Wednesday, February 27, 2019

February 23rd, 2018 Monthly Tracking Portfolio

February 23rd, 2018 Monthly Tracking Portfolio

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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