Weekend Update 7/7/17

Weekend Update

Good morning everyone.  Full summer here.  I am going to type this up quickly and then take a bike ride to Talcott Mountain.

You have found your way to The MFI Diary, a blog I have been maintaining since 2006 (MFI being magic formula investing from The Little Book That Beats the Market by Joel Greenblatt). .In it I track performance of my own actual MFI investments along with detailed tracking of picking stocks from the MFI screen and my MFI Index (an index comprised of 50 stocks from screen and reconstituted once a year).

People need to know I am just a guy with a spreadsheet, no finance expertise.  So please use what I write for information/entertainment - but if you choose to buy some of the names I buy you should do your own due diligence.

Past Week

This past week was not so great for my stocks.  A lot of it was TK, which had really popped with a short squeeze and kind of fell back to earth a bit.  I am still up 28% on the trade - but it was 48%.  Here is how I stand against the indexes:

Component	YTD
Overall	+6.66%
Select	+12.04%
Formula	+4.05%
Miscellaneous	-3.75%
Dividend	+8.49%
R3K	+8.82%
MFI Index	+1.49%

That 6.66% was 7.13% a week ago. So not real good as IWV edged up a bit.  The MFI Index dropped by a full percentage point - so that is always an indicator it was a tough week for value stocks.

I did never get around to selling my 7/1 MFI Formula portfolio (busy week).  I will close it out this weekend and select my five new stocks and buy/sell on Monday.

MFI Select

I have two MFI portfolios - "Select" and "Formula", each consisting of 4 tranches of five stocks.  Select has been running since August 2012 when I performed my MFI reboot (after sitting out for a year).  It has been very successful.  It is pretty free form, I can pick whatever stocks I want, from the official screen or my homemade screen (which always seems to pick up a few names omitted from official screen).

I did also do some analysis this week on whether the price movement of an MFI stock on the screen today over the past 6 months is a predictor of future performance.  My analysis was a bit muddy, at first it seemed like a good approach as I added data.  But when I added 2012, it became pretty borderline as a bunch of stocks that year had major (like over 100%) bouncebacks post substantial drops (like HLF, QCOR and NUS).  So I think if you exclude stocks that have dropped say 30% in past 6 months you will weed out a lot of stinkers - but you will also miss some very big winners.  I will continue to build out data base and see if a second element (such as market cap or dividend) helps.

Here are individual stocks for the week:

Stock	Last Week	Current	Dividend	Change
MSGN	22.45	22.75	-	1.3%
ATHM	45.36	45.97	-	1.3%
AKRX	33.54	33.55	-	0.0%
AMGN	172.23	171.43	-	-0.5%
MPAA	28.24	27.84	-	-1.4%
YY	58.03	56.83	-	-2.1%
RHI	47.93	49.17	-	2.6%
CA	34.47	34.34	-	-0.4%
WNC	21.98	22.06	-	0.4%
RGR	62.15	61.70	-	-0.7%
KLAC	91.51	94.57	-	3.3%
QCOM	55.22	55.35	-	0.2%
WSTC	23.32	23.31	-	0.0%
TGNA	23.29	23.00	-	-1.2%
TIME	14.35	14.00	-	-2.4%
VLO	67.46	68.18	-	1.1%
CSCO	31.30	30.90	0.29	-0.4%
GILD	70.78	69.25		-2.2%
GNC	8.43	8.33		-1.2%
Average				-0.1%

So KLAC bounced back as tech sell off abated. Here are my 4 tranches:

8/15/2016	Start	Current	Dividend	Pct Gain	R3K Gain
CSCO	$31.20	$30.90	$0.26	-0.1%	13.0%
GNC	$19.79	$8.33	$0.38	-56.0%	13.0%
VLO	$54.73	$68.18	$2.00	28.2%	13.0%
MSGN	$16.68	$22.75	$0.00	36.4%	13.0%
GILD	$79.33	$69.25	$1.98	-10.2%	13.0%
Totals				-0.3%	13.0%
11/15/2016	Start	Current	Dividend	Pct Gain	R3K Gain
MPAA	$26.55	$27.84	$0.00	4.9%	12.8%
ATHM	$22.61	$45.97	$0.00	103.3%	12.8%
AMGN	$145.14	$171.43	$2.00	19.5%	12.8%
RHI	$43.23	$49.17	$0.70	15.4%	12.8%
CA	$31.11	$34.34	$0.51	12.0%	12.8%
Totals				31.0%	12.8%
2/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
AKRX	$19.10	$33.55	$0.00	75.7%	6.9%
YY	$41.08	$56.83	$0.00	38.3%	6.9%
KLAC	$85.11	$94.57	$1.08	12.4%	6.9%
WNC	$17.65	$22.06	$0.06	25.3%	6.9%
RGR	$52.75	$61.70	$0.92	18.7%	6.9%
Totals				34.1%	6.9%
5/6/2017	Start	Current	Dividend	Pct Gain	R3K Gain
WSTC	$24.15	$23.31	$0.00	-3.5%	1.4%
TGNA	$25.75	$23.00	$0.07	-10.4%	1.4%
TIME	$15.05	$14.00	$0.04	-6.7%	1.4%
MSGN	$23.55	$22.75	$0.00	-3.4%	1.4%
QCOM	$54.93	$55.35	$0.57	1.8%	1.4%
Totals				-4.4%	1.4%

Kind of same story here as a week ago.

Category/Tranche	August	November	February	May	Total
Initial Investment	25,000	25,000	25,000	25,000	100,000
Current Tranche	-0.3%	31.0%	34.1%	-4.4%	16.3%
Previous Tranche	2.8%	8.0%	10.7%	19.1%	8.8%
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	83.8%	293.7%	146.0%	33.9%	139.4%
Current Balance	45,953	98,426	61,511	33,470	239,361
R3K Current Tranche	13.0%	12.8%	6.9%	1.4%	8.5%
R3K Overall Gain	88.8%	92.3%	72.9%	61.7%	78.9%
R3K Balance	47,198	48,066	43,231	40,436	178,931
Annualized IRR	13.2%	34.3%	22.5%	7.2%	19.3%

Then here is month by month:

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	60.43%	239,361	178,931

MFI Formula

Stock	Last Week	Current	Dividend	Change
CPLA	85.60	85.05	-	-0.6%
GILD	70.78	69.25	-	-2.2%
SYNT	16.96	16.16	-	-4.7%
CSCO	31.30	30.90	0.29	-0.4%
TGNA	23.29	23.00	-	-1.2%
HPQ	17.48	17.35	-	-0.7%
CA	34.47	34.34	-	-0.4%
PBI	15.10	14.95	-	-1.0%
OMC	82.90	81.50	-	-1.7%
BKE	17.80	17.40	-	-2.2%
LDOS	51.69	52.07	-	0.7%
ILG	27.49	27.43	-	-0.2%
VIAB	33.57	33.20	-	-1.1%
HRB	30.91	31.37	-	1.5%
GME	21.61	20.91	-	-3.2%
			-
Average				-1.2%

Just not a very good week.  GME is one that would be weeded out by 6 month rule.  As would SYNT. Here are four tranches with July being closed out (I will try to write specifically about it this weekend).

7/1/2016	Start	Current	Dividend	Pct Gain	R3K Gain
ILG	$16.76	$27.49	$0.54	67.2%	16.8%
VIAB	$44.00	$33.57	$0.80	-21.9%	16.8%
CPLA	$53.22	$85.60	$1.62	63.9%	16.8%
HRB	$23.62	$30.91	$0.90	34.7%	16.8%
PBI	$17.69	$15.10	$0.75	-10.4%	16.8%
Totals				26.7%	16.8%
10/3/2016	Start	Current	Dividend	Pct Gain	R3K Gain
CPLA	$58.15	$85.05	$1.23	48.4%	13.8%
LDOS	$43.01	$52.07	$0.96	23.3%	13.8%
GME	$27.70	$20.91	$1.13	-20.4%	13.8%
PBI	$18.15	$14.95	$0.56	-14.5%	13.8%
CSCO	$31.72	$30.90	$1.10	0.9%	13.8%
Totals				7.5%	13.8%
12/30/2016	Start	Current	Dividend	Pct Gain	R3K Gain
GILD	$71.69	$69.25	$1.04	-1.9%	8.7%
HPQ	$15.00	$17.35	$0.40	18.3%	8.7%
TGNA	$21.33	$23.00	$0.21	8.8%	8.7%
CA	$31.99	$34.34	$0.51	8.9%	8.7%
SYNT	$19.79	$16.16	$0.00	-18.3%	8.7%
Totals				3.2%	8.7%
4/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
BKE	$18.45	$17.40	$0.25	-4.3%	3.0%
CSCO	$33.76	$30.90	$0.58	-6.7%	3.0%
GILD	$67.50	$69.25	$0.52	3.4%	3.0%
OMC	$85.53	$81.50	$0.55	-4.1%	3.0%
SYNT	$16.76	$16.16	$0.00	-3.6%	3.0%
Totals				-3.1%	3.0%

You can see that next week, when the July tranche moves from "current" to history - my current tranches will not be in great shape as other three are trailing by average of 6 points.  That is not very good.

Category/Tranche	October	January	April	July	Total
Initial Investment	249,820	249,939	250,180	249,728	999,667
Current Tranche	7.5%	3.2%	-3.1%	26.7%	5.9%
Previous Tranche	5.5%	9.3%	25.2%	-12.5%	8.1%
Tranche -2	0.5%	11.0%	-0.2%	-	2.8%
MFI Overall Gain	14.0%	25.1%	21.0%	10.9%	17.8%
Current Balance	284,685	312,736	302,757	276,956	1,177,134
R3K Current Tranche	13.8%	8.7%	3.0%	16.8%	10.6%
R3K Overall Gain	28.5%	21.5%	20.2%	16.4%	21.7%
R3K Balance	320,962	303,678	300,794	290,784	1,216,218
Annualized IRR	4.8%	9.3%	8.7%	5.2%	7.0%

I am committed to this approach - although I am considering making Sept and April be based on a formula of momentum and July and January on dividends.  That would alleviate (a bit) my getting overweight in certain stocks.  But I need to hammer our momentum approach (that was one reason I waited a week - I was hopeful I could find something).

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	-3.91%	117,713	121,623

You can see in this table, going from 7/1/17 to current was not great.

Dividends/Misc

For the week, my dividend portfolio held its own, but the ever volatile Misc dropped again, now down 3.75%.  I know, I need to unplug Misc.  I did sell two stocks from it this week.

Stock	Initial	Current	Div/Sh	Gain/Loss	Yield
JQC	8.20	8.54	0.49	10%	7.4%
TK	5.24	6.80	-	30%	3.2%
PSXP	48.20	50.20	-	4%	4.7%
TGONF	10.47	12.90	1.97	42%	5.3%
DHF	3.34	3.52	0.07	7%	9.2%
FDEU	18.21	18.61	0.48	5%	7.8%
SBRA	24.01	23.16	0.43	-2%	7.4%
RILY	13.85	18.50	-	34%	1.7%
NRZ	16.51	15.34	0.50	-4%	13.0%
DSL	18.49	20.69	1.86	22%	8.7%
KCLI	49.00	50.40	-	3%	2.2%
O	24.91	54.69	20.12	200%	4.6%
OIBAX	5.09	5.83	2.38	61%	4.0%

SBRA and NRZ are not exactly setting the world afire.  RILY and TK have been great recent buys.  I am getting a fair amount of cash pretty soon - so I will have to decide how to invest that.  I will likely continue to build this portfolio out to create a nice income stream as I approach 60.

Have a great week everyone.