MFI Weekend Update 10/14/17

MFI Weekend Update

Another week zips past.  We are in Knoxville this morning.  We came to Tennessee to look at houses, thinking very seriously about leaving CT as empty nesters and retired.  Financially, it is a slam dunk - I have never seen a state like Connecticut just keep grabbing your money.

We first went to Nashville.  It is a very fun city, but didn't strike me as a place I wanted to live.  Then Knoxville (which was really more of an after thought when I planned this trip) and we both really liked it.

People are friendly, it is beautiful here with tons of lakes and the Smokey Mountains.  The downtown is going through a renaissance. Weather, while a bit muggy at times, will be a big improvement on CT.  We would keep our NH condo and spend decent chunks of summer there.  You do get 4 seasons here and beautiful fall foliage.  And so much less expensive than New England.

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 was essentially a flat week for me.  I could almost skip summarizing the week.

Component	YTD	4th Q
Overall	+14.58%	+0.94%
MFI Select	+25.87%	+1.33%
MFI Formula	+10.18%	+0.57%
Miscellaneous	+9.34%	+2.19%
Dividend	+13.85%	+0.02%
R3K	+15.20%	+1.39%
MFI Index	+4.21%	-0.07%
GARIX	+6.17%	+1.22%

You'll see that overall I continue to trail the R3K benchmark.  I am ok with that as I have a number of securities that are bond like, so not exactly high flyers but hopefully safer.  The MFI Index turned negative for the 4th quarter, it was down 1% on the week.

Here are my MFI stocks for the week.  See if you can pick out the big winner.

Portfolio	Stock	Last Week	Current	Dividend	Change
Formula	HPQ	20.58	21.71	-	5.5%
Formula	GILD	82.14	81.17	-	-1.2%
Formula	SYNT	19.58	19.39	-	-1.0%
Formula	CSCO	33.75	33.47	-	-0.8%
Formula	OMC	75.42	75.14	-	-0.4%
Formula	GME	20.02	19.71	-	-1.5%
Formula	TGNA	22.97	21.72	-	-5.5%
Formula	CA	33.86	33.88	-	0.1%
Formula	DIN	45.04	43.40	-	-3.6%
Formula	BKE	17.15	15.55	0.25	-7.9%
Formula	RGR	52.75	49.70	-	-5.8%

For my Formula stocks, BKE, RGR and TGNA struggled.  HPQ soared.

Stock	Last Week	Current	Dividend	Change
ATHM	61.42	60.46	-	-1.6%
RHI	51.14	49.01	-	-4.2%
YY	88.74	93.22	-	5.0%
AKRX	32.83	33.22	-	1.2%
AMGN	185.82	183.01	-	-1.5%
CA	33.86	33.88	-	0.1%
ICHR	26.41	32.67	-	23.7%
WNC	22.44	22.35	-	-0.4%
SIMO	51.20	51.93	-	1.4%
MPAA	29.24	29.49	-	0.9%
MD	43.62	42.17	-	-3.3%
GHC	579.35	559.90	-	-3.4%
WSTC	23.49	23.50	-	0.1%
QCOM	52.49	52.82	-	0.6%
KLAC	102.47	105.30	-	2.8%
MSGN	22.05	20.75	-	-5.9%
TGNA	22.97	21.72	-	-5.5%
RGR	52.75	49.70		-5.8%
TIME	12.95	12.70		-1.9%

ICHR announced a new major deal and shot up.  RHI really hurt me, not sure what drove its drop.

MFI Select

 I have two magic formula portfolios with real money. I call the first one MFI Select as I pick whatever stocks I want, sometimes not even from the official screen (I have my own screening approach to supplement official screens).  The portfolio has 4 tranches of 5 stocks each, which I buy and hold for a year.  I have boon doing this since August 2012, which was my MFI reboot. (I had used MFI from 2006-mid 2011 and quit for a year as results were subpar. I studies it for a year and then the reboot).

Here is how $100,000 spread over the 4 tranches would have performed 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
8/1/2017	57.76%	239,924	182,163
9/1/2017	68.85%	251,265	182,419
10/1/2017	75.60%	262,489	186,886
Current	75.68%	265,156	189,475

This shows that MFI Select has substantially outperformed the Russell 3000 benchmark.  Here are my current 4 tranches:

11/15/2016	Start	Current	Dividend	Pct Gain	R3K Gain
MPAA	$26.55	$29.49	$0.00	11.1%	19.4%
ATHM	$22.61	$60.46	$0.00	167.4%	19.4%
AMGN	$145.14	$183.01	$3.15	28.3%	19.4%
RHI	$43.23	$49.01	$0.94	15.5%	19.4%
CA	$31.11	$33.88	$0.77	11.4%	19.4%
Totals				46.7%	19.4%
2/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
AKRX	$19.10	$33.22	$0.00	73.9%	13.2%
YY	$41.08	$93.22	$0.00	126.9%	13.2%
KLAC	$85.11	$105.30	$1.67	25.7%	13.2%
WNC	$17.65	$22.35	$0.06	27.0%	13.2%
RGR	$52.75	$49.70	$1.15	-3.6%	13.2%
Totals				50.0%	13.2%
5/6/2017	Start	Current	Dividend	Pct Gain	R3K Gain
WSTC	$24.15	$23.50	$0.00	-2.7%	7.3%
TGNA	$25.75	$21.72	$0.14	-15.1%	7.3%
TIME	$15.05	$12.70	$0.04	-15.3%	7.3%
MSGN	$23.55	$20.75	$0.00	-11.9%	7.3%
QCOM	$54.93	$52.82	$1.14	-1.8%	7.3%
Totals				-9.4%	7.3%
8/15/2017	Start	Current	Dividend	Pct Gain	R3K Gain
GHC	$591.10	$559.90	$0.00	-5.3%	4.5%
ICHR	$19.80	$32.67	$0.00	65.0%	4.5%
MD	$43.00	$42.17	$0.00	-1.9%	4.5%
SIMO	$43.05	$51.93	$0.00	20.6%	4.5%
RHI	$44.15	$49.01	$0.24	11.6%	4.5%
Totals				18.0%	4.5%

3 of 4 are doing very well as the tables above show.  You can see impact of ICHR pop.  Here is a table giving overall color:

Category/Tranche	August	November	February	May	Total
Initial Investment	25,000	25,000	25,000	25,000	100,000
Current Tranche	18.0%	46.7%	50.0%	-9.4%	26.1%
Previous Tranche	-0.1%	8.0%	10.7%	19.1%	15.3%
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	117.5%	340.9%	175.2%	27.0%	165.2%
Current Balance	54,370	110,236	68,804	31,745	265,156
R3K Current Tranche	4.5%	19.4%	13.2%	7.3%	11.1%
R3K Overall Gain	100.1%	103.5%	83.1%	71.3%	89.5%
R3K Balance	50,022	50,871	45,766	42,817	189,475
Annualized IRR	16.2%	35.2%	24.0%	5.5%	20.3%

You can see that current tranches are up an aggregate 26.1% versus 11.1% for R3K.  You can also see annualized IRR of 20.3%.  My actually results vary somewhat as this is more hypothetical, assuming $100,000 start and never adding $, just rolling over.  In reality, I have often added $ at anniversary dates and tried to keep my balance by tranches closer.

Me v Hypo	August	November	February	May	Total
With Adds	63,249	83,850	70,499	47,558	265,156
Hypothetical	54,370	110,236	68,804	31,745	265,156

This table shows the difference. Hypothetically November is $110.236 of total 265,156 as for whatever reason that quarter's tranche has done the best.  But my splits are a bit tempered as I have added less $ to successful Nov in attempt to keep 4 tranches "balanced".  Nov is still easily the largest.

MFI Formula

The formula approach is taking stocks with a yield of at least 2.4% and (generally) market cap over $600m from official screen.  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
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
10/1/2017	-2.56%	124,448	127,007
Current	-3.87%	124,905	128,775

Still trailing benchmark.

12/30/2016	Start	Current	Dividend	Pct Gain	R3K Gain
GILD	$71.69	$81.17	$1.56	15.4%	15.1%
HPQ	$15.00	$21.71	$0.53	48.3%	15.1%
TGNA	$21.33	$21.72	$0.28	3.1%	15.1%
CA	$31.99	$33.88	$0.77	8.3%	15.1%
SYNT	$19.79	$19.39	$0.00	-2.0%	15.1%
Totals				14.6%	15.1%
4/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
BKE	$18.45	$15.55	$0.75	-11.7%	9.1%
CSCO	$33.76	$33.47	$0.87	1.7%	9.1%
GILD	$67.50	$81.17	$1.04	21.8%	9.1%
OMC	$85.53	$75.14	$1.10	-10.9%	9.1%
SYNT	$16.76	$19.39	$0.00	15.7%	9.1%
Totals				3.3%	9.1%
7/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
CSCO	$30.98	$33.47	$0.29	9.0%	5.9%
GME	$20.95	$19.71	$0.38	-4.1%	5.9%
HPQ	$17.60	$21.71	$0.13	24.1%	5.9%
RGR	$60.70	$49.70	$0.23	-17.7%	5.9%
SYNT	$16.21	$19.39	$0.00	19.6%	5.9%
Totals				6.2%	5.9%
10/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
DIN	$43.14	$43.40	$0.00	0.6%	1.4%
GILD	$82.85	$81.17	$0.00	-2.0%	1.4%
GME	$20.50	$19.71	$0.00	-3.9%	1.4%
HPQ	$20.22	$21.71	$0.00	7.4%	1.4%
OMC	$74.80	$75.14	$0.00	0.5%	1.4%
Totals				0.5%	1.4%

Not terrible, just not as good as I'd like.

Category/Tranche	October	January	April	July	Total
Initial Investment	249,820	249,939	250,180	249,728	999,667
Current Tranche	0.5%	14.6%	3.3%	6.2%	6.1%
Previous Tranche	7.0%	9.3%	25.2%	26.7%	16.5%
Tranche -2	5.5%	11.0%	-0.2%	-12.5%	1.0%
Tranche -3	0.5%	0.0%	0.0%	0.0%	0.1%
MFI Overall Gain	14.0%	39.0%	29.0%	17.7%	24.9%
Current Balance	284,740	347,477	322,787	294,043	1,249,047
R3K Current Tranche	1.4%	15.1%	9.1%	5.9%	7.9%
R3K Overall Gain	36.0%	28.6%	27.3%	23.3%	28.8%
R3K Balance	339,771	321,484	318,500	307,977	1,287,733
Annualized IRR	4.4%	12.5%	10.5%	7.4%	8.7%

8.7% IRR.  Current tranches are trailing 6.1% to 7.9%.  Compared to MFI in total, that is "better".

Dividends and Misc

Not a great week for my dividend stocks, but these are really all about the income.

Dividend Stocks	Start	Current	Divvy	Overall Pct Gain	Weekly Pct Gain	9/30/17 Price	Yield
FDEU	18.40	19.39	0.57	8.5%	0.0%	19.42	6.4%
EVG	14.46	14.28	0.18	0.0%	0.0%	14.24	9.0%
PSXP	47.39	53.35	0.38	13.4%	0.0%	52.56	4.6%
KCLI	49.31	49.00	0.22	-0.2%	0.0%	49.75	7.5%
LADR	13.01	13.81	0.30	8.5%	0.0%	13.78	8.7%
ISBC	13.25	13.65	0.06	3.5%	0.0%	13.64	2.4%
NS	41.04	37.85	-	-7.8%	0.0%	40.59	2.3%
RLJ-PA	28.45	28.85	0.49	3.1%	0.0%	27.82	6.8%
JQC	8.20	8.48	1.54	22.2%	0.0%	8.49	11.6%
TK	5.24	8.98	0.06	72.3%	0.0%	8.93	6.7%
DSL	19.47	21.29	1.35	16.3%	0.0%	21.25	2.4%
OIBAX	5.85	5.96	0.42	9.0%	0.0%	5.95	8.5%
FSFR	8.68	8.90	0.19	4.8%	0.0%	8.80	4.4%
RILY	15.58	16.55	0.13	7.1%	0.0%	17.05	8.5%
SBRA	23.13	21.10	0.52	-6.5%	0.0%	21.94	1.6%
TGONF	11.04	12.78	1.61	30.3%	0.0%	12.80	6.8%
VTIBX	10.92	10.92	0.02	0.2%	0.0%	10.89	5.5%
GLDI	9.29	9.20	0.10	0.2%	0.0%	9.07	1.1%
CPLP	3.54	3.56	-	0.6%	0.0%	3.50	11.8%
NRZ	16.22	17.21	0.88	11.5%	0.0%	16.73	11.6%
DHF	3.34	3.51	0.14	9.2%	0.0%	3.53	8.0%
BKE	14.15	15.55	0.25	11.7%	0.0%	16.85	6.4%
CA	34.79	33.88	0.26	-1.9%	0.0%	17.85	3.0%
O	25.38	56.87	20.66	205.5%	0.0%	57.19	4.5%
Totals				8.8%

Had a little trouble, this nets to a 6.4% yield.

On the Miscellaneous side, I have been buying some shipping stocks. I had TK, and have bought SHIP, SSW and SBLK.  I have been adding to EXXI as an energy play.  Then I still have the reconstruction plays, BLDR and FIX.  My other big holding is MTG (and BAC warrants of course). is up 11%... that is a stock I really like as LT hold.

Ok... now really done.