Weekend Update 9/2/17

Weekend Update From Chilly New Hampshire

Well - I am now both retired and an empty nester as dropped youngest daughter off at Northeastern University on Thursday.  My wife and I are now in New Hampshire (44 this morning) and we are going to spend a couple weeks here and do some work on our little condo here.  First step was wifi!

The calendar has moved to September and while the markets continue to ramble upwards - there does seem to be stuff under the surface.

• "Historic/Epic" flooding in Houston post Harvey landfall.  Just tragic, although I had trouble with the descriptors having just finished "Rising Tide", a book about the 1927 Mississippi River flood. That was worse in my opinion. Not sure how the flood will impact economy/markets.   Houston is a huge port and oil & gas hub.  Also rebuilding will be expensive.  I did buy FIX and BLDR this week.  I also owned DSKE, a trucking firm that went up a lot this week.
• North Korea and US continue "sabre rattling".  My view is that this is way more than smoke. Trump and Kim Jong-Un inspire zero confidence in my view and just a matter of time until one of them causes an International incident.
• Trump kicked off "Tax Reform" this week and it was sooooo underwhelming.  Tax reform is often seen as the carrot that keeps this market moving up. To me that carrot looks like it might be a mirage. When running for Prez, Trump continuously bragged about how he was the one to push meaningful tax reform as he knew the system better than anyone. What he proposed seemed like it was written on a cocktail napkin the night before.

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

It seemed like a pretty good week for me. Here are YTD figures:

Component	YTD
Overall	+9.87%
Select	+19.36%
Formula	+4.87%
Miscellaneous	+0.77%
Dividend	+12.82%
R3K	+11.21%
MFI Index	-0.50%

Gotta be pretty happy that my 2 MFI approaches (Select and Formula) are up 19.4% and 4.9% while the index is in the red for 2017.  Here are my MFI stocks for the week.

Stock	Last Week	Current	Dividend	Change
ATHM	63.70	65.33	-	2.6%
RHI	44.04	45.28	-	2.8%
YY	72.29	74.35	-	2.8%
AKRX	32.50	32.94	-	1.4%
AMGN	169.74	178.71	-	5.3%
CA	32.50	33.26	-	2.3%
ICHR	19.88	23.10	-	16.2%
WNC	20.27	20.94	-	3.3%
SIMO	42.75	46.58	-	9.0%
MPAA	26.09	27.09	-	3.8%
MD	44.22	44.09	-	-0.3%
GHC	582.95	583.00	-	0.0%
WSTC	23.36	23.40	-	0.2%
QCOM	52.03	52.05	-	0.0%
KLAC	90.48	94.08	-	4.0%
MSGN	20.70	21.60	-	4.3%
TGNA	21.13	21.58	-	2.1%
RGR	48.85	46.25		-5.3%
TIME	12.60	12.90		2.4%

Wow, that is better than a good week, that is a great week!

Stock	Last Week	Current	Dividend	Change
SYNT	18.06	18.13	-	0.4%
CSCO	31.44	32.30	-	2.7%
HPQ	19.31	19.36	-	0.3%
GILD	73.79	83.75	-	13.5%
GME	19.40	18.67	-	-3.8%
CA	32.50	33.26	-	2.3%
TGNA	21.13	21.58	-	2.1%
OMC	73.13	71.94	-	-1.6%
CPLA	66.40	66.85	-	0.7%
BKE	15.10	14.55	-	-3.6%
RGR	48.85	46.25	-	-5.3%
LDOS	55.86	58.74	-	5.2%
PBI	12.64	12.90	-	2.1%

GILD had a great week as the KITE purchase was viewed positively.  BKE had miserable same store sales... how low can they go?

I did buy three major new positions this week.  FIX and BLDR as plays on rebuilding Houston.  They both came up relatively highly in my own MFI listing worksheet (though I am not labeling them MFI stocks). Then I bought HPE-WI last week at $14.  This is a spinoff from the "old" HPE and it started trading on 9/1 and went to 14.21.  I have always liked spinoffs and this one seemed way too cheap.  I suspect the new HPE will show up in MFI screens soon (though again, I am not labeling as MFI stock for me at this time - the point being I view all three of these stocks as value plays.

MFI Select

These are stocks that I view as "magic formula stocks", but very free form.  I pick some of my own stocks from my own screen instead of official screen.  I started in August 2012 (a reboot after I quit MFI for a year). It has been extremely successful.  I have 4 tranches of 5 stocks apiece that I buy and hold for a year.  I just started a new tranche August 15, 2017.    So my picks are pretty much fully discretionary (see pix to left).

Latest tranche is off to an outstanding start!  I was so bummed about my May picks, I felt a strong need for redemption.  Two weeks is a far cry from a year, but still nice to have strong start.

Here are the four tranches:

11/15/2016	Start	Current	Dividend	Pct Gain	R3K Gain
MPAA	$26.55	$27.09	$0.00	2.0%	15.3%
ATHM	$22.61	$65.33	$0.00	188.9%	15.3%
AMGN	$145.14	$178.71	$3.15	25.3%	15.3%
RHI	$43.23	$45.28	$0.94	6.9%	15.3%
CA	$31.11	$33.26	$0.77	9.4%	15.3%
Totals				46.5%	15.3%
2/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
AKRX	$19.10	$32.94	$0.00	72.5%	9.2%
YY	$41.08	$74.35	$0.00	81.0%	9.2%
KLAC	$85.11	$94.08	$1.67	12.5%	9.2%
WNC	$17.65	$20.94	$0.06	19.0%	9.2%
RGR	$52.75	$46.25	$1.15	-10.1%	9.2%
Totals				35.0%	9.2%
5/6/2017	Start	Current	Dividend	Pct Gain	R3K Gain
WSTC	$24.15	$23.40	$0.00	-3.1%	3.6%
TGNA	$25.75	$21.58	$0.07	-15.9%	3.6%
TIME	$15.05	$12.90	$0.04	-14.0%	3.6%
MSGN	$23.55	$21.60	$0.00	-8.3%	3.6%
QCOM	$54.93	$52.05	$1.14	-3.2%	3.6%
Totals				-8.9%	3.6%
8/15/2017	Start	Current	Dividend	Pct Gain	R3K Gain
GHC	$591.10	$583.00	$0.00	-1.4%	0.8%
ICHR	$19.80	$23.10	$0.00	16.7%	0.8%
MD	$43.00	$44.09	$0.00	2.5%	0.8%
SIMO	$43.05	$46.58	$0.00	8.2%	0.8%
RHI	$44.15	$45.28	$0.24	3.1%	0.8%
Totals				5.8%	0.8%

Not bad.  Actually, pretty satisfactory.  Here is table showing all past tranches (in total):

Category/Tranche	August	November	February	May	Total
Initial Investment	25,000	25,000	25,000	25,000	100,000
Current Tranche	5.8%	46.5%	35.0%	-8.9%	19.7%
Previous Tranche	-0.1%	8.0%	10.7%	19.1%	15.8%
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	95.1%	340.3%	147.7%	27.6%	152.7%
Current Balance	48,764	110,073	61,913	31,907	252,657
R3K Current Tranche	0.8%	15.3%	9.2%	3.6%	7.2%
R3K Overall Gain	93.1%	96.5%	76.7%	65.3%	82.9%
R3K Balance	48,276	49,117	44,181	41,328	182,902
Annualized IRR	14.1%	36.2%	21.9%	5.8%	19.5%

You can see my current tranches are up by 19.7% versus 7.2% for R3K. Not bad.  Also, I have gotten the annualized IRR back above 19% again.  Not remember this table is theoretical assuming I started with $100,000 over the 4 tranches back in 2012 and just constantly rolled over once a year.  In reality, I did not start with $100,000 and at anniversary dates I have typically added more $ (especially here in 2017).  Looking at February tranche -4, hard to believe I had one up 78% over the five stocks.

Then here is a comparison month by month of MFI Select vs R3K (assuming $100,000 start).

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	69.75%	252,657	182,902

August was a great month!  Here are individual stocks for August (plus 9/1):

Stock	Last Week	Current	Dividend	Change
ATHM	49.01	65.33	-	33.3%
RHI	45.12	45.28	-	0.4%
YY	71.74	74.35	-	3.6%
AKRX	33.45	32.94	-	-1.5%
AMGN	174.13	178.71	-	2.6%
CA	31.22	33.26	-	6.5%
ICHR	19.80	23.10	-	16.7%
WNC	18.72	20.94	-	11.9%
SIMO	43.05	46.58	-	8.2%
MPAA	27.71	27.09	-	-2.2%
MD	44.03	44.09	-	0.1%
GHC	591.10	583.00	-	-1.4%
WSTC	23.36	23.40	-	0.2%
QCOM	53.41	52.05	-	-2.5%
KLAC	92.63	94.08	-	1.6%
MSGN	21.45	21.60	-	0.7%
TGNA	22.81	21.58	-	-5.4%
RGR	57.65	46.25		-19.8%
TIME	14.20	12.90		-9.2%

Keep in mind these are in descending order of holding size. So the 33% on ATHM is on my largest holding.

MFI Formula

Recall, my MFI Formula are stocks I have been picking since October 2014 based on a simple formula and random number generator.  I do expect it to "work", although after almost 3 years the jury is still out. Same tables, just much faster.

10/3/2016	Start	Current	Dividend	Pct Gain	R3K Gain
CPLA	$58.15	$66.85	$1.64	17.8%	16.3%
LDOS	$43.01	$58.74	$0.96	38.8%	16.3%
GME	$27.70	$18.67	$1.13	-28.5%	16.3%
PBI	$18.15	$12.90	$0.75	-24.8%	16.3%
CSCO	$31.72	$32.30	$1.10	5.3%	16.3%
Totals				1.7%	16.3%
12/30/2016	Start	Current	Dividend	Pct Gain	R3K Gain
GILD	$71.69	$83.75	$1.04	18.3%	11.1%
HPQ	$15.00	$19.36	$0.40	31.7%	11.1%
TGNA	$21.33	$21.58	$0.21	2.2%	11.1%
CA	$31.99	$33.26	$0.77	6.4%	11.1%
SYNT	$19.79	$18.13	$0.00	-8.4%	11.1%
Totals				10.0%	11.1%
4/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
BKE	$18.45	$14.55	$0.50	-18.4%	5.3%
CSCO	$33.76	$32.30	$0.58	-2.6%	5.3%
GILD	$67.50	$83.75	$0.52	24.8%	5.3%
OMC	$85.53	$71.94	$0.55	-15.2%	5.3%
SYNT	$16.76	$18.13	$0.00	8.2%	5.3%
Totals				-0.7%	5.3%
7/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
CSCO	$30.98	$32.30	$0.00	4.3%	2.2%
GME	$20.95	$18.67	$0.00	-10.9%	2.2%
HPQ	$17.60	$19.36	$0.00	10.0%	2.2%
RGR	$60.70	$46.25	$0.23	-23.4%	2.2%
SYNT	$16.21	$18.13	$0.00	11.8%	2.2%
Totals				-1.6%	2.2%

All 4 tranches trailing... sigh.

Category/Tranche	October	January	April	July	Total
Initial Investment	249,820	249,939	250,180	249,728	999,667
Current Tranche	1.7%	10.0%	-0.7%	-1.6%	2.5%
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	7.8%	33.5%	24.0%	9.1%	18.6%
Current Balance	269,318	333,561	310,324	272,411	1,185,614
R3K Current Tranche	16.3%	11.1%	5.3%	2.2%	8.7%
R3K Overall Gain	31.3%	24.2%	22.9%	19.0%	24.3%
R3K Balance	327,982	310,351	307,430	297,228	1,242,991
Annualized IRR	2.6%	11.4%	9.3%	4.1%	6.8%

Just keep "losing" by 5 or 6 points.  Unimpressive.

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	-5.74%	118,561	124,301

Dividend Stocks

These are not "MFI", though some have MFI characteristics.  This is my portfolio of dividend paying holdings for my retirement.  I do not intend on any new names, rather just add depth to all on buying opportunities.  Recall that across all my investing strategies, I am about 50% cash right now.

Stock	Initial	Current	Div/Sh	Gain/Loss	Yield
LADR	13.01	13.85	-	6.5%	8.7%
FDEU	18.40	18.62	0.36	3.2%	7.8%
NS	41.04	40.37	-	-1.6%	10.8%
FCH-PA	28.45	28.00	-	-1.6%	7.0%
PSXP	47.39	48.11	0.38	2.3%	5.1%
TK	5.24	8.99	0.06	72.5%	2.4%
JQC	8.20	8.46	0.60	10.5%	7.4%
FSFR	8.68	8.93	-	2.9%	8.5%
OIBAX	5.85	5.99	0.40	9.2%	4.0%
DSL	19.47	20.91	1.20	13.6%	8.6%
RILY	15.58	17.20	0.13	11.3%	1.5%
KCLI	49.32	48.75	0.27	-0.6%	2.5%
ISBC	13.15	13.24	0.08	1.3%	2.4%
VTIBX	10.92	10.94	0.01	0.3%	1.1%
EVG	14.49	14.43	0.08	0.1%	6.4%
TGONF	10.91	12.77	1.76	33.2%	5.5%
BCRH	19.69	18.75	-	-4.8%	6.4%
SBRA	23.53	22.24	0.65	-2.7%	6.5%
NRZ	16.22	16.66	0.38	5.1%	12.0%
GLDI	9.23	9.42	0.04	2.5%	5.6%
DHF	3.34	3.52	0.09	8.1%	8.0%
BKE	14.15	14.55	-	2.8%	6.9%
O	25.14	57.86	20.39	211.3%	4.4%

I did add to BCRH this week as I felt the pullback from Harvey was overblown.  Got my first VTIBX dividend of a penny!  So some of these are not meant to be sexy, but hopefully safer.

Have a great Labor Day weekend, I am off to enjoy some fresh White Mountain air (I love it here).