Another week zips by. You have found your way to the MFI Diary. This is my blog where I discuss many things related to "The Little Book That Beats the Market" by Joel Greenblatt. I have been writing this blog since early 2006 and have tracked my performance with real money and tracking portfolios based on the official Magic Formula Investing (MFI) website. I also have created an MFI Index, which is fifty MFI stocks and is reconstituted once a year.
At least I had a good laugh yesterday when I saw Trump blame the Democrats for the AHCA not passing the house yesterday
(President Trump Blames Lack of Democrat Support for Failure of AHCA).
You just can't make this stuff up. Instead he should think about the line from Hamilton, "Winning is easy, Governing is hard." I know it is sacrilegious, but we would do a lot better if the two major parties worked together and found compromises both don't like but could live with. Someday...
Ok, back to MFI.
I should mention that I am just a guy with a spreadsheet. Not a CFA, not an expert... just a guy. So please use what I write for information, but do your own diligence in making stock decisions.
So welcome!
The Past Week
Well, we finally had a day where the market dopped more than 1%. First time in like 4 months. It definitely hurt as I lost well more than 1%. But one really can't be surprised. I continue to underperform the benchmarks so far in 2017... it is a bit frustrating, but I am not unhappy. Here are how all the components are faring:
| Component | YTD |
| Overall | +2.97% |
| Select | +4.53% |
| Formula | +0.62% |
| Miscellaneous | +3.98% |
| Dividend | +3.37% |
| R3K | +4.20% |
| MFI Index | -2.83% |
I say this caveat all the time, but keep in mind that these portfolios have a cash component (as I do plan on plowing in more money in 2017 should the market ever drop). So the percentages here may not match what you see further on as I often show those returns assuming zero cash. (As I pointed out midweek in Falling (not so) Slowly - the MFI Index is really struggling in 2017. Down 2.8%. My Select approach continues to be solid, while my Formula approach struggles (not helped by GME as we shall see). My Miscellaeous took a hige tumble. I had mentioned that this was a riskier approach and that showed in a bumpy week. My BAC warrants are easily my single largest holding and they went from $12.61 to $10.79 in a week. Ouch.
MFI Select
I have two groups of MFI stocks with real money. The first (and oldest) is MFI Select. This is 4 baskets of 5 stocks that I buy and hold for a year. I have been doing this since my reboot in August 2012.
This approach has done very well for me. Note I am trying to avoid stocks that are on the screen, but in my view are not a true Jake's Bubble Gum Shop (ie a one hit wonder). To be fair, I have also had several stocks that did very well..
Here is my month by month performance, assuming I put in $100,000 spread over the 4 baskets evenly:
| 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 |
| 3/1/2017 | 52.99% | 222,583 | 169,589 |
| Current | 52.72% | 220,666 | 167,941 |
It was a tough week. Here are the individual stock movements:
| Stock | Last Week | Current | Dividend | Change |
| RHI | 49.54 | 48.19 | - | -2.7% |
| ATHM | 33.26 | 31.90 | - | -4.1% |
| CA | 32.43 | 31.86 | - | -1.8% |
| AMGN | 168.61 | 165.74 | - | -1.7% |
| MPAA | 27.98 | 28.01 | - | 0.1% |
| AKRX | 22.32 | 22.75 | - | 1.9% |
| MSGN | 23.05 | 22.50 | - | -2.4% |
| VLO | 68.90 | 65.78 | - | -4.5% |
| BRCD | 12.47 | 12.52 | - | 0.4% |
| YY | 51.01 | 46.30 | - | -9.2% |
| CSCO | 34.23 | 34.08 | - | -0.4% |
| KLAC | 94.69 | 95.72 | - | 1.1% |
| RGR | 53.55 | 51.90 | - | -3.1% |
| GILD | 69.06 | 67.51 | - | -2.2% |
| CBI | 29.76 | 28.83 | - | -3.1% |
| GNC | 7.40 | 7.00 | - | -5.4% |
| WNC | 21.14 | 20.48 | - | -3.1% |
| Average | -2.4% |
You can see my two Chinese names, ATHM and YY got hit pretty hard.
Here are the 4 tranches:
| 5/6/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| BRCD | $7.97 | $12.52 | $0.17 | 59.2% | 16.5% |
| CBI | $37.82 | $28.83 | $0.00 | -23.8% | 16.5% |
| HSII | $18.51 | $25.50 | $0.39 | 39.9% | 16.5% |
| RHI | $38.51 | $48.19 | $0.90 | 27.5% | 16.5% |
| UTHR | $107.99 | $140.05 | $0.00 | 29.7% | 16.5% |
| Totals | 26.5% | 16.5% | |||
| 8/15/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| CSCO | $31.20 | $34.08 | $0.26 | 10.1% | 8.2% |
| GNC | $19.79 | $7.00 | $0.38 | -62.7% | 8.2% |
| VLO | $54.73 | $65.78 | $1.30 | 22.6% | 8.2% |
| MSGN | $16.68 | $22.50 | $0.00 | 34.9% | 8.2% |
| GILD | $79.33 | $67.51 | $1.46 | -13.1% | 8.2% |
| Totals | -1.6% | 8.2% | |||
| 11/15/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| MPAA | $26.55 | $28.01 | $0.00 | 5.5% | 8.1% |
| ATHM | $22.61 | $31.90 | $0.00 | 41.1% | 8.1% |
| AMGN | $145.14 | $165.74 | $1.00 | 14.9% | 8.1% |
| RHI | $43.23 | $48.19 | $0.46 | 12.5% | 8.1% |
| CA | $31.11 | $31.86 | $0.26 | 3.2% | 8.1% |
| Totals | 15.4% | 8.1% | |||
| 2/1/2017 | Start | Current | Dividend | Pct Gain | R3K Gain |
| AKRX | $19.10 | $22.75 | $0.00 | 19.1% | 2.4% |
| YY | $41.08 | $46.30 | $0.00 | 12.7% | 2.4% |
| KLAC | $85.11 | $95.72 | $0.54 | 13.1% | 2.4% |
| WNC | $17.65 | $20.48 | $0.00 | 16.0% | 2.4% |
| RGR | $52.75 | $51.90 | $0.44 | -0.8% | 2.4% |
| Totals | 12.0% | 2.4% |
All-in-all pretty darned good. Even satisfactory as Greenblatt might say. Just that one stinker, GNC.
| Category/Tranche | August | November | February | May | Total |
| Initial Investment | 25,000 | 25,000 | 25,000 | 25,000 | 100,000 |
| Current Tranche | -1.6% | 15.4% | 12.0% | 26.5% | 12.6% |
| Previous Tranche | 2.8% | 8.0% | 10.7% | -25.2% | -2.9% |
| 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% | 246.9% | 105.6% | 48.7% | 120.7% |
| Current Balance | 45,350 | 86,734 | 51,397 | 37,185 | 220,666 |
| R3K Current Tranche | 8.2% | 8.1% | 2.4% | 16.5% | 8.8% |
| R3K Overall Gain | 80.8% | 84.1% | 65.6% | 54.9% | 67.9% |
| R3K Balance | 41,779 | 46,035 | 41,396 | 38,732 | 167,941 |
| Annualized IRR | 13.8% | 33.0% | 19.0% | 10.7% | 19.1% |
Still clocking an annualized IRR of over 19%. Current open tranches leading by almost 4 points.
MFI Formula
These are stocks picked by formula rather than my selecting. Formula is based on my backtesting - stocks have to have yield of 2.4% or greater and be in upper 2/3 in market cap. I then randomly select 5 names. I will be retiring a tranche in a weeks (4/1) and starting a new one. I have been also planning to dedicate more $, but I am starting to re-think that. Not so much that I do not believe in MFI Formula... rather the whole market seems extended.
Same tables.
| 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 |
| 3/1/2017 | -5.09% | 112,930 | 118,024 |
| Current | -2.88% | 113,624 | 116,503 |
| Stock | Last Week | Current | Dividend | Change |
| CPLA | 82.25 | 82.20 | - | -0.1% |
| HPQ | 17.56 | 17.23 | - | -1.9% |
| ILG | 19.26 | 19.37 | - | 0.6% |
| PBI | 12.84 | 12.54 | - | -2.3% |
| GILD | 69.06 | 67.51 | - | -2.2% |
| CA | 32.43 | 31.86 | - | -1.8% |
| SYNT | 17.64 | 16.38 | - | -7.1% |
| TGNA | 26.07 | 25.53 | - | -2.1% |
| XPER | 35.80 | 37.25 | - | 4.1% |
| LDOS | 53.95 | 52.62 | - | -2.5% |
| TIME | 19.15 | 19.35 | - | 1.0% |
| CSCO | 34.23 | 34.08 | - | -0.4% |
| GME | 24.64 | 20.70 | - | -16.0% |
| HRB | 24.45 | 22.42 | - | -8.3% |
| CALM | 38.50 | 37.35 | -3.0% | |
| VIAB | 43.40 | 43.06 | -0.8% | |
| Average | -2.7% |
You can see the GME implosion. I am so fed up with retail, but am committed to following Formula on this part of my investing (check emotions at the door). But here are my thoughts about retail recently (MFI Diary: Clearance Bin).
| 4/1/16 Stocks | Start | Current | Dividend | Pct Gain | R3K Gain |
| CALM | $51.27 | $37.35 | $0.44 | -26.3% | 16.4% |
| HPQ | $12.10 | $17.23 | $0.51 | 46.5% | 16.4% |
| TIME | $15.24 | $19.35 | $0.76 | 31.9% | 16.4% |
| ILG | $13.85 | $19.37 | $0.51 | 43.5% | 16.4% |
| XPER | $30.79 | $37.25 | $0.80 | 23.6% | 16.4% |
| Totals | 23.9% | 16.4% | |||
| 7/1/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| ILG | $16.76 | $19.37 | $0.39 | 17.9% | 11.9% |
| VIAB | $44.00 | $43.06 | $0.60 | -0.8% | 11.9% |
| CPLA | $53.22 | $82.20 | $1.21 | 56.7% | 11.9% |
| HRB | $23.62 | $22.42 | $0.66 | -2.3% | 11.9% |
| PBI | $17.69 | $12.54 | $0.56 | -25.9% | 11.9% |
| Totals | 9.1% | 11.9% | |||
| 10/3/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| CPLA | $58.15 | $82.20 | $0.82 | 42.8% | 9.0% |
| LDOS | $43.01 | $52.62 | $0.00 | 22.3% | 9.0% |
| GME | $27.70 | $20.70 | $0.75 | -22.6% | 9.0% |
| PBI | $18.15 | $12.54 | $0.38 | -28.8% | 9.0% |
| CSCO | $31.72 | $34.08 | $0.52 | 9.1% | 9.0% |
| Totals | 4.6% | 9.0% | |||
| 12/30/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| GILD | $71.69 | $67.51 | $0.52 | -5.1% | 4.1% |
| HPQ | $15.00 | $17.23 | $0.13 | 15.8% | 4.1% |
| TGNA | $21.33 | $25.53 | $0.14 | 20.3% | 4.1% |
| CA | $31.99 | $31.86 | $0.26 | 0.4% | 4.1% |
| SYNT | $19.79 | $16.38 | $0.00 | -17.2% | 4.1% |
| Totals | 2.8% | 4.1% |
As mentioned, just a week left on the 4/1 tranche - which looks like a nice winner (only one of the 4 leading). Some logistics. I will sell CALM this week. The other four I will sell April 3rd. I will buy 5 new names April 3rd. In my tables (below), the April 2016 tranche will move from Current to "Previous". And the April 2017 tranche will become current. It is actually a fair amount of effort switching over.
| Category/Tranche | October | January | April | July | Total |
| Initial Investment | 249,820 | 249,939 | 250,180 | 249,728 | 999,667 |
| Current Tranche | 4.6% | 2.8% | 23.9% | 9.1% | 9.1% |
| Previous Tranche | 5.5% | 9.3% | -0.2% | -12.5% | 1.3% |
| Tranche -2 | 0.5% | 11.0% | - | - | 2.9% |
| MFI Overall Gain | 10.8% | 24.7% | 23.6% | -4.5% | 13.7% |
| Current Balance | 276,846 | 311,751 | 309,110 | 238,537 | 1,136,244 |
| R3K Current Tranche | 9.0% | 4.1% | 16.4% | 11.9% | 10.3% |
| R3K Overall Gain | 23.0% | 16.3% | 15.1% | 11.6% | 16.5% |
| R3K Balance | 307,401 | 290,787 | 288,061 | 278,768 | 1,165,017 |
| Annualized IRR | 4.2% | 10.4% | 11.2% | -2.6% | 5.8% |
Dividend Portfolio
Those who only care about MFI can stop here. I do have a dividend portfolio as I approach retirement and want to create an income stream for my "golden" years. So not sexy, but real investing. Most dividends get plowed back in. I have sold a couple names this year - I am nervous about impact of interest rate hikes here and want to keep some proverbial dry powder.
| Dividend Stocks | Start | Current | Divvy | Overall Pct Gain | Weekly Pct Gain | 1/1/17 Price | % Chg Since 1/1/17 |
| CSQ | 9.14 | 10.96 | 2.42 | 46.4% | -1.4% | 10.27 | 8.6% |
| AOD | 7.64 | 8.15 | 1.83 | 30.6% | -1.5% | 7.58 | 9.4% |
| SBRA | 22.46 | 25.74 | 0.41 | 16.4% | 0.0% | 24.42 | 5.4% |
| PSXP | 47.04 | 50.23 | 1.08 | 9.1% | -1.3% | 48.64 | 4.4% |
| TGONF | 10.24 | 12.33 | 2.02 | 40.2% | 0.1% | 12.14 | 3.0% |
| JQC | 7.85 | 8.75 | 0.79 | 21.5% | -1.4% | 8.85 | 0.5% |
| PSX | 80.00 | 78.90 | 3.51 | 3.0% | 0.0% | 86.41 | -8.0% |
| DSL | 18.45 | 19.78 | 1.45 | 15.0% | 0.1% | 18.99 | 6.4% |
| GLDI | 10.63 | 9.40 | 0.86 | -3.5% | 0.0% | 8.94 | 6.7% |
| PEO | 20.49 | 18.98 | 0.10 | -6.9% | -1.7% | 20.17 | -5.4% |
| O | 24.55 | 59.46 | 19.71 | 222.5% | -0.7% | 57.48 | 3.9% |
| DHF | 3.19 | 3.36 | 0.09 | 8.0% | 0.3% | 3.36 | 1.8% |
| OIBAX | 5.08 | 5.75 | 2.34 | 59.4% | 0.5% | 5.61 | 3.3% |
| Totals | 25.0% | 3.4% |
I am thrilled with the 3.4% gain so far. Again, this is a steady eddy type of portfolio.
Miscellaneous
This continues to be a volatile (and smallest) component. It dropped a lot this week - mostly due to BAC warrants dropping like 20%. But those are a very long term investment (I have since 2012) and I may use this dip as a buying opportunity. I do have some options in here and have been buying a bit of biotech (a basket approach) and some M&A arbitrage. Again, I do not go into detail as I am not comfortable if people follow me.
Have a great weekend.
Posts
No comments:
Post a Comment