Weekend Update - 9/16/17

Weekend Update

Top of the morning everybody. Tis football season once again, both my teams (IU and Cowboys) won last week, so that was nice.  Now that I am retired, I think I will try and see at least one Cowboys game this year - perhaps the November game in Atlanta.

Everyone is big on memes right now, I guess we could label Charlie Brown as the NFL and Lucy as TV viewers.  Rating were down 10% for opening weekend after a lackluster 2016.  Of course most of Florida was dark last week from Irma.

Politics is all over the place.  Here in CT, some Democratic lawmakers broke ranks with their party and sided with Republicans on hotly debated budget.  Now Gov Malloy is threatening to veto.  But CT needs to take some bold action - it is stunning how much higher our taxes are than the majority of states.  And if Malloy gets his way,  CT will continue the trend of taxpayers voting with their feet and leaving for warmer and less tax-oppressive climes. As I am now retired, I might just join them.

Then Trump also broke ranks and has been cosying up with Pelosi and Schumer.  In my view some compromise and bipartisanship in DC would be a breath of fresh air.  We shall see.  Ok, I know this is not politico.

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.

Any opinions you read are my own unless they end up being really bad.

The Past Week

Seems like things were better for me last week.  I did sell a couple larger, non-MFI holdings.  I decided my BCRH purchase was misinformed - so I sold them and took about a 12% loss.  They did pop back post Irma this past week (which helped a bit), but I have a queasy feeling they will need to reduce their dividend (at least temporarily) and I did not want to be around for that.  I also sold my NYRT, a large-ish holding of a REIT that is being liquidated.  There were rumors the liquidation was going slower than anticipated, so I bailed.  I did replace the BCRH with CPLP, a shipping stock with a 8.8% yield.  The MFI side was good, as you'll see.  Here is where I am YTD:

Component	YTD
Overall	+10.13%
MFI Select	+20.50%
MFI Formula	+6.10%
Miscellaneous	+0.12%
Dividend	+12.62%
R3K	+12.36%
MFI Index	-0.84%

So I was up almost 2 percent during the week.  Gotta be happy with that!  You can see my MFI Index continues to lag and that my two MFI portfolios, Select and Formula are doing relatively well.

Here are the MFI stocks for the week:

Stock	Last Week	Current	Dividend	Change
SYNT	18.26	18.09	-	-0.9%
CSCO	31.48	32.44	-	3.0%
HPQ	19.12	19.47	0.13	2.5%
GILD	85.10	82.36	0.49	-2.6%
GME	19.15	20.29	-	6.0%
CA	33.16	33.10	-	-0.2%
TGNA	21.11	20.97	-	-0.7%
OMC	72.83	73.04	-	0.3%
CPLA	65.90	68.20	-	3.5%
BKE	14.35	15.75	-	9.8%
RGR	46.25	47.30	-	2.3%
LDOS	57.11	56.40	0.32	-0.7%
PBI	12.62	12.98	-	2.9%

Wow, the favorite dog to kick, retail, actually had a good week as BKE was up 10% and GME 6%.

Stock	Last Week	Current	Dividend	Change
ATHM	65.45	65.83	-	0.6%
RHI	45.49	46.47	-	2.2%
YY	78.01	77.11	-	-1.2%
AKRX	33.11	33.10	-	0.0%
AMGN	180.64	187.47	-	3.8%
CA	33.16	33.10	-	-0.2%
ICHR	22.57	24.33	-	7.8%
WNC	20.50	20.86	-	1.8%
SIMO	47.14	47.44	-	0.6%
MPAA	26.28	27.05	-	2.9%
MD	41.98	42.90	-	2.2%
GHC	563.70	562.80	-	-0.2%
WSTC	23.37	23.38	-	0.0%
QCOM	49.64	52.19	-	5.1%
KLAC	94.35	98.64	-	4.5%
MSGN	20.75	21.25	-	2.4%
TGNA	21.11	20.97	-	-0.7%
RGR	46.25	47.30		2.3%
TIME	13.05	13.05		0.0%

And here, a few of my Semi plays, KLAC, QCOM and ICHR were strong.

MFI Select

Now for real money.  MFI Select is a portfolio of 4 tranches, each with 5 stocks that I buy and hold for a year per the "rules" from "The Little Book That Beats the Markets".  I rebooted this portfolio 5 years ago after quitting MFI for a year in 2011.  It has done well.  Here is how a hypothetical $100,000 invested in the first four tranches would have grown since 2012:

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
8/1/2017	57.76%	239,924	182,163
9/1/2017	68.85%	251,265	182,419
Current	71.02%	255,802	184,786

So up by a factor of 2.55 to $255,802.  Much better than if you had put $ in Russell 3000 benchmark.  Now I do often call this "hypothetical".  This is because (1) $100,000 was not my actual starting point and (2) I have added $ since 2012 while this hypothetical approach assumes no additional investment.  It makes a difference.  Here is overall table of all tranches:

Category/Tranche	August	November	February	May	Total
Initial Investment	25,000	25,000	25,000	25,000	100,000
Current Tranche	6.8%	48.6%	37.8%	-9.4%	21.0%
Previous Tranche	-0.1%	8.0%	10.7%	19.1%	15.9%
Tranche -2	2.8%	69.4%	-14.3%	-25.2%	8.2%
Tranche -3	11.2%	14.2%	8.5%	18.3%	13.0%
Tranche -4	41.4%	43.7%	78.3%	33.0%	49.1%
Tranche -5	14.1%	0.0%	0.0%	0.0%	3.5%
MFI Overall Gain	96.8%	346.5%	153.0%	27.0%	155.8%
Current Balance	49,199	111,626	63,238	31,738	255,802
R3K Current Tranche	1.9%	16.5%	10.4%	4.7%	8.3%
R3K Overall Gain	95.1%	98.5%	78.5%	67.0%	84.8%
R3K Balance	48,776	49,619	44,635	41,755	184,786
Annualized IRR	14.2%	36.2%	22.2%	5.6%	19.6%

You'll note the annualized IRR of 19.6%. But if you look by tranche, you'll see that for whatever reason, November has been outstanding at 36.2%, while May has lagged at 5.6%. Probably just luck of the draw, I do not believe there is seasonality.  So since November has been so good, the hypothetical $25,000 it started with has really grown - up to $111,626.  At the same time, May's growth has been stunted and is just 31,738.

That means in my hypothetical tracking - how November does going forward is more critical than how May does as it has 3x the weight.  In my real tracking, I add money virtually every time a portfolio hits anniversary date.  And in doing so, I make an effort to vene out the $ in each tranche.  So the table below compares the hypothetical allotment with my actual allotment (although for comparison purposes I have factored my actual dollars by quarter to staill ballance to the overall 255,802.

Me v Hypo	August	November	February	May	Total
With Adds	57,546	85,345	65,142	47,769	255,802
Hypothetical	49,199	111,626	63,238	31,738	255,802

So you can see I have tempered the differentials, Nov vs May goes from 111,626/31,738 to 85,345/47,769.   This is exacerbated by the fact that this year, November is once again doing way better than May as you can see from tables below:

11/15/2016	Start	Current	Dividend	Pct Gain	R3K Gain
MPAA	$26.55	$27.05	$0.00	1.9%	16.5%
ATHM	$22.61	$65.83	$0.00	191.2%	16.5%
AMGN	$145.14	$187.47	$3.15	31.3%	16.5%
RHI	$43.23	$46.47	$0.94	9.7%	16.5%
CA	$31.11	$33.10	$0.77	8.9%	16.5%
Totals				48.6%	16.5%
2/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
AKRX	$19.10	$33.10	$0.00	73.3%	10.4%
YY	$41.08	$77.11	$0.00	87.7%	10.4%
KLAC	$85.11	$98.64	$1.67	17.9%	10.4%
WNC	$17.65	$20.86	$0.06	18.5%	10.4%
RGR	$52.75	$47.30	$1.15	-8.2%	10.4%
Totals				37.8%	10.4%
5/6/2017	Start	Current	Dividend	Pct Gain	R3K Gain
WSTC	$24.15	$23.38	$0.00	-3.2%	4.7%
TGNA	$25.75	$20.97	$0.14	-18.0%	4.7%
TIME	$15.05	$13.05	$0.04	-13.0%	4.7%
MSGN	$23.55	$21.25	$0.00	-9.8%	4.7%
QCOM	$54.93	$52.19	$1.14	-2.9%	4.7%
Totals				-9.4%	4.7%
8/15/2017	Start	Current	Dividend	Pct Gain	R3K Gain
GHC	$591.10	$562.80	$0.00	-4.8%	1.9%
ICHR	$19.80	$24.33	$0.00	22.9%	1.9%
MD	$43.00	$42.90	$0.00	-0.2%	1.9%
SIMO	$43.05	$47.44	$0.00	10.2%	1.9%
RHI	$44.15	$46.47	$0.24	5.8%	1.9%
Totals				6.8%	1.9%

So I have actually "hurt" myself in this instance as I allocated more marginal $ to May than November over past year and May since then is down 9.4% while November is up over 44%.  But I think risk-wise it is best for me to try and keep the 4 tranches in the same ballpark as far as size.  I want to keep stock weighting relatively equal.  If I believed in seasonality, then more $ to Nov would make sense.

MFI Formula

My second approach of real $ was started 3 years ago, October 2014. It is formula-driven, from stocks from official screen that have a dividend yield of 2.4% or greater.  While that works great in back testing, it has been a bit more challenged since I started.

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
8/1/2017	-1.96%	121,873	123,828
9/1/2017	-6.09%	117,879	123,973
Current	-5.76%	119,823	125,581

10/3/2016	Start	Current	Dividend	Pct Gain	R3K Gain
CPLA	$58.15	$68.20	$1.64	20.1%	17.4%
LDOS	$43.01	$56.40	$1.28	34.1%	17.4%
GME	$27.70	$20.29	$1.51	-21.3%	17.4%
PBI	$18.15	$12.98	$0.75	-24.4%	17.4%
CSCO	$31.72	$32.44	$1.10	5.7%	17.4%
Totals				2.9%	17.4%
12/30/2016	Start	Current	Dividend	Pct Gain	R3K Gain
GILD	$71.69	$82.36	$1.56	17.1%	12.2%
HPQ	$15.00	$19.47	$0.53	33.3%	12.2%
TGNA	$21.33	$20.97	$0.28	-0.4%	12.2%
CA	$31.99	$33.10	$0.77	5.9%	12.2%
SYNT	$19.79	$18.09	$0.00	-8.6%	12.2%
Totals				9.5%	12.2%
4/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
BKE	$18.45	$15.75	$0.50	-11.9%	6.4%
CSCO	$33.76	$32.44	$0.58	-2.2%	6.4%
GILD	$67.50	$82.36	$1.04	23.6%	6.4%
OMC	$85.53	$73.04	$0.55	-14.0%	6.4%
SYNT	$16.76	$18.09	$0.00	7.9%	6.4%
Totals				0.7%	6.4%
7/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
CSCO	$30.98	$32.44	$0.00	4.7%	3.3%
GME	$20.95	$20.29	$0.38	-1.3%	3.3%
HPQ	$17.60	$19.47	$0.13	11.4%	3.3%
RGR	$60.70	$47.30	$0.23	-21.7%	3.3%
SYNT	$16.21	$18.09	$0.00	11.6%	3.3%
Totals				0.9%	3.3%
Category/Tranche	October	January	April	July	Total
Initial Investment	249,820	249,939	250,180	249,728	999,667
Current Tranche	2.9%	9.5%	0.7%	0.9%	3.6%
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	9.0%	32.8%	25.7%	11.9%	19.9%
Current Balance	272,351	331,845	314,496	279,534	1,198,225
R3K Current Tranche	17.4%	12.2%	6.4%	3.3%	9.8%
R3K Overall Gain	32.6%	25.4%	24.2%	20.3%	25.6%
R3K Balance	331,338	313,541	310,602	300,308	1,255,788
Annualized IRR	3.0%	11.0%	9.7%	5.2%	7.2%

Note I only have a couple weeks left on 10/3 tranche.  You will also note that all four of my tranches are trailing the benchmark.  Hence the word "struggle".  You will also note that the disparity between my four tranche start date performances is not as wide as MFI Select:  high is 314,496 vs low 272,351.  But I am also trying to keep these "close" by how I allocate new money.

Dividends and Misc

Besides the BCRH foot fault, my dividend portfolio continues to hum along.

Stock	Initial	Current	Div/Sh	Gain/Loss	Yield
EVG	14.46	14.45	0.10	0.6%	6.4%
FDEU	18.40	18.95	0.48	5.6%	7.7%
KCLI	49.31	49.25	0.22	0.3%	2.4%
LADR	13.01	13.56	0.30	6.6%	8.8%
NS	41.04	40.66	-	-0.9%	10.8%
PSXP	47.39	48.84	0.38	3.9%	5.0%
RLJ-PA	28.45	27.66	-	-2.8%	7.1%
OIBAX	5.85	6.01	0.40	9.5%	4.0%
JQC	8.20	8.38	0.65	10.1%	7.5%
FSFR	8.68	8.85	0.19	4.2%	8.6%
TK	5.24	8.83	0.06	69.4%	2.5%
DSL	19.47	21.02	1.20	14.1%	8.6%
RILY	15.58	17.00	0.13	10.0%	1.5%
ISBC	13.15	13.29	0.08	1.7%	2.4%
GLDI	9.29	9.40	0.03	1.6%	8.8%
VTIBX	10.92	10.91	0.01	0.0%	1.1%
CPLP	3.57	3.54	-	-0.8%	9.0%
SBRA	23.53	23.46	0.65	2.5%	6.1%
TGONF	10.91	12.44	1.76	30.2%	5.6%
NRZ	16.22	16.53	0.38	4.3%	12.1%
DHF	3.34	3.48	0.12	7.6%	8.1%
BKE	14.15	15.75	-	11.3%	6.3%
O	25.26	59.90	20.53	218.4%	4.2%

I have really added a lot of $ to this portfolio in 2017 as I entered world of retirement and it does include some bond or bond-like investments (VTIBX, OIBAX, JQC, RLI-PA, EVG, DSL and DHF).  Since I have added so much and made so many changes this year - I am planning to rethink how I present and measure the performance of this portfolio here.  That will likely be an initiative for start of 2018.