Good morning everyone! You have managed to stumble upon my blog, The MFI Diary. I have been writing this blog since 2006 and it is focused on tracking my performance using Joel Greenblatt's techniques from "The Little Book That Beats the Stock Market". I also spend a fair amount of time tracking performance of baskets of stocks from the official screen.
If you are new, you can dig through my archives and find all kinds of fun stuff. One favorite is a post I call "The Calculation", which gives a detailed description of how to calculate earnings yield and return on capital using balance sheets and income statements from Fidelity. It is very close to what the book and website use.
Weekly Overview
Just brewed some fresh java, new brand - seems pretty good. I am listening to Early Morning Jams with Bobby Gomes (archived on WWUH.com). Always a great way to start the weekend. The table below shows where I am so far in 2017:
| Component | YTD |
| Overall | +3.60% |
| Select | +3.60% |
| Formula | +0.94% |
| Miscellaneous | +8.33% |
| Dividend | +4.19% |
| R3K | +3.62% |
| MFI Index | +1.58% |
So overall I am exactly even with Russell 3000 (R3K). The MFI Select is also on par with R3K, but my Formula approach is lagging (+0.94%). My Miscellaneous approach and dividend approach are the components out-performing. The MFI Index is also lagging. Note that all my numbers include a cash component, which can drag things down slightly in upmarkets. This is because in 2017 I am intending to increase my $ commitment to MFI. Later, when I look by MFI portfolio, I show those numbers as if 100% invested.
MFI Select
As the name implies, these are MFI stocks that I select (clever). I have been running this approach since my re-boot in August 2012. I have four tranches of 5 stocks each that I buy and hold for a year. This approach has been very, very good. The table below shows that if you started with $100,000 ($25,000 per tranche) in August 2012 where you would be today.
| Date | Differential | MFI Value | R3K Value |
| 12/1/2012 | -2.20% | 99,765 | 101,965 |
| 1/1/2013 | -1.78% | 102,798 | 104,575 |
| 2/1/2013 | -2.26% | 102,594 | 104,856 |
| 3/1/2013 | -2.23% | 102,881 | 105,114 |
| 4/1/2013 | -0.43% | 106,804 | 107,234 |
| 5/1/2013 | 2.00% | 110,423 | 108,423 |
| 6/1/2013 | 4.75% | 115,831 | 111,085 |
| 7/1/2013 | 4.29% | 114,888 | 110,597 |
| 8/1/2013 | 6.91% | 124,799 | 117,889 |
| 9/1/2013 | 10.46% | 124,536 | 114,079 |
| 10/1/2013 | 19.67% | 138,655 | 118,990 |
| 11/1/2013 | 19.75% | 143,514 | 123,764 |
| 12/1/2013 | 23.70% | 150,105 | 126,405 |
| 1/1/2014 | 26.63% | 157,138 | 130,503 |
| 2/1/2014 | 24.70% | 150,619 | 125,918 |
| 3/1/2014 | 25.66% | 158,116 | 132,458 |
| 4/1/2014 | 30.38% | 162,991 | 132,616 |
| 5/1/2014 | 29.65% | 162,428 | 132,779 |
| 6/1/2014 | 31.44% | 167,001 | 135,559 |
| 7/1/2014 | 39.23% | 177,971 | 138,740 |
| 8/1/2014 | 31.13% | 167,054 | 135,922 |
| 9/1/2014 | 35.90% | 177,792 | 141,892 |
| 10/1/2014 | 29.38% | 168,321 | 138,944 |
| 11/1/2014 | 26.14% | 168,810 | 142,666 |
| 12/1/2014 | 30.22% | 176,420 | 146,198 |
| 1/1/2015 | 28.17% | 174,306 | 146,140 |
| 2/1/2015 | 20.63% | 162,833 | 142,201 |
| 3/1/2015 | 25.15% | 175,476 | 150,324 |
| 4/1/2015 | 29.95% | 178,565 | 148,612 |
| 5/1/2015 | 37.31% | 186,655 | 149,348 |
| 6/1/2015 | 51.53% | 202,897 | 151,371 |
| 7/1/2015 | 62.69% | 211,437 | 148,743 |
| 8/1/2015 | 40.75% | 192,117 | 151,369 |
| 9/1/2015 | 36.41% | 178,603 | 142,195 |
| 10/1/2015 | 43.12% | 181,175 | 138,052 |
| 11/1/2015 | 69.02% | 217,959 | 148,936 |
| 12/1/2015 | 73.49% | 223,435 | 149,946 |
| 1/1/2016 | 63.33% | 209,514 | 146,186 |
| 2/1/2016 | 49.49% | 187,428 | 137,934 |
| 3/1/2016 | 56.48% | 194,415 | 137,934 |
| 4/1/2016 | 47.34% | 195,770 | 148,430 |
| 5/1/2016 | 46.38% | 194,301 | 147,923 |
| 6/1/2016 | 51.44% | 201,999 | 150,558 |
| 7/1/2016 | 50.41% | 201,092 | 150,680 |
| 8/1/2016 | 52.72% | 207,223 | 154,501 |
| 9/1/2016 | 67.04% | 222,481 | 155,446 |
| 10/1/2016 | 42.98% | 198,563 | 155,582 |
| 11/1/2016 | 41.86% | 195,726 | 153,863 |
| 12/1/2016 | 45.92% | 202,775 | 156,859 |
| 1/1/2017 | 47.19% | 209,503 | 162,313 |
| 2/1/2017 | 47.65% | 212,330 | 164,675 |
| Current | 51.78% | 219,016 | 167,235 |
So going from $100,000 to $219,016 in under 5 years is pretty good. Works out to better than 19% per year. But the smart reader will note I have hit a bit of a wall. I was at $223,435 in December 2015 and am down since then. MFI is not always up, up, up. You can get some really big winners, but you can get some really big losers. I had another big drop from September to October 2016. I remember VEC getting crushed, but there were others. You can read my weekly updates to find out.
Here are my current open tranches (once a quarter I also publish closed tranches).:
| 5/6/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| BRCD | $7.97 | $12.31 | $0.17 | 56.5% | 15.9% |
| CBI | $37.82 | $33.68 | $0.00 | -10.9% | 15.9% |
| HSII | $18.51 | $22.00 | $0.39 | 21.0% | 15.9% |
| RHI | $38.51 | $47.21 | $0.66 | 24.3% | 15.9% |
| UTHR | $107.99 | $164.08 | $0.00 | 51.9% | 15.9% |
| Totals | 28.6% | 15.9% | |||
| 8/15/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| CSCO | $31.20 | $31.51 | $0.26 | 1.8% | 7.6% |
| GNC | $19.79 | $8.52 | $0.38 | -55.0% | 7.6% |
| VLO | $54.73 | $67.47 | $0.60 | 24.4% | 7.6% |
| MSGN | $16.68 | $22.00 | $0.00 | 31.9% | 7.6% |
| GILD | $79.33 | $66.36 | $0.94 | -15.2% | 7.6% |
| Totals | -2.4% | 7.6% | |||
| 11/15/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| MPAA | $26.55 | $27.24 | $0.00 | 2.6% | 7.4% |
| ATHM | $22.61 | $34.09 | $0.00 | 50.8% | 7.4% |
| AMGN | $145.14 | $167.89 | $0.00 | 15.7% | 7.4% |
| RHI | $43.23 | $47.21 | $0.22 | 9.7% | 7.4% |
| CA | $31.11 | $31.77 | $0.00 | 2.1% | 7.4% |
| Totals | 16.2% | 7.4% | |||
| 2/1/2017 | Start | Current | Dividend | Pct Gain | R3K Gain |
| AKRX | $19.10 | $20.49 | $0.00 | 7.3% | 1.8% |
| YY | $41.08 | $44.48 | $0.00 | 8.3% | 1.8% |
| KLAC | $85.11 | $86.64 | $0.00 | 1.8% | 1.8% |
| WNC | $17.65 | $21.36 | $0.00 | 21.0% | 1.8% |
| RGR | $52.75 | $50.15 | $0.00 | -4.9% | 1.8% |
| Totals | 6.7% | 1.8% |
So three of four look pretty good compared to benchmark. For August, GILD had a bad week and GNC continues to be challenged. Then here is a table that shows performance of past tranches and some IRR data:
| Category/Tranche | August | November | February | May | Total |
| Initial Investment | 25,000 | 25,000 | 25,000 | 25,000 | 100,000 |
| Current Tranche | -2.4% | 16.2% | 6.7% | 28.6% | 11.5% |
| Previous Tranche | 2.8% | 8.0% | 10.7% | -25.2% | -2.7% |
| Tranche -2 | 11.2% | 69.4% | -14.3% | 18.3% | 21.2% |
| Tranche -3 | 41.4% | 14.2% | 8.5% | 33.0% | 24.3% |
| Tranche -4 | 14.1% | 43.7% | 78.3% | 0.0% | 34.0% |
| MFI Overall Gain | 80.0% | 249.1% | 95.8% | 51.2% | 119.0% |
| Current Balance | 44,995 | 87,282 | 48,944 | 37,794 | 219,016 |
| R3K Current Tranche | 7.6% | 7.4% | 1.8% | 15.9% | 8.2% |
| R3K Overall Gain | 79.8% | 83.1% | 64.7% | 54.1% | 67.2% |
| R3K Balance | 41,779 | 45,777 | 41,163 | 38,517 | 167,235 |
| Annualized IRR | 14.0% | 34.3% | 18.1% | 11.6% | 19.5% |
My open tranches are up 11.5% versus 8.2% for R3K. That is solid. But you can see the May 2015 tranche was a big loser (down 25.2%). Gad, that is terrible.
| 5/6/2015 | Start | Current | Dividend | Pct Gain | R3K Gain |
| CBI | $50.38 | $38.23 | $0.14 | -23.8% | -0.9% |
| PSDV | $4.12 | $2.87 | $0.00 | -30.4% | -0.9% |
| TSRA | $38.94 | $30.46 | $0.80 | -19.7% | -0.9% |
| KORS | $62.24 | $50.87 | $0.00 | -18.3% | -0.9% |
| DEPO | $23.50 | $15.51 | $0.00 | -34.0% | -0.9% |
| Totals | -25.2% | -0.9% |
Not always up, up, up. Those five stocks are down another 4% since May 2016.
Here is how my stocks did this past week:
| Stock | Last Week | Current | Dividend | Change |
| RHI | 48.61 | 47.21 | - | -2.9% |
| ATHM | 32.01 | 34.09 | - | 6.5% |
| CA | 31.86 | 31.77 | - | -0.3% |
| AMGN | 167.53 | 167.89 | - | 0.2% |
| MPAA | 25.57 | 27.24 | - | 6.5% |
| AKRX | 20.08 | 20.49 | - | 2.0% |
| MSGN | 21.65 | 22.00 | - | 1.6% |
| VLO | 65.51 | 67.47 | - | 3.0% |
| BRCD | 12.51 | 12.31 | - | -1.6% |
| YY | 41.14 | 44.48 | - | 8.1% |
| CSCO | 31.32 | 31.51 | - | 0.6% |
| KLAC | 87.59 | 86.64 | - | -1.1% |
| RGR | 50.05 | 50.15 | - | 0.2% |
| GILD | 72.34 | 66.36 | - | -8.3% |
| CBI | 33.33 | 33.68 | - | 1.1% |
| GNC | 9.02 | 8.52 | - | -5.5% |
| WNC | 21.14 | 21.36 | - | 1.0% |
| Average | 0.7% |
Note this is a straight average and does not consider I have more $ in some stocks than others. My riskier Chinese plays, YY amd ATHM have really helped.
MFI Formula
Here I use a formula to pick my stocks along with a random number generator. My formula is top 34 stocks from $100m screen (by market cap) that pay a dividend of 2.4% or greater. My analysis is that this approach tends to reduce the number of MFI stocks that crash and burn. While this is an effective approach in my back-testing, so far with real money I'd call it a push at best. Here are same series of tables (this approach goes back to September 2014):
| Date | Differential | Value | R3K Value |
| 10/1/2014 | 0.00% | 100,000 | 100,000 |
| 11/1/2014 | 1.63% | 102,288 | 100,658 |
| 12/1/2014 | 0.30% | 101,375 | 101,075 |
| 1/1/2015 | -0.33% | 100,664 | 100,995 |
| 2/1/2015 | 1.67% | 101,281 | 99,611 |
| 3/1/2015 | 3.62% | 106,073 | 102,454 |
| 4/1/2015 | 5.09% | 106,781 | 101,695 |
| 5/1/2015 | 5.78% | 107,859 | 102,077 |
| 6/1/2015 | 5.08% | 108,213 | 103,134 |
| 7/1/2015 | 4.82% | 106,423 | 101,604 |
| 8/1/2015 | 3.71% | 107,112 | 103,404 |
| 9/1/2015 | 4.38% | 101,523 | 97,139 |
| 10/1/2015 | 6.39% | 100,703 | 94,312 |
| 11/1/2015 | 2.93% | 104,835 | 101,907 |
| 12/1/2015 | -3.48% | 99,443 | 102,926 |
| 1/1/2016 | -3.36% | 96,830 | 100,012 |
| 2/1/2016 | -0.72% | 93,797 | 94,367 |
| 3/1/2016 | 4.07% | 98,588 | 94,367 |
| 4/1/2016 | 0.34% | 102,371 | 101,548 |
| 5/1/2016 | -1.91% | 99,774 | 101,200 |
| 6/1/2016 | -0.42% | 103,145 | 103,568 |
| 7/1/2016 | -0.19% | 103,022 | 103,216 |
| 8/1/2016 | 2.56% | 109,419 | 106,857 |
| 9/1/2016 | -0.34% | 106,704 | 107,048 |
| 10/1/2016 | -0.85% | 106,377 | 107,230 |
| 11/1/2016 | 0.42% | 105,421 | 105,003 |
| 12/1/2016 | 1.62% | 110,705 | 109,088 |
| 1/1/2017 | 1.57% | 113,406 | 111,832 |
| 2/1/2017 | 1.32% | 114,809 | 113,486 |
| Current | -1.43% | 114,417 | 115,851 |
| 4/1/16 Stocks | Start | Current | Dividend | Pct Gain | R3K Gain |
| CALM | $51.27 | $39.40 | $0.44 | -22.3% | 15.8% |
| HPQ | $12.10 | $15.72 | $0.38 | 33.0% | 15.8% |
| TIME | $15.24 | $19.00 | $0.57 | 28.4% | 15.8% |
| ILG | $13.85 | $19.19 | $0.36 | 41.1% | 15.8% |
| TSRA | $30.79 | $43.85 | $0.60 | 44.4% | 15.8% |
| Totals | 24.9% | 15.8% | |||
| 7/1/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| ILG | $16.76 | $19.19 | $0.24 | 15.9% | 11.3% |
| VIAB | $44.00 | $43.65 | $0.40 | 0.1% | 11.3% |
| CPLA | $53.22 | $82.85 | $0.80 | 57.2% | 11.3% |
| HRB | $23.62 | $21.05 | $0.44 | -9.0% | 11.3% |
| PBI | $17.69 | $13.19 | $0.38 | -23.3% | 11.3% |
| Totals | 8.2% | 11.3% | |||
| 10/3/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| CPLA | $58.15 | $82.85 | $0.41 | 43.2% | 8.3% |
| LDOS | $43.01 | $50.84 | $0.00 | 18.2% | 8.3% |
| GME | $27.70 | $25.66 | $0.37 | -6.0% | 8.3% |
| PBI | $18.15 | $13.19 | $0.19 | -26.3% | 8.3% |
| CSCO | $31.72 | $31.51 | $0.52 | 1.0% | 8.3% |
| Totals | 6.0% | 8.3% | |||
| 12/30/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| GILD | $71.69 | $66.36 | $0.00 | -7.4% | 3.5% |
| HPQ | $15.00 | $15.72 | $0.00 | 4.8% | 3.5% |
| TGNA | $21.33 | $23.66 | $0.00 | 10.9% | 3.5% |
| CA | $31.99 | $31.77 | $0.00 | -0.7% | 3.5% |
| SYNT | $19.79 | $22.24 | $0.00 | 12.4% | 3.5% |
| Totals | 4.0% | 3.5% |
The keen-eyed reader will note that I do get a fair number of repeats using this method. So PBI (which has struggled) is in July and October tranches. Not that many stocks pass this screen every quarter (say 9-14) and then when you pick five at random, you can get repeats.
| Category/Tranche | October | January | April | July | Total |
| Initial Investment | 249,820 | 249,939 | 250,180 | 249,728 | 999,667 |
| Current Tranche | 6.0% | 4.0% | 24.9% | 8.2% | 9.8% |
| Previous Tranche | 5.5% | 9.3% | -0.2% | -12.5% | 1.3% |
| Tranche -2 | 0.5% | 11.0% | - | - | 2.9% |
| MFI Overall Gain | 12.4% | 26.1% | 24.6% | -5.3% | 14.5% |
| Current Balance | 280,688 | 315,271 | 311,751 | 236,461 | 1,144,170 |
| R3K Current Tranche | 8.3% | 3.5% | 15.8% | 11.3% | 9.7% |
| R3K Overall Gain | 22.4% | 15.7% | 14.5% | 11.0% | 15.9% |
| R3K Balance | 305,679 | 289,150 | 286,460 | 277,212 | 1,158,501 |
| Annualized IRR | 5.0% | 11.6% | 12.5% | -3.3% | 6.4% |
So the 6.4% IRR is not so hot. You might ask, "why are you doing this?". It is a good question. My select approach has been very successful, why not just go all in on it? I have thought hard about that. I guess I know that my Select success has really benefitted from some big winners. I also have back testing that shows the Formula can/should be successful. But I will continue to think about it.
Here are the Formula stocks for the week:
| Stock | Last Week | Current | Dividend | Change |
| CPLA | 85.35 | 82.85 | - | -2.9% |
| HPQ | 15.27 | 15.72 | - | 2.9% |
| ILG | 19.05 | 19.19 | - | 0.7% |
| PBI | 13.18 | 13.19 | - | 0.1% |
| GILD | 72.34 | 66.36 | - | -8.3% |
| CA | 31.86 | 31.77 | - | -0.3% |
| SYNT | 21.30 | 22.24 | - | 4.4% |
| TGNA | 23.46 | 23.66 | - | 0.9% |
| TSRA | 45.75 | 43.85 | - | -4.2% |
| LDOS | 49.69 | 50.84 | - | 2.3% |
| TIME | 19.40 | 19.00 | - | -2.1% |
| CSCO | 31.32 | 31.51 | - | 0.6% |
| GME | 24.74 | 25.66 | - | 3.7% |
| HRB | 21.43 | 21.05 | - | -1.8% |
| CALM | 41.15 | 39.40 | -4.3% | |
| VIAB | 41.90 | 43.65 | 4.2% | |
| Average | -0.2% |
Dividend Portfolio
For those of you just interested in MFI, you may want to stop here. But I am 57 and thinking about creating an income stream for retirement. So I have a dividend portfolio, which has stocks and closed end fund with a focus on long term holds and reinvestment of dividends. It isn't sexy. But it is a way to wealth. Compounding baby! In fact this next week is like the peak week for me and dividends. I have nine securities going x-dividend. Woo-hoo.
| Dividend Stocks | Start | Current | Divvy | Overall Pct Gain | Weekly Pct Gain | 1/1/17 Price | % Chg Since 1/1/17 |
| CSQ | 9.11 | 11.02 | 2.37 | 47.0% | 0.1% | 10.27 | 8.7% |
| AOD | 7.64 | 8.16 | 1.73 | 29.5% | 1.5% | 7.58 | 8.2% |
| SBRA | 22.46 | 25.74 | 0.41 | 16.4% | 0.0% | 24.42 | 5.4% |
| PSXP | 46.95 | 55.87 | 1.09 | 21.3% | -2.1% | 48.64 | 16.0% |
| TGONF | 10.24 | 12.20 | 1.85 | 37.3% | -2.2% | 12.14 | 0.5% |
| JQC | 7.85 | 8.93 | 0.69 | 22.6% | 1.0% | 8.85 | 1.5% |
| PSX | 80.00 | 79.86 | 2.88 | 3.4% | -0.1% | 86.41 | -7.6% |
| DSL | 18.44 | 20.30 | 1.16 | 16.4% | 0.2% | 18.99 | 7.6% |
| GLDI | 10.64 | 9.47 | 0.79 | -3.5% | 0.6% | 8.94 | 6.7% |
| PEO | 20.49 | 20.10 | 0.10 | -1.4% | -0.9% | 20.17 | 0.1% |
| O | 24.30 | 61.28 | 19.64 | 233.0% | 2.4% | 57.48 | 7.0% |
| DHF | 3.19 | 3.42 | 0.06 | 9.0% | 0.0% | 3.36 | 2.8% |
| OIBAX | 5.08 | 5.67 | 2.33 | 57.7% | -0.2% | 5.61 | 1.6% |
| Totals | 26.2% | 4.2% |
The YTD of 4.2% is not too shabby and you can see some solid performances. SBRA wassold last week, so is now just 0% going forward. I intend to replace with MTW within next month or two. But just these names create over $80,000 of annual dividends. So even if I did not add another $ and just reinvested dividends - that would increase to $127,000 by age 65. Compounding baby!
Miscellaneous
I also have a group of miscellaneous holdings. This is the smallest of my 4 portfolios. Too bad this year as it is my best performing. I do not list my holdings and they tend to be more speculative. I have done well in 2017 though with some gold miners holdings and BAC warrants. My initial plan this year was to wind this portfolio down. But I may keep it around same size as I seem to have a few ideas always percolating.
Have a great weekend everyone.
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