Perhaps I'll take the family to IHOP tomorrow!  HPQ has also been good, and then three losers.  GME has announced they are having a strategic review, but it seems unlikely to be completed before 10/1.  We'll see.  That could take price to ~$22 if positive.  I am a bit down on GILD, it is my largest holding - but HC stocks have the potential to be under political duress in election season.  OMC is old-school advertising and that just isn't cool any more.

Then I will be picking a new tranche.  I plan to continue to add $ to MFI... so I will likely increase my allotment to this tranche by 30% to put it on par in size with my other tranches.

Trial Run

For kicks and giggles, here is a trial run were I to pick the new tranche today.  As a reminder, here is my current rule set (recall MFI Formula is picked by formula/random number generator).

1. Start with 50 stocks from official MFI website, with market cap 130m+.
2. Remove the 16 smallest stocks by market cap.
3. Remove all stocks with a dividend yield under 2.4%.
4. Discard one additional stock at my discretion.
5. Run a random number generator to get my five stocks.

Step 1:

Ticker	Market Cap	Price	Dividend	Yield
ACOR	1,311	27.55	-	0.00%
AEIS	2,159	56.07	-	0.00%
ALSN	6,664	50.51	0.60	1.18%
MO	114,666	60.93	2.72	4.47%
AMCX	3,553	63.15	-	0.00%
ABC	19,169	88.64	1.52	1.72%
AMAT	39,585	39.85	0.60	1.51%
AGX	707	41.50	1.00	2.41%
HRB	5,537	26.17	0.97	3.70%
BPT	644	30.40	4.59	15.09%
CASA	1,280	14.93	-	0.00%
CJREF	589	2.90	0.24	8.28%
DLX	2,823	58.59	1.20	2.04%
DNB	5,316	142.70	2.05	1.44%
ESIO	656	18.39	-	0.00%
EVC	444	5.10	0.20	3.93%
ESRX	50,718	90.80	-	0.00%
FTSI	1,092	9.50	-	0.00%
GILD	94,452	72.22	2.19	3.03%
HPQ	39,054	24.71	0.55	2.23%
IMMR	333	10.63	-	0.00%
INVA	1,654	14.56	-	0.00%
IDCC	2,833	81.50	1.40	1.72%
IPG	8,674	22.75	0.81	3.57%
JW.A	3,197	54.10	1.29	2.39%
KLAC	16,741	104.18	3.00	2.88%
LRCX	26,688	159.58	2.54	1.59%
LEE	160	2.75	-	0.00%
MSB	363	27.50	2.49	9.04%
MSGN	1,779	24.25	-	0.00%
NHTC	281	24.58	0.54	2.19%
NLS	429	14.05	-	0.00%
NKTR	11,379	65.00	-	0.00%
EGOV	1,095	16.30	0.32	1.99%
OMC	15,538	69.87	2.34	3.35%
PTN	197	1.04	-	0.00%
PCOA	159	690.00	12.70	1.84%
SGH	670	30.54	-	0.00%
SP	862	38.55	-	0.00%
SDI	262	16.00	-	0.00%
TGNA	2,475	11.41	0.28	2.45%
TVTY	1,393	34.80	-	0.00%
TUP	1,586	32.03	2.73	8.51%
UIS	973	19.05	-	0.00%
UTHR	5,570	118.48	-	0.00%
EGY	136	2.23	-	0.00%
VEC	365	32.52	-	0.00%
VIAB	11,795	28.98	0.80	2.76%
WDC	17,106	57.69	1.99	3.45%
ZAGG	434	15.10	-	0.00%

Now, I am doing this quickly, but if it was real I would double check the dividend yields as special dividends or recent changes in dividends are not always handled properly when automated.  I did go in (for example) and fix CJREF.  Then the market cap rule means I'll take stocks over $671m.

Step 3:

So here is filtered list:

Number	Ticker	Market Cap	Price	Dividend	Yield
1	MO	114,666	60.93	2.72	4.47%
2	AGX	707	41.50	1.00	2.41%
3	HRB	5,537	26.17	0.97	3.70%
4	GILD	94,452	72.22	2.19	3.03%
5	IPG	8,674	22.75	0.81	3.57%
6	KLAC	16,741	104.18	3.00	2.88%
7	OMC	15,538	69.87	2.34	3.35%
8	TGNA	2,475	11.41	0.28	2.45%
9	TUP	1,586	32.03	2.73	8.51%
10	VIAB	11,795	28.98	0.80	2.76%
11	WDC	17,106	57.69	1.99	3.45%

Step 4:

Now I use randomize to get 5 stocks from these 11.  I would also allow myself at this time to discard one.  I feel overweight TUP and GILD, but I doubt I would toss out any names as I am really looking for a stock that I believe does not has sustainable earnings.

Here would be my 5 picks:   

Random #	Stock
5	IPG
6	KLAC
8	TGNA
11	WDC
7	OMC

So, I guess I'd get to keep OMC and add a second ad agency, IPG.  We will see in 3 weeks what really happens.

Look Back

I was very lucky that the random number generator picked DIN a year ago.  The 5 stocks I didn't pick were VIAB, IPG, CJREF, CSCO and HRB.  They are basically flat as CJREF destroyed the group, dropping 60%.

Finally, if I went with the "dividend" stocks from my MFI Tracking portfolio from end of September - I would have been up 20.1%.  Here are the stocks from that list (slightly different start date and dividend treatment):

Stock	Initial Price	End Price	Percent Change
BPT	18.13	30.40	67.7%
CJREF	8.68	2.90	-66.6%
CSCO	32.58	47.05	44.4%
DIN	41.43	91.68	121.3%
GILD	79.27	72.22	-8.9%
GME	19.26	16.13	-16.2%
HPQ	19.60	24.71	26.1%
HRB	25.74	26.17	1.7%
IPG	20.05	22.75	13.5%
MSB	20.90	27.50	31.6%
NCMI	6.25	8.99	43.8%
OMC	72.30	69.87	-3.4%
VIAB	27.29	28.98	6.2%

Again, you see the CJREF fiasco.