Next Wednesday I will be replacing my January 1st MFI Formula tranche. As my readers know, I have 4 MFI Formula tranches (each at quarter start/close dates). Each tranche consists of 5 MFI stocks that I buy and hold for a year.
For my MFI Formula portfolio, I have a filtering/formulaic approach. I thought it might be helpful if I do a dry run so readers can see how I pick the five stocks.
Before I do that though, a quick shout out to the tranche about to call it a wrap:
| 1/2/2018 | Start | Current | Dividend | Pct Gain | R3K Gain |
| AMGN | $177.11 | $190.33 | $5.28 | 10.4% | -6.6% |
| GME | $18.06 | $12.18 | $1.52 | -24.1% | -6.6% |
| GILD | $71.64 | $62.94 | $1.71 | -9.8% | -6.6% |
| HRB | $26.34 | $25.12 | $0.99 | -0.9% | -6.6% |
| OMC | $72.81 | $72.15 | $1.80 | 1.6% | -6.6% |
| Totals | -4.5% | -6.6% |
Hard to be excited about down 4.5%. But I wish my entire portfolio was down just 4.5% in 2018. No stinkers (stocks down 30% or more), although GME gave it a run.
Now on to new tranche (dry run).
Step 1
First I run the official screen. I have been running 50 stocks at 133m. I will continue that in 2019.
| Ticker | Market Cap | Price | Dividend | Yield |
| ACOR | 740 | 14.85 | - | 0.00% |
| AEIS | 1,604 | 42.69 | - | 0.00% |
| ALSN | 5,552 | 43.63 | 0.60 | 1.38% |
| AMAT | 29,568 | 31.55 | 0.80 | 2.54% |
| AGX | 590 | 37.59 | 1.00 | 2.66% |
| HRB | 5,105 | 25.12 | 0.99 | 3.95% |
| BPT | 423 | 20.25 | 5.29 | 26.14% |
| CECO | 797 | 11.20 | - | 0.00% |
| CASA | 1,056 | 12.69 | - | 0.00% |
| CELG | 43,681 | 62.81 | - | 0.00% |
| CJREF | 678 | 3.21 | 0.24 | 7.48% |
| DLX | 1,801 | 38.44 | 1.20 | 3.13% |
| DXC | 14,663 | 53.44 | 0.76 | 1.42% |
| ESIO | 1,039 | 29.95 | - | 0.00% |
| FTSI | 740 | 6.76 | - | 0.00% |
| GME | 1,267 | 12.18 | 1.52 | 12.50% |
| GILD | 81,933 | 62.94 | 2.28 | 3.63% |
| EAF | 3,376 | 11.31 | 0.23 | 2.07% |
| HSII | 579 | 31.19 | 0.52 | 1.67% |
| HPQ | 31,633 | 20.38 | 0.58 | 2.84% |
| IDT | 143 | 5.99 | 0.37 | 6.18% |
| IMMR | 272 | 8.77 | - | 0.00% |
| INVA | 1,898 | 16.96 | - | 0.00% |
| IDCC | 2,250 | 65.85 | 1.42 | 2.15% |
| IPG | 7,822 | 20.41 | 0.84 | 4.12% |
| KLAC | 13,172 | 88.30 | 2.83 | 3.21% |
| LRCX | 20,993 | 133.28 | 3.79 | 2.84% |
| LGORF | 1,090 | 2.08 | - | 0.00% |
| LTRPA | 1,187 | 15.89 | - | 0.00% |
| MCFT | 349 | 18.40 | - | 0.00% |
| MSB | 310 | 23.70 | 2.79 | 11.77% |
| MKSI | 3,324 | 63.22 | 0.78 | 1.24% |
| MSGN | 1,723 | 22.92 | - | 0.00% |
| NHTC | 219 | 19.80 | 0.58 | 2.94% |
| NKTR | 5,673 | 33.17 | - | 0.00% |
| EGOV | 815 | 12.31 | 0.32 | 2.59% |
| OMC | 16,093 | 72.15 | 2.40 | 3.32% |
| PETS | 490 | 23.93 | 1.04 | 4.35% |
| STX | 10,847 | 38.44 | 2.52 | 6.55% |
| SIGA | 569 | 7.00 | - | 0.00% |
| SP | 640 | 28.56 | - | 0.00% |
| STRL | 285 | 10.25 | - | 0.00% |
| TVTY | 992 | 24.92 | - | 0.00% |
| TUP | 1,566 | 31.57 | 2.72 | 8.61% |
| HEAR | 207 | 14.59 | - | 0.00% |
| UIS | 577 | 11.41 | - | 0.00% |
| UTHR | 4,979 | 105.30 | - | 0.00% |
| VEC | 236 | 21.45 | - | 0.00% |
| VIAB | 10,589 | 25.89 | 0.80 | 3.10% |
| WDC | 10,673 | 36.89 | 2.00 | 5.42% |
Step 2
Exclude stocks with yield under 2.4%.
| Number | Ticker | Market Cap | Price | Dividend | Yield |
| 1 | AMAT | 29,568 | 31.55 | 0.80 | 2.54% |
| 2 | AGX | 590 | 37.59 | 1.00 | 2.66% |
| 3 | HRB | 5,105 | 25.12 | 0.99 | 3.95% |
| 4 | BPT | 423 | 20.25 | 5.29 | 26.14% |
| 5 | CJREF | 678 | 3.21 | 0.24 | 7.48% |
| 6 | DLX | 1,801 | 38.44 | 1.20 | 3.13% |
| 7 | GME | 1,267 | 12.18 | 1.52 | 12.50% |
| 8 | GILD | 81,933 | 62.94 | 2.28 | 3.63% |
| 9 | HPQ | 31,633 | 20.38 | 0.58 | 2.84% |
| 10 | IDT | 143 | 5.99 | 0.37 | 6.18% |
| 11 | IPG | 7,822 | 20.41 | 0.84 | 4.12% |
| 12 | KLAC | 13,172 | 88.30 | 2.83 | 3.21% |
| 13 | LRCX | 20,993 | 133.28 | 3.79 | 2.84% |
| 14 | MSB | 310 | 23.70 | 2.79 | 11.77% |
| 15 | NHTC | 219 | 19.80 | 0.58 | 2.94% |
| 16 | EGOV | 815 | 12.31 | 0.32 | 2.59% |
| 17 | OMC | 16,093 | 72.15 | 2.40 | 3.32% |
| 18 | PETS | 490 | 23.93 | 1.04 | 4.35% |
| 19 | STX | 10,847 | 38.44 | 2.52 | 6.55% |
| 20 | TUP | 1,566 | 31.57 | 2.72 | 8.61% |
| 21 | VIAB | 10,589 | 25.89 | 0.80 | 3.10% |
| 22 | WDC | 10,673 | 36.89 | 2.00 | 5.42% |
Step 3
Exclude stocks with market cap under 740m (the 16 smallest stocks from original pull).
| Number | Ticker | Market Cap | Price | Dividend | Yield |
| 1 | AMAT | 29,568 | 31.55 | 0.80 | 2.54% |
| 2 | HRB | 5,105 | 25.12 | 0.99 | 3.95% |
| 3 | DLX | 1,801 | 38.44 | 1.20 | 3.13% |
| 4 | GME | 1,267 | 12.18 | 1.52 | 12.50% |
| 5 | GILD | 81,933 | 62.94 | 2.28 | 3.63% |
| 6 | HPQ | 31,633 | 20.38 | 0.58 | 2.84% |
| 7 | IPG | 7,822 | 20.41 | 0.84 | 4.12% |
| 8 | KLAC | 13,172 | 88.30 | 2.83 | 3.21% |
| 9 | LRCX | 20,993 | 133.28 | 3.79 | 2.84% |
| 10 | EGOV | 815 | 12.31 | 0.32 | 2.59% |
| 11 | OMC | 16,093 | 72.15 | 2.40 | 3.32% |
| 12 | STX | 10,847 | 38.44 | 2.52 | 6.55% |
| 13 | TUP | 1,566 | 31.57 | 2.72 | 8.61% |
| 14 | VIAB | 10,589 | 25.89 | 0.80 | 3.10% |
| 15 | WDC | 10,673 | 36.89 | 2.00 | 5.42% |
Step 4
Throw out one name if desired. While this is a formulaic approach, I do allow myself the optionality to throw out one name. I am trying to remove my biases, so I should not throw out a name just because I don't like it... it should be because I don't believe past 12 month income is reflective (at all) of future income. In this event, I have wearied of GME... but will not throw it out.
Step 5
Run a random number generator to pick 5 names.
| Random # | Stock |
| 6 | HPQ |
| 2 | HRB |
| 3 | DLX |
| 9 | LRCX |
| 10 | EGOV |
I do plan in 2019 to continue to divert a larger and larger part of my overall money into MFI. I have not decided how much yet. But I do believe it works for me.
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