Mid December is hear. And that means it is time to start thinking about ending a tranche and starting a new tranche. My regular readers know that my 4 tranches that start/end at beginning of a quarter are formula-driven. So I do not pick the five new stocks, rather I pick a subset of official list via filters and random number generator.
First, the 7 stocks I didn't pick a year ago, due to Mr Randomizer were: VIAB, PBI, IPG, HPQ, DIN, CJREF and CSCO. In aggregate they are up about 6%. The Russell 3000 is basically flat YTD right now, so that is a win. Here are the five stocks Mr Random dealt to me:
| 1/2/2018 | Start | Current | Dividend | Pct Gain | R3K Gain |
| AMGN | $177.11 | $196.41 | $5.28 | 13.9% | -0.4% |
| GME | $18.06 | $13.23 | $1.52 | -18.3% | -0.4% |
| GILD | $71.64 | $68.14 | $1.71 | -2.5% | -0.4% |
| HRB | $26.34 | $28.04 | $0.99 | 10.2% | -0.4% |
| OMC | $72.81 | $77.59 | $1.80 | 9.0% | -0.4% |
| Totals | 2.5% | -0.4% |
So not exactly knocking your socks off... but that is better than the benchmark and my overall portfolio by a bunch. I do believe this approach works.
This Approach
So it is reasonable to ask what "this approach" is. Here is what I do:
1. Take the top 50 stocks greater than 130m from official list:
| Ticker | Market Cap | Price | Dividend | Yield |
| ACOR | 772 | 16.37 | - | 0.00% |
| AEIS | 1,630 | 42.11 | - | 0.00% |
| ALSN | 5,574 | 43.00 | 0.60 | 1.40% |
| AMCX | 3,329 | 58.91 | - | 0.00% |
| AMAT | 33,003 | 34.20 | 0.70 | 2.05% |
| AGX | 641 | 41.19 | 0.75 | 1.82% |
| AKG | 158 | 0.70 | - | 0.00% |
| HRB | 5,763 | 28.04 | 0.68 | 2.41% |
| BPT | 577 | 26.97 | 5.29 | 19.62% |
| CELG | 49,552 | 70.90 | - | 0.00% |
| CJREF | 783 | 3.69 | 0.24 | 6.50% |
| DLX | 1,980 | 42.75 | 1.20 | 2.81% |
| DXC | 16,356 | 58.15 | 0.75 | 1.29% |
| ESIO | 1,030 | 29.69 | - | 0.00% |
| FTSI | 844 | 7.72 | - | 0.00% |
| GME | 1,352 | 13.23 | 1.52 | 11.49% |
| GILD | 88,309 | 68.14 | 2.23 | 3.27% |
| EAF | 3,565 | 12.27 | 0.23 | 1.91% |
| HSII | 645 | 34.04 | 0.52 | 1.53% |
| HPQ | 35,088 | 22.55 | 0.58 | 2.56% |
| IMMR | 263 | 8.53 | - | 0.00% |
| INVA | 1,994 | 17.58 | - | 0.00% |
| IDCC | 2,540 | 73.30 | 1.40 | 1.91% |
| KLAC | 14,319 | 93.54 | 2.84 | 3.04% |
| LRCX | 22,214 | 138.45 | 3.79 | 2.74% |
| LGORF | 1,198 | 2.29 | - | 0.00% |
| LTRPA | 1,425 | 18.98 | - | 0.00% |
| TUSK | 969 | 21.66 | 0.25 | 1.15% |
| MCFT | 400 | 21.34 | - | 0.00% |
| MSB | 348 | 26.49 | 2.79 | 10.53% |
| MKSI | 3,675 | 68.08 | 0.78 | 1.15% |
| MSGN | 1,847 | 24.68 | - | 0.00% |
| NHTC | 262 | 23.07 | 0.58 | 2.51% |
| NKTR | 6,398 | 36.97 | - | 0.00% |
| EGOV | 824 | 12.56 | 0.32 | 2.55% |
| OMC | 17,442 | 77.59 | 2.40 | 3.09% |
| PETS | 476 | 690.00 | 31.19 | 4.52% |
| STX | 11,445 | 40.00 | 2.52 | 6.30% |
| SIGA | 512 | 6.38 | - | 0.00% |
| SGH | 696 | 31.23 | - | 0.00% |
| SP | 648 | 28.91 | - | 0.00% |
| STRL | 302 | 11.14 | - | 0.00% |
| TVTY | 1,124 | 28.07 | - | 0.00% |
| TUP | 1,738 | 35.77 | 2.72 | 7.60% |
| HEAR | 246 | 17.31 | - | 0.00% |
| UIS | 633 | 12.41 | - | 0.00% |
| UTHR | 5,269 | 112.01 | - | 0.00% |
| VEC | 251 | 22.31 | - | 0.00% |
| VIAB | 11,900 | 29.52 | 0.80 | 2.71% |
| WDC | 11,840 | 40.97 | 2.00 | 4.88% |
I then filter the list to take the largest 34 companies by market cap and those with a yield 2.4% or greater. That leaves me with:
| Ticker | Market Cap | Price | Dividend | Yield |
| HRB | 5,763 | 28.04 | 0.68 | 2.41% |
| CJREF | 783 | 3.69 | 0.74 | 20.01% |
| DLX | 1,980 | 42.75 | 1.20 | 2.81% |
| GME | 1,352 | 13.23 | 1.52 | 11.49% |
| GILD | 88,309 | 68.14 | 2.23 | 3.27% |
| HPQ | 35,088 | 22.55 | 0.58 | 2.56% |
| KLAC | 14,319 | 93.54 | 2.84 | 3.04% |
| LRCX | 22,214 | 138.45 | 3.79 | 2.74% |
| EGOV | 824 | 12.56 | 0.32 | 2.55% |
| OMC | 17,442 | 77.59 | 2.40 | 3.09% |
| STX | 11,445 | 40.00 | 2.52 | 6.30% |
| TUP | 1,738 | 35.77 | 2.72 | 7.60% |
| VIAB | 11,900 | 29.52 | 0.80 | 2.71% |
| WDC | 11,840 | 40.97 | 2.00 | 4.88% |
I the would allow myself to throw out one stock. Not sure what I would do here, perhaps GME. I then run a random number generator to pick 5 stocks from this list. (an aside, I would also double check some of the figures - CJREF is showing a trailing dividend yield, they have cut the dividend and are closer to 6.4%... but they would still qualify).
Stay tuned, always not exciting!
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