Another month/year has flown by. And so it is time to look at another monthly tracking portfolio as we hit the end of February 2019.
As my faithful readers know, I have been tracking the Magic Formula Stocks as described by Joel Greenblatt in The Little Book That Beats the Stock Market since January 2006. Every month I take the top 50 stocks over $100m market cap from his website and track how that portfolio of stocks fares versus the Russell 3000 for the next 12 months. It has been an uphill struggle as the tracking portfolios have under-performed, driven in part by Chinese reverse merger fiascos, for-profit education stocks and home health care stocks all being proverbial albatrosses.
People ask, does MFI not work anymore? I am not sure. Perhaps 12 years isn't long enough. Perhaps it works better at a higher market cap cut off (I believe this to be true). I think too many stocks make the screen over the years by "mistake"... that is they are not true value/cheap stocks. In 2011, we had a bunch of Chinese Reverse Merger stocks that hurt that year and were out and out frauds. Then we have also had a number of stocks that have a one time spike in earnings that fools the formula. Frankly, it might do better if instead of a trailing 12 month income look, it used a trailing 24 month look on income, to filter out the one time spikes.
But even with that being said, Value stocks have not exactly been in favor the past couple of years, although this appears to be changing (although painstakingly slowly). Greenblatt wrote a great analysis of growth vs value lately (Market Observations – September 2018 ). His writing may be starting to be bearing fruit yet as January/February have been unbelievably good for my MFI stocks.
Onward
Fearless readers will recall we had a 29 month "losing streak".. Then we had a 13 month winning streak. Now we have our second straight loss , "losing" 0.4% to 3.7% this month. At least we bounced back from our 30 month low (January) at -7.5%.
Guess what? Last month 9 open portfolios were trailing. Now the most recent 3 are leading.
Here are the 50 stocks in descending performance order (from the portfolio that just hit a year):
| Stock | Initial Price | End Price | Percent Change | Mkt Cap |
| MEET | 2.59 | 5.85 | 125.9% | 186 |
| HSII | 25.25 | 43.13 | 70.8% | 479 |
| CERC | 4.40 | 6.69 | 52.0% | 115 |
| SYNT | 26.98 | 41.00 | 52.0% | 2,235 |
| BPT | 17.33 | 26.06 | 50.4% | 445 |
| PDLI | 2.48 | 3.63 | 46.4% | 383 |
| MSB | 22.66 | 30.77 | 35.8% | 332 |
| ALSN | 38.65 | 51.69 | 33.7% | 5,464 |
| USNA | 77.40 | 99.88 | 29.0% | 1,853 |
| EGOV | 13.45 | 17.07 | 26.9% | 911 |
| ESRX | 77.00 | 95.80 | 24.4% | 43,613 |
| AGX | 38.04 | 45.98 | 20.9% | 610 |
| AMCX | 51.99 | 62.45 | 20.1% | 3,260 |
| UIS | 11.45 | 13.64 | 19.1% | 578 |
| LEE | 2.50 | 2.96 | 18.4% | 143 |
| DISCA | 24.01 | 28.39 | 18.2% | 13,710 |
| BIIB | 292.78 | 327.62 | 11.9% | 61,894 |
| HPQ | 21.59 | 23.90 | 10.7% | 35,917 |
| KLAC | 107.38 | 116.12 | 8.1% | 17,302 |
| PCOA | 640.00 | 690.00 | 7.8% | 158 |
| UTHR | 118.04 | 121.95 | 3.3% | 5,402 |
| RPXC | 10.15 | 10.48 | 3.3% | 506 |
| OMC | 74.80 | 75.52 | 1.0% | 17,789 |
| VEC | 28.41 | 27.95 | -1.6% | 315 |
| SP | 36.00 | 35.23 | -2.1% | 801 |
| MSGN | 25.05 | 23.93 | -4.5% | 1,886 |
| HRB | 25.83 | 24.27 | -6.0% | 5,607 |
| MPAA | 22.00 | 20.50 | -6.8% | 420 |
| TGNA | 13.44 | 12.52 | -6.8% | 2,961 |
| IDCC | 74.33 | 69.02 | -7.1% | 2,623 |
| VIAB | 32.85 | 29.14 | -11.3% | 13,580 |
| PTN | 0.98 | 0.86 | -12.2% | 180 |
| ABC | 96.67 | 83.92 | -13.2% | 21,505 |
| CJREF | 5.52 | 4.60 | -16.6% | 1,324 |
| NHTC | 16.12 | 13.26 | -17.8% | 191 |
| GME | 14.43 | 11.64 | -19.3% | 1,618 |
| AEIS | 67.23 | 51.58 | -23.3% | 2,663 |
| EGRX | 66.86 | 46.74 | -30.1% | 1,067 |
| CNCE | 21.75 | 14.66 | -32.6% | 534 |
| DLX | 72.24 | 48.02 | -33.5% | 3,543 |
| QTRH | 1.58 | 1.03 | -34.9% | 195 |
| TUP | 48.08 | 31.04 | -35.4% | 2,631 |
| ASYS | 7.69 | 4.85 | -36.9% | 113 |
| SQBG | 2.01 | 1.23 | -38.8% | 127 |
| EVC | 6.58 | 3.98 | -39.5% | 624 |
| TRNC | 19.73 | 11.87 | -39.8% | 662 |
| ACOR | 26.05 | 14.00 | -46.3% | 1,205 |
| CASA | 19.64 | 10.40 | -47.0% | 662 |
| NLS | 11.95 | 6.10 | -49.0% | 367 |
| MDCA | 8.75 | 3.50 | -60.0% | 493 |
Not very good. Especially if you didn't have MEET. I always preach the importance of avoiding stinker stocks, those off by 30% or more. 13 of the 50 (26%) were in the stinker category here. That is dreadful.
Here is a listing of every MFI Tracking portfolio, back to January 2006:
| Date | MFI | R3K | Lead |
| 1/6/2006 | 16.0% | 10.9% | 1 |
| 2/17/2006 | 21.2% | 14.6% | 1 |
| 3/29/2006 | 13.0% | 9.6% | 1 |
| 4/7/2006 | 10.3% | 12.1% | 0 |
| 5/12/2006 | 20.4% | 18.6% | 1 |
| 5/31/2006 | 29.2% | 23.3% | 1 |
| 6/30/2006 | 22.4% | 20.0% | 1 |
| 7/31/2006 | 19.7% | 17.3% | 1 |
| 8/31/2006 | 13.0% | 13.3% | 0 |
| 9/28/2006 | 12.7% | 14.6% | 0 |
| 10/27/2006 | 10.3% | 12.0% | 0 |
| 11/29/2006 | -0.3% | 4.8% | 0 |
| 12/28/2006 | -6.9% | 3.4% | 0 |
| 1/26/2007 | -10.2% | -6.6% | 0 |
| 2/27/2007 | -3.7% | -1.0% | 0 |
| 3/26/2007 | -9.8% | -5.5% | 0 |
| 4/27/2007 | -10.9% | -5.0% | 0 |
| 5/29/2007 | -11.5% | -6.3% | 0 |
| 7/3/2007 | -30.0% | -15.6% | 0 |
| 7/30/2007 | -19.9% | -11.5% | 0 |
| 8/30/2007 | -12.5% | -8.7% | 0 |
| 9/27/2007 | -19.0% | -18.2% | 0 |
| 11/2/2007 | -40.4% | -34.3% | 0 |
| 11/28/2007 | -40.1% | -38.3% | 0 |
| 12/28/2007 | -36.3% | -40.0% | 1 |
| 1/25/2008 | -36.4% | -35.9% | 0 |
| 2/26/2008 | -51.7% | -41.5% | 0 |
| 3/24/2008 | -40.9% | -36.8% | 0 |
| 4/25/2008 | -25.6% | -31.0% | 1 |
| 5/28/2008 | -22.2% | -33.6% | 1 |
| 7/2/2008 | -11.7% | -25.3% | 1 |
| 7/29/2008 | -10.5% | -20.9% | 1 |
| 8/29/2008 | -13.8% | -17.9% | 1 |
| 9/26/2008 | -4.3% | -10.0% | 1 |
| 10/31/2008 | 18.7% | 13.9% | 1 |
| 11/26/2008 | 50.9% | 27.7% | 1 |
| 12/26/2008 | 48.9% | 32.3% | 1 |
| 1/23/2009 | 59.3% | 36.4% | 1 |
| 2/27/2009 | 92.8% | 55.6% | 1 |
| 3/27/2009 | 85.8% | 48.1% | 1 |
| 4/24/2009 | 69.7% | 45.8% | 1 |
| 5/29/2009 | 31.8% | 22.8% | 1 |
| 6/29/2009 | 21.3% | 24.0% | 0 |
| 7/29/2009 | 19.5% | 15.9% | 1 |
| 8/28/2009 | 7.4% | 8.8% | 0 |
| 9/25/2009 | 12.6% | 12.4% | 1 |
| 10/30/2009 | 22.7% | 18.3% | 1 |
| 11/27/2009 | 24.3% | 13.6% | 1 |
| 12/31/2009 | 23.7% | 18.1% | 1 |
| 1/22/2010 | 19.0% | 20.6% | 0 |
| 2/26/2010 | 18.6% | 23.6% | 0 |
| 3/25/2010 | 10.0% | 15.4% | 0 |
| 4/23/2010 | 7.1% | 11.4% | 0 |
| 5/28/2010 | 19.3% | 25.4% | 0 |
| 6/29/2010 | 16.7% | 25.7% | 0 |
| 7/29/2010 | 5.4% | 20.1% | 0 |
| 9/2/2010 | 7.3% | 10.1% | 0 |
| 9/24/2010 | -4.3% | 0.3% | 0 |
| 10/29/2010 | -2.9% | 10.4% | 0 |
| 11/26/2010 | -8.5% | 1.4% | 0 |
| 1/3/2011 | -11.4% | 0.1% | 0 |
| 1/28/2011 | -7.6% | 4.9% | 0 |
| 2/25/2011 | -5.5% | 5.0% | 0 |
| 3/24/2011 | -4.4% | 7.4% | 0 |
| 4/21/2011 | -16.0% | 3.2% | 0 |
| 5/27/2011 | -12.0% | -0.4% | 0 |
| 6/24/2011 | -9.5% | 5.0% | 0 |
| 7/29/2011 | -4.3% | 8.1% | 0 |
| 8/26/2011 | 12.0% | 21.6% | 0 |
| 9/30/2011 | 23.5% | 29.6% | 0 |
| 10/28/2011 | 0.4% | 11.5% | 0 |
| 11/25/2011 | 13.9% | 24.0% | 0 |
| 12/29/2011 | 9.9% | 15.9% | 0 |
| 1/27/2012 | 7.4% | 16.6% | 0 |
| 2/24/2012 | 7.8% | 13.3% | 0 |
| 3/23/2012 | 9.1% | 15.2% | 0 |
| 4/27/2012 | 10.5% | 15.3% | 0 |
| 5/25/2012 | 23.4% | 27.5% | 0 |
| 6/22/2012 | 26.1% | 24.6% | 1 |
| 7/27/2012 | 30.4% | 25.7% | 1 |
| 8/24/2012 | 26.0% | 19.8% | 1 |
| 9/28/2012 | 39.3% | 22.1% | 1 |
| 10/26/2012 | 48.3% | 28.9% | 1 |
| 11/23/2012 | 45.7% | 32.1% | 1 |
| 12/31/2012 | 52.3% | 33.0% | 1 |
| 1/25/2013 | 39.5% | 22.0% | 1 |
| 2/22/2013 | 46.5% | 26.4% | 1 |
| 3/28/2013 | 40.1% | 21.2% | 1 |
| 4/26/2013 | 35.0% | 20.5% | 1 |
| 5/24/2013 | 20.4% | 19.2% | 1 |
| 6/28/2013 | 26.9% | 24.1% | 1 |
| 7/29/2013 | 17.8% | 19.0% | 0 |
| 8/30/2013 | 17.5% | 24.6% | 0 |
| 9/27/2013 | 12.9% | 17.7% | 0 |
| 10/25/2013 | 11.8% | 15.4% | 0 |
| 11/29/2013 | 12.3% | 15.6% | 0 |
| 12/31/2013 | 12.7% | 11.9% | 1 |
| 1/31/2014 | 14.2% | 13.0% | 1 |
| 2/28/2014 | 15.4% | 13.9% | 1 |
| 3/28/2014 | 6.1% | 12.3% | 0 |
| 4/25/2014 | 8.6% | 15.8% | 0 |
| 5/30/2014 | 5.9% | 11.7% | 0 |
| 6/27/2014 | 2.5% | 9.2% | 0 |
| 7/25/2014 | 3.3% | 8.7% | 0 |
| 8/29/2014 | -2.2% | 1.0% | 0 |
| 9/26/2014 | -0.6% | -0.9% | 1 |
| 10/31/2014 | 4.3% | 4.4% | 0 |
| 11/28/2014 | -2.9% | 2.9% | 0 |
| 12/31/2014 | -9.3% | 0.3% | 0 |
| 1/30/2015 | -12.4% | -2.8% | 0 |
| 2/27/2015 | -19.0% | -7.3% | 0 |
| 3/27/2015 | -17.1% | -1.9% | 0 |
| 4/24/2015 | -15.4% | -0.8% | 0 |
| 5/29/2015 | -14.1% | 0.1% | 0 |
| 6/26/2015 | -8.7% | 0.4% | 0 |
| 7/30/2015 | 3.96% | 4.02% | 0 |
| 8/28/2015 | 5.6% | 10.2% | 0 |
| 9/25/2015 | 6.5% | 13.8% | 0 |
| 10/30/2015 | 2.0% | 4.0% | 0 |
| 11/27/2015 | 8.9% | 8.4% | 1 |
| 12/31/2015 | 13.7% | 12.6% | 1 |
| 1/29/2016 | 22.6% | 22.4% | 1 |
| 2/26/2016 | 27.8% | 25.4% | 1 |
| 3/24/2016 | 26.5% | 19.6% | 1 |
| 4/22/2016 | 13.7% | 14.8% | 0 |
| 5/27/2016 | 14.3% | 15.6% | 0 |
| 6/30/2016 | 23.2% | 16.1% | 1 |
| 7/29/2016 | 17.1% | 16.0% | 1 |
| 8/26/2016 | 10.6% | 14.6% | 0 |
| 9/30/2016 | 18.6% | 18.5% | 1 |
| 10/28/2016 | 18.3% | 24.1% | 0 |
| 11/25/2016 | 7.4% | 19.2% | 0 |
| 12/30/2016 | 4.7% | 20.5% | 0 |
| 1/27/2017 | 10.5% | 25.7% | 0 |
| 2/24/2017 | 7.6% | 17.4% | 0 |
| 3/31/2017 | 6.4% | 13.6% | 0 |
| 4/28/2017 | 5.8% | 13.8% | 0 |
| 5/26/2017 | 11.1% | 15.1% | 0 |
| 6/29/2017 | 11.1% | 14.7% | 0 |
| 7/28/2017 | 12.5% | 16.1% | 0 |
| 8/25/2017 | 28.8% | 21.5% | 1 |
| 9/29/2017 | 20.0% | 17.3% | 1 |
| 10/27/2017 | 11.8% | 4.0% | 1 |
| 11/24/2017 | 9.8% | 7.0% | 1 |
| 12/29/2017 | -3.4% | -5.4% | 1 |
| 1/26/2018 | -7.5% | -5.6% | 0 |
| 2/23/2018 | 0.4% | 3.7% | 0 |
| 3/29/2018 | 1.3% | 7.2% | 0 |
| 4/27/2018 | -2.9% | 6.0% | 0 |
| 5/25/2018 | -4.7% | 3.5% | 0 |
| 6/29/2018 | -4.1% | 3.3% | 0 |
| 7/27/2018 | -3.3% | -0.1% | 0 |
| 8/31/2018 | -6.4% | -3.4% | 0 |
| 9/28/2018 | -6.8% | -3.5% | 0 |
| 10/26/2018 | 2.4% | 6.3% | 0 |
| 11/30/2018 | 2.4% | 2.2% | 1 |
| 12/31/2018 | 15.5% | 12.5% | 1 |
| 1/25/2019 | 5.6% | 5.3% | 1 |
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