Weekend Update - 2/4/17

Weekend Update

Good morning everyone. Listening to

Tower of Power

 this Saturday morning.  Always gets my weekend started right.  How did I not know this band "back in the day"?

It is super bowl weekend, in the event you were unaware.  This Cowboy's fan in New England will be rooting heartily for the Falcons.

As my followers know, this is a blog I have been keeping since 2006 following both my personal (real money) investing in so called Magic Formula Investing from "The Little Book That Beats the Markets" by Joel Greenblatt.  This blog also tracks hypothictical investments (following rules and screens in the book) and I have even created an MFI Index which gets reconstituted once a year.

I have two approaches to MFI, (1) Select and (2) Formula. The first is free form and I have been using since August 2012. The second is formulatic/random and started October 2014.  I actually started in 2006 and did ok, but then started picking too many speculative stocks from the screen and pulled out for a year or so and came back with new and improved approach (which has actually worked well as you will see).

I also will share a little bit about my dividend portfolio and "Misc" portfolio, which really are unrelated to MFI.

Here is a quick table that shows how I am doing so far this year.  Note that this does include some cash (which dampens my returns) as I have planned to increase amount to MFI (and dividends) in 2017.  So this will not tie to my other tables which assume always fully invested.

Component	YTD
Overall	+3.62%
Select	+2.80%
Formula	+1.14%
Miscellaneous	+10.01%
Dividend	+4.11%
R3K	+2.69%
MFI Index	+1.06%

So you can see in total, I have about 100 basis points on index, which is good considering I started year a bit more than 20% cash.  The MFI Index is lagging a bit. Ironically, my non-MFI approaches (Dividend and Miscellaneous) have been the rock stars.  But it is just February 4th. Long way to go.

MFI Select

It was a good week for my Select stocks, up almost 2%. Helped in part by my five new names I bought 1/31 and promptly went up 4.6%.  Here are all my Select stocks and how they did during the week. Note the average is a straight average and does not consider my $ in each stock varies:

Stock	Last Week	Current	Dividend	Change
RHI	46.30	48.61	-	5.0%
ATHM	31.09	32.01	-	3.0%
CA	31.13	31.86	-	2.3%
AMGN	157.16	167.53	-	6.6%
MPAA	27.01	25.57	-	-5.3%
AKRX	19.10	20.08	-	5.1%
MSGN	22.35	21.65	-	-3.1%
VLO	67.31	65.51	-	-2.7%
BRCD	12.48	12.51	-	0.2%
YY	41.08	41.14	-	0.1%
CSCO	30.98	31.32	-	1.1%
KLAC	85.11	87.59	-	2.9%
RGR	52.75	50.05	-	-5.1%
GILD	71.26	72.34	-	1.5%
CBI	33.85	33.33		-1.5%
GNC	8.83	9.02		2.2%
WNC	17.65	21.14		19.8%
Average				1.9%

WNC and AMGN were strong.

Here are all 4 of my open tranches:

5/6/2016	Start	Current	Dividend	Pct Gain	R3K Gain
BRCD	$7.97	$12.51	$0.17	59.0%	14.9%
CBI	$37.82	$33.33	$0.00	-11.9%	14.9%
HSII	$18.51	$22.35	$0.39	22.9%	14.9%
RHI	$38.51	$48.61	$0.66	27.9%	14.9%
UTHR	$107.99	$163.68	$0.00	51.6%	14.9%
Totals				29.9%	14.9%
8/15/2016	Start	Current	Dividend	Pct Gain	R3K Gain
CSCO	$31.20	$31.32	$0.26	1.2%	6.7%
GNC	$19.79	$9.02	$0.38	-52.5%	6.7%
VLO	$54.73	$65.51	$0.60	20.8%	6.7%
MSGN	$16.68	$21.65	$0.00	29.8%	6.7%
GILD	$79.33	$72.34	$0.94	-7.6%	6.7%
Totals				-1.7%	6.7%
11/15/2016	Start	Current	Dividend	Pct Gain	R3K Gain
MPAA	$26.55	$25.57	$0.00	-3.7%	6.5%
ATHM	$22.61	$32.01	$0.00	41.6%	6.5%
AMGN	$145.14	$167.53	$0.00	15.4%	6.5%
RHI	$43.23	$48.61	$0.22	13.0%	6.5%
CA	$31.11	$31.86	$0.00	2.4%	6.5%
Totals				13.7%	6.5%
2/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
AKRX	$19.10	$20.08	$0.00	5.1%	0.9%
YY	$41.08	$41.14	$0.00	0.1%	0.9%
KLAC	$85.11	$87.59	$0.00	2.9%	0.9%
WNC	$17.65	$21.14	$0.00	19.8%	0.9%
RGR	$52.75	$50.05	$0.00	-5.1%	0.9%
Totals				4.6%	0.9%

So now that I closed  the 2/1/16 tranche, looking pretty strong except for May.  Here is table showing tranches and returns over time:

Category/Tranche	August	November	February	May	Total
Initial Investment	25,000	25,000	25,000	25,000	100,000
Current Tranche	-1.7%	13.7%	4.6%	29.9%	10.5%
Previous Tranche	2.8%	8.0%	10.7%	-25.2%	30.4%
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	81.4%	241.8%	91.9%	52.8%	117.0%
Current Balance	45,343	85,448	47,972	38,190	216,953
R3K Current Tranche	6.7%	6.5%	0.9%	14.9%	7.2%
R3K Overall Gain	78.2%	81.5%	63.2%	52.7%	66.1%
R3K Balance	41,779	45,370	40,796	38,177	166,122
Annualized IRR	14.2%	33.8%	17.6%	11.9%	19.4%

So you can look at November (which has been my best series of tranches) is up 241.8% since 11/15/12. That works out to 33.8% per year. Not bad.  Overall, this approach is tracking at a very snappy 19.4% return per year.  Here is a table showing month by month (assuming we started at 100,000 spread over 4 tranches):

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	50.83%	216,953	166,122

So here you can see I am up 3.6% for the year (better than the 2.8% in initial table as this one does not have cash drag).

MFI Formula

This approach is by formula.  I screen to 50 stocks > 100m.  I then take top 2/3 market caps that have a dividend yield of at least 2.4% and pick randomly from that list (usually about 10 names).  While backtesting shows this approach would do very well, it has only been "meh" since I started with real money in October 2014.  Here are same series of tables.

Stock	Last Week	Current	Dividend	Change
CPLA	85.40	85.35	-	-0.1%
HPQ	14.80	15.27	-	3.2%
ILG	18.74	19.05	-	1.7%
PBI	15.87	13.18	-	-17.0%
GILD	71.26	72.34	-	1.5%
CA	31.13	31.86	-	2.3%
SYNT	21.09	21.30	-	1.0%
TGNA	22.69	23.46	-	3.4%
TSRA	45.80	45.75	-	-0.1%
LDOS	49.55	49.69	-	0.3%
TIME	19.35	19.40	-	0.3%
CSCO	30.98	31.32	-	1.1%
GME	24.31	24.74	-	1.8%
HRB	22.19	21.43	-	-3.4%
CALM	41.40	41.15		-0.6%
VIAB	41.97	41.90		-0.2%
Average				-0.3%

This week was crushed by PBI, down 17% on earnings/guidance.  As I preach here, MFI stocks are much more volatile than "normal" stocks and avoiding stinkers is key.

4/1/16 Stocks	Start	Current	Dividend	Pct Gain	R3K Gain
CALM	$51.27	$41.15	$0.44	-18.9%	14.7%
HPQ	$12.10	$15.27	$0.38	29.3%	14.7%
TIME	$15.24	$19.40	$0.57	31.0%	14.7%
ILG	$13.85	$19.05	$0.36	40.1%	14.7%
TSRA	$30.79	$45.75	$0.60	50.6%	14.7%
Totals				26.4%	14.7%
7/1/2016	Start	Current	Dividend	Pct Gain	R3K Gain
ILG	$16.76	$19.05	$0.24	15.1%	10.3%
VIAB	$44.00	$41.90	$0.40	-3.9%	10.3%
CPLA	$53.22	$85.35	$0.80	61.9%	10.3%
HRB	$23.62	$21.43	$0.44	-7.4%	10.3%
PBI	$17.69	$13.18	$0.38	-23.4%	10.3%
Totals				8.5%	10.3%
10/3/2016	Start	Current	Dividend	Pct Gain	R3K Gain
CPLA	$58.15	$85.35	$0.41	47.5%	7.4%
LDOS	$43.01	$49.69	$0.00	15.5%	7.4%
GME	$27.70	$24.74	$0.37	-9.4%	7.4%
PBI	$18.15	$13.18	$0.19	-26.3%	7.4%
CSCO	$31.72	$31.32	$0.52	0.4%	7.4%
Totals				5.5%	7.4%
12/30/2016	Start	Current	Dividend	Pct Gain	R3K Gain
GILD	$71.69	$72.34	$0.00	0.9%	2.6%
HPQ	$15.00	$15.27	$0.00	1.8%	2.6%
TGNA	$21.33	$23.46	$0.00	10.0%	2.6%
CA	$31.99	$31.86	$0.00	-0.4%	2.6%
SYNT	$19.79	$21.30	$0.00	7.6%	2.6%
Totals				4.0%	2.6%
Category/Tranche	October	January	April	July	Total
Initial Investment	249,820	249,939	250,180	249,728	999,667
Current Tranche	5.5%	4.0%	26.4%	8.5%	10.1%
Previous Tranche	5.5%	9.3%	-0.2%	-12.5%	1.3%
Tranche -2	0.5%	11.0%	-	-	2.9%
MFI Overall Gain	11.9%	26.1%	26.1%	-5.1%	14.8%
Current Balance	279,443	315,247	315,485	237,089	1,147,264
R3K Current Tranche	7.4%	2.6%	14.7%	10.3%	8.8%
R3K Overall Gain	21.3%	14.7%	13.5%	10.0%	14.9%
R3K Balance	302,963	286,569	283,936	274,758	1,148,227
Annualized IRR	4.9%	11.7%	13.3%	-3.2%	6.7%

So even with PBI debacle, you can see my current tranches are up 10.1% versus 8.8% for R3K.  But overall, it is a virtual push (14.8% v 14.9%).

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	-0.10%	114,726	114,823

Dividend Stocks

I did sell SBRA on Friday.  It was up over 16% and I have convinced myself that MPW is better in that space.  I will wait to see if I can get a better entry point.

Dividend Stocks	Start	Current	Divvy	Overall Pct Gain	Weekly Pct Gain	1/1/17 Price	% Chg Since 1/1/17
CSQ	9.11	11.01	2.29	46.0%	2.3%	10.27	7.8%
AOD	7.64	8.04	1.73	27.9%	1.6%	7.58	6.6%
SBRA	22.46	25.74	0.41	16.4%	0.3%	24.42	5.4%
PSXP	46.95	57.06	1.09	23.9%	1.6%	48.64	18.5%
TGONF	10.24	12.47	1.85	39.9%	-0.2%	12.14	2.7%
JQC	7.85	8.84	0.69	21.5%	1.1%	8.85	0.4%
PSX	80.00	79.95	2.88	3.5%	-3.4%	86.41	-7.5%
DSL	18.44	20.25	1.16	16.1%	3.4%	18.99	7.4%
GLDI	10.64	9.41	0.79	-4.1%	1.9%	8.94	6.0%
PEO	20.49	20.29	-	-1.0%	-0.6%	20.17	0.6%
O	24.30	59.82	19.64	227.0%	0.6%	57.48	4.4%
DHF	3.19	3.42	0.04	8.2%	-0.3%	3.36	2.0%
OIBAX	5.08	5.68	2.33	57.9%	0.5%	5.61	1.8%
Totals				25.9%			4.1%

Obviously PSXP is the high-flyer so far this year. I think part of that is the Dakota pipeline, which I think is part of joint venture.  Some controversy there.  DSL, CSQ and AOD have all been very strong as well and recall these stocks are listed in size order.

Miscellaneous

I do not talk about these stocks much here, but they had an insanely good week (up 2.7%).  I have been allocating some to covered call plays on gold mining ETFs. It is highly volatile but has been extraordinarily profitable so far this year (up 59%).  Also my BAC Warrants, my single largest position is up 10% this year (and SPCB is up 12%).