Greetings from Eden Roc - Miami Beach. Just disembarked from a 7 day Western Caribbean cruise. Hopefully I did not gain too much weight. I probably enjoyed Roatan Island off Honduras the most.
You have found your way to the MFI Diary, a blog where I let readers know my thoughts and performance on real life, real dollar Magic Formula Portfolios (based of course on "The Little Book The Beats The Market" by Joel Greenblatt. I also spend some effort tracking hypothetical portfolios based on downloads from the official website going back to January 2006.
Of course, I have to have a disclaimer - I am just a guy with a spreadsheet and not a stock advisor. You should do your own due diligence before acting on anything you read here.
Past Week
Overall I was up a bit on the week, although my magic formula portfolios did struggle.
| Component | YTD |
| Overall | +9.37% |
| Select | +12.31% |
| Formula | +7.68% |
| Miscellaneous | -2.94% |
| Dividend | +13.22% |
| R3K | +10.86% |
| MFI Index | +1.75% |
So year to date, I am up 9.4%. And given that I am trying to be "safe" with a decent cash component, I am happy. Interestingly, my Dividend portfolio has done the best - really helped by TK being up about 85%. Overall MFI Index is really struggling, so I am actually satisfied with my MFI results. I have not show MFI Index results back to 2006 for a while, so here they are:
| Annual | Inception to Date | |||
| Year | Russell | MFI | Russell ITD | MFI ITD |
| 2006 | 11.40% | 15.03% | 11.40% | 15.03% |
| 2007 | 4.09% | -6.69% | 15.96% | 7.34% |
| 2008 | -37.05% | -37.97% | -27.00% | -33.42% |
| 2009 | 32.51% | 45.18% | -3.27% | -3.34% |
| 2010 | 18.38% | 22.77% | 14.50% | 18.67% |
| 2011 | -0.56% | -10.47% | 13.87% | 6.25% |
| 2012 | 16.43% | 9.70% | 32.57% | 16.56% |
| 2013 | 33.01% | 51.70% | 76.34% | 76.82% |
| 2014 | 12.26% | 12.07% | 97.95% | 98.15% |
| 2015 | 0.38% | -8.95% | 98.33% | 89.37% |
| 2016 | 12.50% | 13.19% | 110.62% | 101.16% |
| 2017 | 10.86% | 1.75% | 122.64% | 102.93% |
You can see it is a struggle and in 11 years we are losing by about 22 percentage points.
Here are how my MFI stocks did for the week:
| Portfolio | Stock | Last Week | Current | Dividend | Change |
| Formula | SYNT | 19.40 | 19.73 | - | 1.7% |
| Formula | CSCO | 31.84 | 31.52 | - | -1.0% |
| Formula | HPQ | 19.15 | 19.17 | - | 0.1% |
| Formula | GILD | 73.76 | 75.94 | - | 3.0% |
| Formula | GME | 20.78 | 21.50 | - | 3.5% |
| Formula | CA | 34.42 | 30.94 | - | -10.1% |
| Formula | TGNA | 22.72 | 23.45 | - | 3.2% |
| Formula | OMC | 82.73 | 78.90 | - | -4.6% |
| Formula | CPLA | 87.95 | 70.10 | - | -20.3% |
| Formula | BKE | 16.75 | 16.85 | - | 0.6% |
| Formula | RGR | 57.45 | 56.90 | - | -1.0% |
| Formula | LDOS | 53.44 | 53.60 | - | 0.3% |
| Formula | PBI | 15.53 | 15.48 | - | -0.3% |
On the formula side, pretty tough sledding. CPLA earnings disappointed - I was lucky to sell one of my two positions July 8th! Then CA talks with BMC seem to be cooling off. Their drop in price to 30.94 seems overdone to me.
| Portfolio | Stock | Last Week | Current | Dividend | Change |
| Select | ATHM | 47.60 | 48.71 | - | 2.3% |
| Select | MSGN | 21.15 | 21.85 | - | 3.3% |
| Select | AKRX | 33.60 | 33.63 | - | 0.1% |
| Select | YY | 67.59 | 71.64 | - | 6.0% |
| Select | AMGN | 180.21 | 174.54 | - | -3.1% |
| Select | RHI | 48.42 | 44.82 | - | -7.4% |
| Select | CA | 34.42 | 30.94 | - | -10.1% |
| Select | MPAA | 27.68 | 27.73 | - | 0.2% |
| Select | WNC | 22.68 | 19.03 | - | -16.1% |
| Select | QCOM | 53.84 | 52.88 | - | -1.8% |
| Select | KLAC | 99.89 | 94.40 | - | -5.5% |
| Select | RGR | 57.45 | 56.90 | - | -1.0% |
| Select | WSTC | 23.32 | 23.35 | - | 0.1% |
| Select | TGNA | 22.72 | 23.45 | - | 3.2% |
| Select | TIME | 13.85 | 14.50 | - | 4.7% |
| Select | VLO | 67.78 | 66.69 | - | -1.6% |
| Select | CSCO | 31.84 | 31.52 | - | -1.0% |
| Select | GILD | 73.76 | 75.94 | 3.0% | |
| Select | GNC | 8.89 | 10.17 | 14.4% |
On the Select side, CA got the same whacking. GNC was GREAT, but it is my smallest position of all (recall these are descending order). WNC also had poor earnings (as did KLAC and RHI), so I am taking a few hits while cruising. Oh well.
MFI Select
As the name suggests, this is my MFI portfolio where I allow myself free reign to pick whatever "value" stocks I want. It can be from the official website screens or from my own workbook where I create a top 200 at least once a month. I rebooted this approach in August 2012 (I licked my wounds in August 2011 when I stopped for a year and re-considered my strategy/approach).
Here is how MFI Select has down month by month (assuming I began with $100,000):
| 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 | 45.60% | 209,503 | 163,936 |
| 2/1/2017 | 45.20% | 212,330 | 167,146 |
| 3/1/2017 | 48.80% | 222,583 | 173,829 |
| 4/1/2017 | 55.70% | 229,473 | 173,735 |
| 5/1/2017 | 55.80% | 231,497 | 175,712 |
| 6/1/2017 | 53.40% | 230,599 | 177,203 |
| 7/1/2017 | 60.28% | 239,060 | 178,782 |
| Current | 58.03% | 240,306 | 182,274 |
Here are the four tranches, just a couple weeks to go on August 15th.
| 8/15/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| CSCO | $31.20 | $31.52 | $1.10 | 4.6% | 15.1% |
| GNC | $19.79 | $10.17 | $0.38 | -46.7% | 15.1% |
| VLO | $54.73 | $66.69 | $2.00 | 25.5% | 15.1% |
| MSGN | $16.68 | $21.85 | $0.00 | 31.0% | 15.1% |
| GILD | $79.33 | $75.94 | $1.98 | -1.8% | 15.1% |
| Totals | 2.5% | 15.1% | |||
| 11/15/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| MPAA | $26.55 | $27.73 | $0.00 | 4.4% | 14.9% |
| ATHM | $22.61 | $48.71 | $0.00 | 115.4% | 14.9% |
| AMGN | $145.14 | $174.54 | $2.00 | 21.6% | 14.9% |
| RHI | $43.23 | $44.82 | $0.70 | 5.3% | 14.9% |
| CA | $31.11 | $30.94 | $0.51 | 1.1% | 14.9% |
| Totals | 29.6% | 14.9% | |||
| 2/1/2017 | Start | Current | Dividend | Pct Gain | R3K Gain |
| AKRX | $19.10 | $33.63 | $0.00 | 76.1% | 8.9% |
| YY | $41.08 | $71.64 | $0.00 | 74.4% | 8.9% |
| KLAC | $85.11 | $94.40 | $1.08 | 12.2% | 8.9% |
| WNC | $17.65 | $19.03 | $0.06 | 8.2% | 8.9% |
| RGR | $52.75 | $56.90 | $0.92 | 9.6% | 8.9% |
| Totals | 36.1% | 8.9% | |||
| 5/6/2017 | Start | Current | Dividend | Pct Gain | R3K Gain |
| WSTC | $24.15 | $23.35 | $0.00 | -3.3% | 3.3% |
| TGNA | $25.75 | $23.45 | $0.07 | -8.7% | 3.3% |
| TIME | $15.05 | $14.50 | $0.04 | -3.4% | 3.3% |
| MSGN | $23.55 | $21.85 | $0.00 | -7.2% | 3.3% |
| QCOM | $54.93 | $52.88 | $0.57 | -2.7% | 3.3% |
| Totals | -5.1% | 3.3% |
You can see GNC is still down 46% despite the big week. ATHM and YY continue to soar. May is a mess. Five bad picks... but at least no stinkers (yet).
| Category/Tranche | August | November | February | May | Total |
| Initial Investment | 25,000 | 25,000 | 25,000 | 25,000 | 100,000 |
| Current Tranche | 2.5% | 29.6% | 36.1% | -5.1% | 16.7% |
| Previous Tranche | 2.8% | 8.0% | 10.7% | 19.1% | 8.9% |
| Tranche -2 | 11.2% | 69.4% | -14.3% | -25.2% | 10.3% |
| Tranche -3 | 41.4% | 14.2% | 8.5% | 18.3% | 20.6% |
| Tranche -4 | 14.1% | 43.7% | 78.3% | 33.0% | 42.3% |
| MFI Overall Gain | 89.1% | 289.4% | 149.7% | 33.0% | 140.3% |
| Current Balance | 47,271 | 97,353 | 62,429 | 33,253 | 240,306 |
| R3K Current Tranche | 15.1% | 14.9% | 8.9% | 3.3% | 10.5% |
| R3K Overall Gain | 92.3% | 95.8% | 76.2% | 64.8% | 82.3% |
| R3K Balance | 48,075 | 48,961 | 44,041 | 41,196 | 182,274 |
| Annualized IRR | 13.7% | 33.5% | 22.6% | 7.0% | 19.2% |
Still above 19% per year!.
MFI Formula
Here I also have 4 tranches of 5 stocks. But these are picked by formula and random number generator. I have been using this approach since October 2014. It has been lukewarm in success thus far - although it has worked very well in my backtesting.
| 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 |
| 4/1/2017 | -1.86% | 116,227 | 118,091 |
| 5/1/2017 | 1.11% | 120,403 | 119,296 |
| 6/1/2017 | -2.65% | 117,824 | 120,472 |
| 7/1/2017 | -2.40% | 119,144 | 121,545 |
| Current | -1.75% | 122,154 | 123,904 |
| 10/3/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| CPLA | $58.15 | $70.10 | $1.23 | 22.7% | 15.9% |
| LDOS | $43.01 | $53.60 | $0.96 | 26.9% | 15.9% |
| GME | $27.70 | $21.50 | $1.13 | -18.3% | 15.9% |
| PBI | $18.15 | $15.48 | $0.56 | -11.6% | 15.9% |
| CSCO | $31.72 | $31.52 | $1.10 | 2.8% | 15.9% |
| Totals | 4.5% | 15.9% | |||
| 12/30/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| GILD | $71.69 | $75.94 | $1.04 | 7.4% | 10.7% |
| HPQ | $15.00 | $19.17 | $0.40 | 30.5% | 10.7% |
| TGNA | $21.33 | $23.45 | $0.21 | 10.9% | 10.7% |
| CA | $31.99 | $30.94 | $0.51 | -1.7% | 10.7% |
| SYNT | $19.79 | $19.73 | $0.00 | -0.3% | 10.7% |
| Totals | 9.4% | 10.7% | |||
| 4/1/2017 | Start | Current | Dividend | Pct Gain | R3K Gain |
| BKE | $18.45 | $16.85 | $0.50 | -6.0% | 5.0% |
| CSCO | $33.76 | $31.52 | $0.58 | -4.9% | 5.0% |
| GILD | $67.50 | $75.94 | $0.52 | 13.3% | 5.0% |
| OMC | $85.53 | $78.90 | $0.55 | -7.1% | 5.0% |
| SYNT | $16.76 | $19.73 | $0.00 | 17.7% | 5.0% |
| Totals | 2.6% | 5.0% | |||
| 7/1/2017 | Start | Current | Dividend | Pct Gain | R3K Gain |
| CSCO | $30.98 | $31.52 | $0.00 | 1.7% | 1.9% |
| GME | $20.95 | $21.50 | $0.00 | 2.6% | 1.9% |
| HPQ | $17.60 | $19.17 | $0.00 | 8.9% | 1.9% |
| RGR | $60.70 | $56.90 | $0.00 | -6.3% | 1.9% |
| SYNT | $16.21 | $19.73 | $0.00 | 21.7% | 1.9% |
| Totals | 5.7% | 1.9% |
The recent July picks look good! The eight stocks that Mr Random did not pick are up about 1.7%. So I appear to have gotten a favorable draw.
| Category/Tranche | October | January | April | July | Total |
| Initial Investment | 249,820 | 249,939 | 250,180 | 249,728 | 999,667 |
| Current Tranche | 4.5% | 9.4% | 2.6% | 5.7% | 5.6% |
| Previous Tranche | 5.5% | 9.3% | 25.2% | 26.7% | 16.1% |
| Tranche -2 | 0.5% | 11.0% | -0.2% | -12.5% | -0.3% |
| MFI Overall Gain | 10.7% | 32.6% | 28.1% | 17.3% | 22.2% |
| Current Balance | 276,664 | 331,515 | 320,487 | 292,877 | 1,221,543 |
| R3K Current Tranche | 15.9% | 10.7% | 5.0% | 1.9% | 8.4% |
| R3K Overall Gain | 30.9% | 23.8% | 22.5% | 18.6% | 23.9% |
| R3K Balance | 326,945 | 309,365 | 306,449 | 296,275 | 1,239,034 |
| Annualized IRR | 3.7% | 11.6% | 11.2% | 8.0% | 8.6% |
Dividend and Miscellaneous Portfolios
Gad, I can't believe my dividend portfolio is up over 13%. This past week I actually got it to 100% invested, so no cash.
| Stock | Initial | Current | Div/Sh | Gain/Loss | Yield |
| FDEU | 18.40 | 18.94 | 0.24 | 4.2% | 7.7% |
| LADR | 13.01 | 13.16 | - | 1.2% | 9.1% |
| TK | 5.24 | 9.72 | 0.06 | 86.4% | 2.3% |
| JQC | 8.20 | 8.68 | 0.54 | 12.5% | 7.3% |
| KCLI | 49.32 | 49.00 | - | -0.6% | 2.4% |
| ISBC | 13.15 | 13.10 | - | -0.3% | 2.4% |
| SBRA | 23.53 | 23.25 | 0.29 | 0.0% | 7.4% |
| NRZ | 16.22 | 16.04 | 0.38 | 1.2% | 12.5% |
| PSXP | 48.20 | 49.85 | 0.62 | 4.7% | 4.9% |
| TGONF | 10.47 | 13.05 | 1.97 | 43.4% | 5.3% |
| DHF | 3.34 | 3.50 | 0.07 | 6.8% | 9.3% |
| RILY | 13.85 | 18.95 | - | 36.8% | 1.7% |
| DSL | 18.49 | 21.19 | 2.01 | 25.5% | 8.5% |
| FSFR | 8.92 | 8.40 | - | -5.8% | 9.0% |
| O | 25.02 | 57.20 | 20.25 | 209.6% | 4.4% |
| OIBAX | 5.09 | 5.95 | 2.39 | 63.9% | 3.9% |
I did add to LADR and KLCI this past week. If I do any more adding, it may be to some of the smaller ones near the bottom. My push continues to be to build retirement income as my retirement looms very close.
I have been increasing my Miscellaneous holdings. I am trying to pick stocks that have limited downside with some upside. My three largest holdings (after BAC warrants) are:
- NXPI - QCOM puts a floor of $110 (IMHO). But there is upside should shareholders demand more
- NYRT - again, they are liquidating and net asset value is $9.25. Trading at 8.65, there may be upside on NAV.
- WLFC - trading around $25 with a NAV over $31, so I think downside is limited assuming the continue to make money.
That is it, adios from Miami!
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