MFI Weekend Update 11/4/17

Weekend Update

Good morning.  Back home in CT.  I have my coffee and set to write about the past week.  You have found your way to the MFI Diary.  This is a blog following the investment approach described by Joel Greenblatt in The Little Book That Beats The Market.  I have been writing this blog and following his investment approach since early 2006.

I did create a guide recently for new readers to my blog that point you to some key/interesting posts. I encourage you to give it a whirl (Guide To New Readers).  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

This was just a bad week for me.  Again.  Value stocks are generally just struggling.  Over the past month, IWF (Russell Growth) is up 3.8% while IWD (Russell Value) is flat.  Is it any wonder I am losing ground?  And MFI is under greater duress, I show that my MFI Index (a grouping of 50 stocks reconstituted once a year) was down 3% just during the week.

AMCX - 9.6%
AGTC  -10.5%
HRB  -8.2%
DHX  -14.6%
GME  -6.1%
ICON  -67.0%
MPAA  -7.1%
MSGN  -13.5%
MYGN  -18.4%
PBI  -18.1%

Wow! If that doesn't get your attention, not sure what will.  Just a dreadful group of stocks. Thankfully, I only owned two of them (GME and MSGN) - but my MFI Index now stands basically flat for the year.  My MFI holdings were down 1% this week.  Here is a table showing quarterly and YTD results.

Component	YTD	4th Q
Overall	+11.92%	-1.40%
MFI Select	+22.26%	-1.58%
MFI Formula	+11.32%	+1.60%
Miscellaneous	+6.08%	-0.86%
Dividend	+10.49%	-2.93%
R3K	+16.50%	+2.52%
MFI Index	+0.25%	-3.86%
GARIX	+6.40%	+1.44%

So pretty much everyone is trailing the R3K benchmark (IWV).  My dividend portfolio (not associated with MFI) is down 2.9% this quarter.  NS is down 21%!  TK and SBRA are both down a bit more than 10%.  Tough sledding.

MFI Select

This is the first of my 2 real money MFI portfolios.  It was started August 2012 after I had quit MFI for a year from frustration.  My reboot used greater discipline and analysis of past MFI stocks to try and weed out "stinker stocks" (stocks that drop 30% or more, which I view as the biggest problem with MFI. Here are how my stocks did during the week.

Portfolio	Stock	Last Week	Current	Dividend	Change
Select	ATHM	56.95	59.56	-	4.6%
Select	RHI	52.84	52.34	-	-0.9%
Select	YY	85.34	90.51	-	6.1%
Select	ICHR	31.08	29.77	-	-4.2%
Select	AKRX	32.52	33.15	-	1.9%
Select	AMGN	175.28	173.44	-	-1.0%
Select	SIMO	47.26	47.98	-	1.5%
Select	MPAA	29.07	26.99	-	-7.1%
Select	CA	32.87	32.65	-	-0.7%
Select	WNC	22.42	19.71	-	-12.1%
Select	KLAC	108.07	106.30	-	-1.6%
Select	MD	44.28	43.37	-	-2.1%
Select	WSTC	23.50	23.50	-	0.0%
Select	GHC	575.20	548.00	-	-4.7%
Select	QCOM	54.57	61.81	-	13.3%
Select	MSGN	19.70	17.05	-	-13.5%
Select	RGR	51.50	50.80	-	-1.4%
Select	TGNA	20.55	19.85		-3.4%
Select	TIME	11.95	10.70		-10.5%

Wow,  that is really bad.  Recall that these are generally in descending order of size.  But 4 were down 7% or more.  Only the rumors that AVGO is looking at QCOM kept this from being a rout.

Here are the 4 tranches:

11/15/2016	Start	Current	Dividend	Pct Gain	R3K Gain
MPAA	$26.55	$26.99	$0.00	1.7%	20.7%
ATHM	$22.61	$59.56	$0.00	163.4%	20.7%
AMGN	$145.14	$173.44	$3.15	21.7%	20.7%
RHI	$43.23	$52.34	$0.94	23.2%	20.7%
CA	$31.11	$32.65	$0.77	7.4%	20.7%
Totals				43.5%	20.7%
2/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
AKRX	$19.10	$33.15	$0.00	73.6%	14.4%
YY	$41.08	$90.51	$0.00	120.3%	14.4%
KLAC	$85.11	$106.30	$1.67	26.9%	14.4%
WNC	$17.65	$19.71	$0.18	12.7%	14.4%
RGR	$52.75	$50.80	$1.15	-1.5%	14.4%
Totals				46.4%	14.4%
5/6/2017	Start	Current	Dividend	Pct Gain	R3K Gain
WSTC	$24.15	$23.50	$0.00	-2.7%	8.6%
TGNA	$25.75	$19.85	$0.14	-22.4%	8.6%
TIME	$15.05	$10.70	$0.04	-28.6%	8.6%
MSGN	$23.55	$17.05	$0.00	-27.6%	8.6%
QCOM	$54.93	$61.81	$1.14	14.6%	8.6%
Totals				-13.3%	8.6%
8/15/2017	Start	Current	Dividend	Pct Gain	R3K Gain
GHC	$591.10	$548.00	$1.27	-7.1%	5.7%
ICHR	$19.80	$29.77	$0.00	50.4%	5.7%
MD	$43.00	$43.37	$0.00	0.9%	5.7%
SIMO	$43.05	$47.98	$0.00	11.5%	5.7%
RHI	$44.15	$52.34	$0.24	19.1%	5.7%
Totals				14.9%	5.7%

Still decent overall, but TIME and MSGN are starting to slip into stinker territory.

Category/Tranche	August	November	February	May	Total
Initial Investment	25,000	25,000	25,000	25,000	100,000
Current Tranche	14.9%	43.5%	46.4%	-13.3%	22.6%
Previous Tranche	-0.1%	8.0%	10.7%	19.1%	15.5%
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	111.8%	331.2%	168.6%	21.4%	158.3%
Current Balance	52,962	107,796	67,154	30,353	258,265
R3K Current Tranche	5.7%	20.7%	14.4%	8.6%	12.3%
R3K Overall Gain	102.4%	105.8%	85.1%	73.2%	91.6%
R3K Balance	50,588	51,439	46,280	43,299	191,606
Annualized IRR	15.4%	34.2%	23.1%	4.4%	19.3%

This table summarizes all tranches back to 2012. Overall annualized IRR is still above 19%.

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
11/1/2017	68.17%	259,061	190,888
Current	66.66%	258,265	191,606

Here are month by month tallies, assuming I started at $100,000 back in 2012.  You can see Q4 is off to a slow start versus the benchmark.

MFI Formula

My second real money portfolio.  Started in October 2014.  While Select allows me free form in stock picks, the Formula approach is based upon a formula and random number generator.  While not a disaster, this approach is trailing the benchmark so far.  Same tables.

Portfolio	Stock	Last Week	Current	Dividend	Change
Formula	SYNT	22.82	23.61	-	3.5%
Formula	HPQ	21.50	21.47	-	-0.1%
Formula	GILD	77.07	73.46	-	-4.7%
Formula	CSCO	34.43	34.47	-	0.1%
Formula	OMC	68.56	66.21	-	-3.4%
Formula	GME	19.34	18.10	-	-6.4%
Formula	CA	32.87	32.65	-	-0.7%
Formula	DIN	48.39	47.36	-	-2.1%
Formula	TGNA	20.55	19.85	-	-3.4%
Formula	BKE	17.25	17.75	-	2.9%
Formula	RGR	51.50	50.80	-	-1.4%

12/30/2016	Start	Current	Dividend	Pct Gain	R3K Gain
GILD	$71.69	$73.46	$1.56	4.7%	16.4%
HPQ	$15.00	$21.47	$0.53	46.7%	16.4%
TGNA	$21.33	$19.85	$0.28	-5.6%	16.4%
CA	$31.99	$32.65	$0.77	4.5%	16.4%
SYNT	$19.79	$23.61	$0.00	19.3%	16.4%
Totals				13.9%	16.4%
4/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
BKE	$18.45	$17.75	$0.75	0.3%	10.3%
CSCO	$33.76	$34.47	$0.87	4.7%	10.3%
GILD	$67.50	$73.46	$1.04	10.4%	10.3%
OMC	$85.53	$66.21	$1.10	-21.3%	10.3%
SYNT	$16.76	$23.61	$0.00	40.9%	10.3%
Totals				7.0%	10.3%
7/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
CSCO	$30.98	$34.47	$0.29	12.2%	7.1%
GME	$20.95	$18.10	$0.38	-11.8%	7.1%
HPQ	$17.60	$21.47	$0.13	22.7%	7.1%
RGR	$60.70	$50.80	$0.23	-15.9%	7.1%
SYNT	$16.21	$23.61	$0.00	45.7%	7.1%
Totals				10.6%	7.1%
10/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
DIN	$43.14	$47.36	$0.00	9.8%	2.6%
GILD	$82.85	$73.46	$0.00	-11.3%	2.6%
GME	$20.50	$18.10	$0.00	-11.7%	2.6%
HPQ	$20.22	$21.47	$0.00	6.2%	2.6%
OMC	$74.80	$66.21	$0.00	-11.5%	2.6%
Totals				-3.7%	2.6%

That October 1st tranche is telling, down 3.7% so far.  That is very consistent with the MFI Index I listed at start of this blog, down 3.86% for the quarter.  I'm telling you, we are in a bull market overall, but value stocks not so much.

Category/Tranche	October	January	April	July	Total
Initial Investment	249,820	249,939	250,180	249,728	999,667
Current Tranche	-3.7%	13.9%	7.0%	10.6%	6.9%
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	9.2%	38.1%	33.6%	22.6%	25.9%
Current Balance	272,781	345,286	334,158	306,243	1,258,468
R3K Current Tranche	2.6%	16.4%	10.3%	7.1%	9.1%
R3K Overall Gain	37.6%	30.1%	28.7%	24.7%	30.3%
R3K Balance	343,632	325,093	322,090	311,463	1,302,277
Annualized IRR	2.9%	12.0%	11.8%	9.1%	8.9%

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
11/1/2017	-3.85%	125,890	129,739
Current	-4.38%	125,847	130,229

Ugh. Trailing by 4.38%. Recall that after SYNT shot up 26% that I actually burst into a short-lived lead.

Dividend & Misc Portfolios

These are my non-MFI portfolios.  The dividend portfolio is my largest portfolio and is structured to create income stream for me as I just retired.  As I noted, it is struggling a bit recently.  I really don't think about that much.  I only worry when dividends are at risk or get cut.  In fact, with SBRA and NS drops of late, I think I will turn dividend reinvesting back on for them.

Dividend Stocks	Start	Current	Divvy	Overall Pct Gain	Weekly Pct Gain	9/30/17 Price	Yield
FDEU	18.40	18.85	0.69	6.2%	-0.3%	19.42	7.7%
EVG	14.46	14.13	0.18	-1.0%	-0.4%	14.24	6.5%
PSXP	47.39	49.77	1.03	7.2%	-3.0%	52.56	5.2%
KCLI	49.31	49.00	0.49	0.4%	-0.7%	49.75	2.2%
LADR	13.01	13.70	0.30	7.6%	1.0%	13.78	8.8%
ISBC	13.25	13.77	0.06	4.4%	-2.1%	13.64	2.6%
NS	41.04	32.00	-	-22.0%	-7.0%	40.59	13.7%
RLJ-PA	28.45	27.83	0.49	-0.5%	-1.3%	27.82	7.0%
JQC	8.20	8.25	1.54	19.4%	-1.6%	8.49	6.9%
TK	5.79	7.94	0.10	38.9%	-3.9%	8.93	2.8%
DSL	19.47	20.81	1.50	14.6%	0.0%	21.25	8.6%
OIBAX	5.85	5.89	0.44	8.1%	0.2%	5.95	4.4%
OCSI	8.68	8.72	0.19	2.7%	-2.2%	8.80	8.7%
RILY	15.58	16.55	0.13	7.1%	-0.9%	17.05	1.6%
SBRA	23.13	19.33	0.52	-14.2%	-6.2%	21.94	10.8%
TGONF	11.04	12.86	1.79	32.7%	0.5%	12.80	5.4%
VTIBX	10.92	10.98	0.03	0.8%	0.4%	10.89	1.0%
GLDI	9.29	8.93	0.19	-1.8%	0.1%	9.07	12.1%
CPLP	3.54	3.27	0.08	-5.4%	-4.9%	3.50	9.8%
NRZ	16.22	17.50	0.88	13.3%	-2.2%	16.73	11.4%
DHF	3.34	3.46	0.14	7.7%	0.0%	3.53	8.2%
BKE	14.15	17.75	0.25	27.2%	2.9%	16.85	5.6%
CA	34.79	32.65	0.26	-5.4%	-0.7%	17.85	3.1%
O	25.38	55.18	20.66	198.8%	2.3%	57.19	4.6%
Totals				5.9%	-1.5%		6.7%

My Misc portfolio has higher risk stocks and some warrants.  It has struggled a bit.  I do not plan to allocate any more cash there.