My readers may recall that I have two real money MFI Portfolios, Select and Formula. At the end of 2018, I shared a table showing the the MFI Formula portfolio kicked butt (relatively) in 2018. Sadly, MFI Select was a disaster.
Two weeks into 2019, they are both doing quite well, but I'd like to focus on MFI Select as it has been extraordinarily good so far. Recall the MFI Formula is 4 tranches of 5 stocks each. I hold each tranche for a year.
The five stocks are based upon a "formula"/process I developed and use a (gulp) random number generator to take my biases out of the system. This clearly needs to be done as at start of January, I stated that the one stock I would not buy is GME... and guess what? It is up 20%. We get too emotional about our stocks.
Here is the stunning table, showing growth of $100,000 from start of MFI Formula in October 2014:
| 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 |
| 7/1/2018 | 2.28% | 141,126 | 138,849 |
| 10/1/2018 | -0.85% | 147,963 | 148,808 |
| 1/1/2019 | 3.90% | 132,405 | 128,506 |
| Current | 12.40% | 145,212 | 132,813 |
First, you can see the relatively decent 2018 performance. It started 2018 at 131,460 and grew (a bit) to 132,405, despite the 4th quarter bear market. You can see the Russell 3000 (R3K) dropped in 2018 from 135,086 to 128,506.
But then look at 2019 thus far. MFI Formula is basically up almost 10%, while R3K is more like +3%. So we have expanded our lead over benchmark from 3.9 percentage points to 12.4! Nice. I think it is time for value to shine.
Finally, here are the open tranches:
| 4/3/2018 | Start | Current | Dividend | Pct Gain | R3K Gain |
| AMGN | $166.46 | $196.78 | $3.96 | 20.6% | 0.5% |
| VIAB | $29.20 | $29.88 | $0.60 | 4.4% | 0.5% |
| GILD | $72.71 | $67.25 | $1.14 | -5.9% | 0.5% |
| TUP | $47.32 | $37.20 | $2.04 | -17.1% | 0.5% |
| EGOV | $13.29 | $13.50 | $0.24 | 3.4% | 0.5% |
| Totals | 1.1% | 0.5% | |||
| 7/2/2018 | Start | Current | Dividend | Pct Gain | R3K Gain |
| CJREF | $3.90 | $4.38 | $0.25 | 18.8% | -4.8% |
| GILD | $70.80 | $67.25 | $0.57 | -4.2% | -4.8% |
| IPG | $22.80 | $22.31 | $0.42 | -0.3% | -4.8% |
| KLAC | $102.03 | $92.43 | $1.50 | -7.9% | -4.8% |
| TUP | $40.09 | $37.20 | $1.36 | -3.8% | -4.8% |
| Totals | 0.5% | -4.8% | |||
| 10/2/2018 | Start | Current | Dividend | Pct Gain | R3K Gain |
| CJREF | $3.36 | $4.38 | $0.06 | 32.2% | -11.3% |
| GILD | $78.13 | $67.25 | $0.00 | -13.9% | -11.3% |
| IPG | $22.80 | $22.31 | $0.21 | -1.2% | -11.3% |
| PETS | $31.56 | $22.36 | $0.27 | -28.3% | -11.3% |
| VIAB | $32.21 | $29.88 | $0.20 | -6.6% | -11.3% |
| Totals | -3.6% | -11.3% | |||
| 1/2/2019 | Start | Current | Dividend | Pct Gain | R3K Gain |
| EGOV | $12.54 | $13.50 | $0.00 | 7.7% | 4.7% |
| GILD | $62.01 | $67.25 | $0.00 | 8.5% | 4.7% |
| IPG | $20.50 | $22.31 | $0.00 | 8.8% | 4.7% |
| KLAC | $90.04 | $92.43 | $0.00 | 2.7% | 4.7% |
| OMC | $72.74 | $75.79 | $0.00 | 4.2% | 4.7% |
| Totals | 6.4% | 4.7% |
CJREF has been a major winner, up 25%. But beaten down names like GME, TUP and VIAB are also all up by 15%+ in 2019.
If you didn't read Barron's this weekend (
Barron's 2019 Investment Roundtable, Part 1
), there were some terrific comments by Rupaul J. Bhansali. (side note, of the 9 people last year, 3 of them saw all their stock picks lose money. So two lessons, first they really don't know either and two pick yourself up and learn from mistakes). Anyway, the comments she made was focusing more on enterprise value than market cap (Greenblatt must be smiling) and she is interested in net cash companies (meaning those with more cash than debt). Again, MFI is helpful in identifying those. Gundlach also commented on that we're in a ocean of debt and a lot of it is worse than we think it is.
Here is recap of their 2018 picks
|
Scott Black's Picks
|
|||
| Price 1/5/18 | Price 12/31/18 | Total Return | |
| Lam Research / LRCX | $196.40 | $136.17 | -29% |
| Hi-Crush Partners / HCLP | 11.4 | 3.58 | -65% |
| Gray Television / GTN | 16.1 | 14.74 | -8% |
| Ares Capital / ARCC | 15.79 | 15.58 | 8% |
| Hooker Furniture / HOFT | 40.75 | 26.34 | -34% |
| Total | -26% |
|
Abby Joseph Cohen's Picks
|
|
| Company | Total Return |
| Occidental Petroleum / OXY | -14% |
| Samsung Electronics / 005930.Korea* | -24% |
| AbbVie / ABBV | -5% |
| China Railway Signal & Comm. / 3969.Hong Kong | -11% |
| Mondelez International/ MDLZ | -5% |
| Total | -12% |
| Henry Ellenbogen's Picks | |
| Total Return | |
| Equifax / EFX | -23.20% |
| Vail Resorts / MTN | 4.20% |
| Bright Horizons Family Solutions / BFAM | 16.40% |
| ServiceMaster Global Holdings / SERV * | 4.70% |
| Shopify / SHOP | 25.20% |
| Grubhub / GRUB | 5.30% |
| Average | 5.43% |
|
Mario Gabelli's Picks
|
|
| Total Return | |
| Madison Square Garden / MSG | 26% |
| Liberty Braves Group/BATRA | 12% |
| MGM Resorts International / MGM | -27% |
| Davide Campari-Milano/CPR.Italy | 17% |
| Zimmer Biomet Holdings / ZBH | -17% |
| CNH Industrial / CNHI | -34% |
| GCP Applied Technologies / GCP | -27% |
| Paccar / PCAR * | -20% |
| Textron / TXT | -21% |
| Energizer Holdings / ENR | -11% |
| Average | -10% |
|
Jeffrey Gundlach's Picks
|
|
| Total Return | |
| Energy Select Sector SDPR / XLE* | 3% |
| Tortoise MLP / NTG ** | -24% |
| Invesco Senior Loan / BKLN*** | -2% |
| iShares MSCI Brazil / EWZ | -8% |
| WisdomTree Japan Hedged Equity / DXJ | -23% |
| Average | -11% |
|
William Priest's Picks
|
| Total Return | |
| Universal Display/OLED | -48% |
| Applied Materials/AMAT | -39% |
| Starbucks / SBUX* | -2% |
| Martin Marietta Materials / MLM | -24% |
| MetLife / MET** | -14% |
| Average | -25% |
|
Oscar Schafer's Picks
|
|
| Total Return | |
| Cinemark Holdings / CNK | 8% |
| O'Reilly Automotive / ORLY | 32% |
| CommScope Holding / COMM | -57% |
| Evertec / EVTC | 101% |
| ANI Pharmaceuticals / ANIP | -35% |
| Average | 10% |
|
Paul Wick's Picks
|
| Total Return | |
| LONG | |
| Micron Technology / MU | -31% |
| Western Digital / WDC | -54% |
| Marvell Technology Group / MRVL | -29% |
| Oracle / ORCL | -5% |
| SHORT | |
| Snap / SNAP | 62% |
| Intrexon / XON | 50% |
| Average | -1% |
|
Meryl Witmer's Picks
|
|
| Total Return | |
| CarMax / KMX | -12% |
| Orion Engineered Carbons / OEC | -4% |
| Dart Group / DTG.UK | 12% |
| Howden Joinery Group / HWDN.UK | -5% |
| Average | -2% |
So in total, the 9 portfolios were down 8%. And of the 49 long picks, we had 10 stinkers, stocks that dropped 30% or more. And these are the experts, most invited back again. Note that the MFI Index of 50 stocks from start of 2018 were better, just down 3.4%... but had 12 stinkers.
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