MFI Diary Weekend Update 1/6/18

Weekend Update 1/6/18

Quite a cold spell here in New England.  Today is 12th straight day it hasn't reached above freezing, day or night.  -1 right now and heading to -10 tonight.  Toss in our 14" of snow from Thursday and we're really having fun.

But I have a hot cup of coffee plus a steaming bowl of Quaker Oatmeal in a warm house.  So its really not that bad.  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).  (PS - let me know, in the grievance section, if this link does not work). 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.

Onwards.

Last Week Today

Well, we made it to 2018.  Calendar was flipped, but markets kept moving up every day with limited volatility as per the plan.  Maybe 90% of trading is done by computers now and they just don't get emotional... nah!  It was a great week for me overall, up over 2%.  But astonishingly, that still lagged the Russell 3000 which scored an eye-popping 2.3% gain in week 1, 2018.  Recall though that this year I also have a dividend index, which will be the measure of my dividend portfolio.  It was up 0.5%. So really, on a blended basis I beat the indices overall.

Here is where I stand after the first week:

Component	YTD
Overall	+2.1%
MFI Select	+2.2%
MFI Formula	+1.5%
MFI Combined	+1.8%
Miscellaneous	+2.8%
Dividend	+1.9%
Dividend Index	+0.5%
R3K	+2.3%
MFI Index	+3.2%
GARIX	+2.1%

Now the keen-eyed reader will look at that table and say, "whoa, great 1st week for MFI Index - up 3.2%!"  And that would be right.  Really helped by a first week pop in SRNE, at +34%. Recall the MFI Index is a basket of 50 stocks (I just show for tracking purposes) that I reconstitute once a year. My big winner for the week was my Misc portfolio, up 2.8%.  It was definitely a risk-on kind of week.

I feel that since the MFI Index was so beaten down in 2017 and they had such a nice start here that I would give them an "attaboy" and show their first week results by stock.

Stock	Initial Price	End Price	Percent Change
SRNE	3.80	5.10	34.2%
MPAA	24.99	28.01	12.1%
PTN	0.86	0.96	11.6%
EGRX	53.42	59.14	10.7%
AMAG	13.25	14.55	9.8%
BPT	20.10	21.40	6.5%
CNCE	25.87	27.54	6.5%
CASA	17.76	18.80	5.9%
SQBG	1.78	1.88	5.6%
IDCC	76.15	79.85	4.9%
ABCD	5.68	5.95	4.8%
KLAC	105.07	109.86	4.6%
LEE	2.35	2.45	4.3%
GME	17.95	18.68	4.1%
GILD	71.64	74.52	4.0%
ABC	91.82	95.32	3.8%
PDLI	2.74	2.84	3.6%
HPQ	21.01	21.75	3.5%
BIVV	53.92	55.80	3.5%
OPHT	3.12	3.22	3.2%
TGNA	14.08	14.53	3.2%
MEET	2.82	2.91	3.2%
SYNT	22.99	23.67	3.0%
PBI	11.18	11.51	3.0%
SP	37.10	38.05	2.6%
MSGN	20.25	20.75	2.5%
EGOV	16.60	17.00	2.4%
CPLA	77.40	79.10	2.2%
HRB	26.22	26.79	2.2%
PCOA	575.00	586.00	1.9%
ESRX	74.64	76.01	1.8%
TRNC	17.59	17.89	1.7%
AGX	45.00	45.75	1.7%
CJREF	9.21	9.35	1.5%
DIN	50.73	51.46	1.4%
UTHR	147.95	149.79	1.2%
EVC	7.15	7.20	0.7%
DLX	76.84	77.24	0.5%
IPG	20.16	20.19	0.1%
INVA	14.19	14.19	0.0%
VEC	30.85	30.70	-0.5%
TVTY	36.55	36.35	-0.5%
OMC	72.83	72.17	-0.9%
HSII	24.55	24.25	-1.2%
NLS	13.35	13.15	-1.5%
DISCA	22.38	22.00	-1.7%
NHTC	15.19	14.85	-2.2%
AMCX	54.08	52.33	-3.2%
MCFT	22.22	21.42	-3.6%
VIAB	30.81	29.10	-5.6%

MFI Select

This is the first of my two real money MFI Portfolios.  Both of my MFI portfolios will be dampened in their results starting the year as I essentially have a 30% cash position built in (so that impacts the table above).  I will be adding that cash in over the course of 2018.  I also have a more hypothetical tracking (the $100,000 start in tables below that ignores my adding cash).

MFI Select was started by me in August 2012 after I had quick MFI for a year due to frustration of sub par results. But instead of slinking away, I studied my MFI results and tracking work I have done since 2006.  My main finding was that MFI screens have too many stocks that just don't meet the Jake's Bubble Gum Shop mold from the book.  So I try and weed some of those out.  I also (in MFI Select) allow myself total free rein on how I pick the stocks, be it official screen or my own internal screens.  I do buy and hold for a year.  And I have 4 tranches of 5 stocks each.  Here is how a hypothetical $100,000 spread over first 4 tranches would have grown:

Date	Differential	MFI Value	R3K Value
1/1/2013	-1.78%	102,798	104,575
4/1/2013	-0.43%	106,804	107,234
7/1/2013	4.29%	114,888	110,597
10/1/2013	19.67%	138,655	118,990
1/1/2014	26.63%	157,138	130,503
4/1/2014	30.38%	162,991	132,616
7/1/2014	39.23%	177,971	138,740
10/1/2014	29.38%	168,321	138,944
1/1/2015	28.17%	174,306	146,140
4/1/2015	29.95%	178,565	148,612
7/1/2015	62.69%	211,437	148,743
10/1/2015	43.12%	181,175	138,052
1/1/2016	63.33%	209,514	146,186
4/1/2016	47.34%	195,770	148,430
7/1/2016	50.41%	201,092	150,680
10/1/2016	42.98%	198,563	155,582
1/1/2017	45.60%	209,503	163,936
4/1/2017	55.70%	229,473	173,735
7/1/2017	60.28%	239,060	178,782
10/1/2017	75.60%	262,489	186,886
1/1/2018	92.19%	291,114	198,926
Current	94.63%	298,102	203,472

You might note that the growth from $291,114 to 298,102 in 2018 is 2.4%, which is larger than the 2.1% I showed at very start.  The biggest reason for that is my hypothetical approach does not have the cash component.

Here are how the stocks did individually during the week:

Stock	Last Week	Current	Dividend	Change
SIMO	52.96	54.89	-	3.6%
MSGN	20.25	20.75	-	2.5%
YY	113.06	128.10	-	13.3%
CELG	104.36	104.99	-	0.6%
EVC	7.15	7.20	-	0.7%
ICHR	24.60	27.50	-	11.8%
AKRX	32.23	32.46	-	0.7%
VIAB	30.81	29.10	-	-5.6%
RHI	55.54	56.31	-	1.4%
MD	53.44	54.50	-	2.0%
QCOM	64.02	66.47	-	3.8%
KLAC	105.07	109.86	-	4.6%
TIME	18.45	18.55	-	0.5%
GHC	558.35	566.15	-	1.4%
WNC	21.70	21.60	-	-0.5%
RGR	55.85	53.35	-	-4.5%
TGNA	23.69	24.92	-	5.2%

YY has been unbelievable.  Just three+ weeks to go for it.  Here are my 4 tranches:

2/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
AKRX	$19.10	$32.46	$0.00	69.9%	21.4%
YY	$41.08	$128.10	$0.00	211.8%	21.4%
KLAC	$85.11	$109.86	$2.26	31.7%	21.4%
WNC	$17.65	$21.60	$0.24	23.7%	21.4%
RGR	$52.75	$53.35	$1.36	3.7%	21.4%
Totals				68.2%	21.4%
5/6/2017	Start	Current	Dividend	Pct Gain	R3K Gain
WSTC	$24.15	$23.50	$0.00	-2.7%	15.2%
TGNA	$25.75	$24.92	$0.21	-2.4%	15.2%
TIME	$15.05	$18.55	$0.08	23.8%	15.2%
MSGN	$23.55	$20.75	$0.00	-11.9%	15.2%
QCOM	$54.93	$66.47	$1.71	24.1%	15.2%
Totals				6.2%	15.2%
8/15/2017	Start	Current	Dividend	Pct Gain	R3K Gain
GHC	$591.10	$566.15	$1.27	-4.0%	12.1%
ICHR	$19.80	$27.50	$0.00	38.9%	12.1%
MD	$43.00	$54.50	$0.00	26.7%	12.1%
SIMO	$43.05	$54.89	$0.30	28.2%	12.1%
RHI	$44.15	$56.31	$0.48	28.6%	12.1%
Totals				23.7%	12.1%
11/15/2017	Start	Current	Dividend	Pct Gain	R3K Gain
MSGN	$16.67	$20.75	$0.00	24.5%	6.9%
CELG	$100.60	$104.99	$0.00	4.4%	6.9%
EVC	$5.78	$7.20	$0.05	25.4%	6.9%
SIMO	$46.88	$54.89	$0.00	17.1%	6.9%
VIAB	$24.41	$29.10	$0.20	20.1%	6.9%
Totals				18.3%	6.9%

Solid numbers.  Only May is the laggard, but it is vastly improved from Labor day.  Then here is table that summarizes all tranches:

Category/Tranche	August	November	February	May	Total
Initial Investment	25,000	25,000	25,000	25,000	100,000
Current Tranche	23.7%	18.3%	68.2%	6.2%	26.8%
Previous Tranche	-0.1%	42.6%	10.7%	19.1%	23.1%
Tranche -2	2.8%	8.0%	-14.3%	-25.2%	-7.2%
Tranche -3	11.2%	69.4%	8.5%	18.3%	26.8%
Tranche -4	41.4%	14.2%	78.3%	33.0%	41.7%
Tranche -5	14.1%	43.7%	0.0%	0.0%	14.5%
MFI Overall Gain	128.0%	407.0%	208.6%	48.8%	198.1%
Current Balance	56,996	126,756	77,160	37,191	298,102
R3K Current Tranche	12.1%	6.9%	21.4%	15.2%	13.9%
R3K Overall Gain	114.7%	119.1%	96.3%	83.7%	103.5%
R3K Balance	53,680	54,771	49,086	45,934	203,472
Annualized IRR	16.5%	37.1%	25.7%	8.9%	22.0%

Wow, up to a 22.0% annualized IRR.  Not quite the 31% from the book, but a very good number.  You can see my 4 current tranches are up an average of 26.8% vs R3K 13.9%.  That will drop back after February first when I move the 68.2% from current to "Previous tranche".  You can also see, looking down the columns, that November has been my best month for tranches, up 407% in total.  May is my worst (not doing well this time either) up just 48.8%.

My best tranche ever was February 2013 at 78.3%.  May 2015 was the worst, down 25%.

MFI Formula

Same series of tables.  I started MFI Formula with real money in October 2014.  Again, 4 tranches with 5 stocks each.  It is called Formula as I pick my stocks based on formula screening and random number generator.

Date	Differential	Value	R3K Value
10/1/2014	0.00%	100,000	100,000
1/1/2015	-0.33%	100,664	100,995
4/1/2015	5.09%	106,781	101,695
7/1/2015	4.82%	106,423	101,604
10/1/2015	6.39%	100,703	94,312
1/1/2016	-3.36%	96,830	100,012
4/1/2016	0.34%	102,371	101,548
7/1/2016	-0.19%	103,022	103,216
10/1/2016	-0.85%	106,377	107,230
1/1/2017	1.57%	113,406	111,832
4/1/2017	-1.86%	116,227	118,091
7/1/2017	-2.40%	119,144	121,545
10/1/2017	-2.56%	124,448	127,007
1/1/2018	-3.63%	131,460	135,086
Current	-4.41%	133,584	137,999

Not doing as well, trailing benchmark by a bit.  It did edge ahead in early December, but has fallen back again (SYNT really hurt).

4/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
BKE	$18.45	$21.65	$0.75	21.4%	17.0%
CSCO	$33.76	$39.53	$1.16	20.5%	17.0%
GILD	$67.50	$74.52	$1.56	12.7%	17.0%
OMC	$85.53	$72.17	$1.65	-13.7%	17.0%
SYNT	$16.76	$23.67	$0.00	41.2%	17.0%
Totals				16.4%	17.0%
7/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
CSCO	$30.98	$39.53	$0.58	29.5%	13.7%
GME	$20.95	$18.68	$0.76	-7.2%	13.7%
HPQ	$17.60	$21.75	$0.27	25.1%	13.7%
RGR	$60.70	$53.35	$0.44	-11.4%	13.7%
SYNT	$16.21	$23.67	$0.00	46.0%	13.7%
Totals				16.4%	13.7%
10/1/2017	Start	Current	Dividend	Pct Gain	R3K Gain
DIN	$43.14	$51.46	$0.97	21.5%	8.8%
GILD	$82.85	$74.52	$0.52	-9.4%	8.8%
GME	$20.50	$18.68	$0.38	-7.0%	8.8%
HPQ	$20.22	$21.75	$0.13	8.2%	8.8%
OMC	$74.80	$72.17	$0.55	-2.8%	8.8%
Totals				2.1%	8.8%
1/2/2018	Start	Current	Dividend	Pct Gain	R3K Gain
AMGN	$177.11	$180.65	$0.00	2.0%	1.8%
GME	$18.06	$18.68	$0.00	3.5%	1.8%
GILD	$71.64	$74.52	$0.00	4.0%	1.8%
HRB	$26.34	$26.79	$0.00	1.7%	1.8%
OMC	$72.81	$72.17	$0.00	-0.9%	1.8%
Totals				2.1%	1.8%

First look at the newest tranche.  Off to a +2.1% start.  Note the R3K 1.8% is not as good as R3K for the year.  This is because I do not start tranche at start of day.  I bought my stocks around noon and used the R3K value at that time.

Here is table showing all tranches:

Category/Tranche	October	January	April	July	Total
Initial Investment	249,820	249,939	250,180	249,728	999,667
Current Tranche	2.1%	2.1%	16.4%	16.4%	8.5%
Previous Tranche	7.0%	16.5%	25.2%	26.7%	19.2%
Tranche -2	5.5%	9.3%	-0.2%	-12.5%	0.5%
Tranche -3	0.5%	11.0%	0.0%	0.0%	2.9%
MFI Overall Gain	15.8%	44.2%	45.4%	29.1%	33.6%
Current Balance	289,261	360,503	363,706	322,368	1,335,838
R3K Current Tranche	8.8%	1.8%	17.0%	13.7%	10.3%
R3K Overall Gain	46.0%	37.3%	36.6%	32.3%	38.0%
R3K Balance	364,718	343,062	341,693	330,498	1,379,971
Annualized IRR	4.6%	12.9%	14.4%	10.6%	10.6%

So 10.6% annualized IRR not as sexy as the 22% from my Select approach.  but I believe in this approach and I did add 33% more funds to my January 1st tranche.  My 4 current tranches are up 8.5% and trailing benchmark 10.3% by a bit.

Here are stocks during the week:

Stock	Last Week	Current	Dividend	Change
GILD	71.64	74.52	-	4.0%
OMC	72.83	72.17	-	-0.9%
GME	17.95	18.68	-	4.1%
SYNT	22.99	23.67	-	3.0%
CSCO	38.30	39.53	0.29	4.0%
HPQ	21.01	21.75	-	3.5%
AMGN	177.11	180.65	-	2.0%
HRB	26.22	26.79	-	2.2%
BKE	23.75	21.65	-	-8.8%
DIN	50.73	51.46	-	1.4%
RGR	55.85	53.35	-	-4.5%

BKE was off pretty sharply as they announced December same store sales and they were pretty uninspiring.

Dividend Portfolio

As I have discussed, I am going to start tracking my dividend portfolio against a dividend index based on 40 securities Barron's listed in December.  I think this is more fair that comparing against R3K as I have some bond holdings (and they are my largest), such as OIBAX.  That being said, there is no doubt that I stretch for yield more than the Barron's list.  Their average yield is around 4.2%.  I am at 6.4%.  Here is my portfolio:

Dividend Stocks	Start	Current	Divvy	Overall Pct Gain	Weekly Pct Gain	12/30/17 Price	Yield
OIBAX	5.91	6.01	0.19	4.9%	0.8%	19.42	4.0%
KCLI	48.89	45.35	0.33	-6.6%	0.2%	14.24	2.4%
TK	6.20	10.05	0.08	63.6%	7.8%	21.44	2.2%
KNOP	21.30	21.80	-	2.3%	5.1%	49.75	9.5%
CPLP	3.54	3.51	0.08	1.5%	4.5%	13.78	9.1%
JQC	8.18	8.28	0.62	8.9%	0.7%	13.64	6.9%
TGP	17.89	20.50	-	14.6%	1.7%	40.59	2.7%
EVG	14.46	14.23	0.33	0.7%	-0.8%	27.82	6.5%
PSXP	47.39	53.20	1.03	14.4%	1.6%	8.49	4.9%
ISBC	13.25	13.74	0.15	4.9%	-1.0%	8.93	2.6%
FDEU	18.40	19.31	0.94	10.1%	2.5%	21.25	7.5%
LADR	13.01	13.55	0.62	8.9%	-0.6%	5.95	9.3%
NS	37.98	31.32	0.82	-15.4%	4.6%	8.80	14.0%
RLJ-PA	28.45	26.82	0.98	-2.3%	-0.7%	17.05	7.3%
NRZ	16.56	17.71	1.17	14.0%	-1.0%	21.94	11.3%
SBRA	22.28	18.49	0.91	-12.9%	-1.5%	12.80	9.7%
RILY	15.58	18.15	0.21	17.9%	0.3%	10.89	0.9%
OCSI	8.68	8.55	0.38	2.9%	1.8%	9.07	8.9%
DSL	19.47	20.69	1.84	15.7%	2.5%	3.50	8.7%
TGONF	11.04	13.80	1.79	41.2%	3.8%	16.73	5.1%
AMID	13.25	13.95	-	5.3%	4.5%	13.25	11.8%
TOO	2.25	2.60	-	15.6%	10.2%	16.85	1.5%
O	25.61	55.21	20.93	197.3%	-3.2%	65.01	4.6%
Totals				8.1%	2.0%		6.4%

I have been so disappointed with KCLI.  This is a small (and pretty ill-liquid) life insurer that trades way under BV.  I view it as extremely safe.  But they dropped (I understand) as they had some tax loss carry-forwards that are now worth less under the new lowered corporate tax rates.  Who knew?

You can see TOO had a great first full week for me, up 10.2%.  I just wish I had bought more.  TK was also up nicely at 7.8% (I do own a boatload (haha) of them).  Of course they own part of TOO and TGP. So a little incest in here.

Here are the stocks/holding of the dividend index.  I won't publish these every week.

Ticker	12/30/2017	Current	Dividend	YTD Change	Weekly Change	Yield
AMLP	10.79	11.32	-	4.9%	4.9%	7.58%
NML	9.38	9.85	-	5.0%	5.0%	6.70%
EPD	26.51	27.73	-	4.6%	4.6%	6.01%
ETP	17.92	18.74	-	4.6%	4.6%	12.57%
FDD	13.73	14.07	-	2.5%	2.5%	2.71%
VGK	59.15	60.86	-	2.9%	2.9%	2.63%
DDAIF	84.57	87.88	-	3.9%	3.9%	3.94%
NVS	83.96	86.27	-	2.8%	2.8%	3.15%
NOBL	64.04	64.79	-	1.2%	1.2%	1.72%
VYM	85.63	86.97	-	1.6%	1.6%	2.76%
MRK	56.27	56.99	-	1.3%	1.3%	3.32%
PEP	119.92	118.67	-	-1.0%	-1.0%	2.66%
VNQ	82.98	81.03	-	-2.3%	-2.3%	4.34%
RQI	12.65	12.43	-	-1.7%	-1.7%	7.72%
TCO	65.43	64.26	-	-1.8%	-1.8%	3.89%
SLG	100.93	99.86	-	-1.1%	-1.1%	3.13%
T	38.88	38.14	-	-1.9%	-1.9%	5.13%
VZ	52.93	52.48	-	-0.9%	-0.9%	4.44%
CHL	50.54	50.31	-	-0.5%	-0.5%	3.66%
DTEGY	17.66	18.04	-	2.1%	2.1%	3.78%
DSU	11.70	11.70	-	0.0%	0.0%	2.34%
HIO	5.07	5.06	-	-0.2%	-0.2%	6.94%
MUB	110.74	110.48	0.21	0.0%	-0.2%	2.22%
PRHYX	6.76	6.80	-	0.6%	0.6%	5.40%
NEA	13.75	13.84	-	0.7%	0.7%	5.26%
JNK	36.72	37.03	0.17	1.3%	0.8%	5.55%
VWITX	14.13	14.13	0.03	0.2%	0.0%	0.00%
PHMIX	9.09	9.09	0.03	0.4%	0.0%	2.80%
UTG	30.94	30.78	-	-0.5%	-0.5%	4.20%
XLU	52.65	51.33	-	-2.5%	-2.5%	3.41%
DUK	84.11	81.94	-	-2.6%	-2.6%	4.26%
EIX	63.24	62.98	-	-0.4%	-0.4%	3.53%
PFF	38.07	37.97	0.18	0.2%	-0.3%	5.61%
JPC	10.34	10.25	-	-0.9%	-0.9%	7.57%
WFC-PL	1,309.99	1,295.56	-	-1.1%	-1.1%	5.80%
TIP	114.08	113.92	0.21	0.0%	-0.1%	2.49%
SHY	83.85	83.78	0.08	0.0%	-0.1%	0.98%
TLT	126.86	125.71	0.26	-0.7%	-0.9%	2.46%
Totals	-	-	-	0.5%	0.5%	4.28%

The tracking of dividends on this portfolio is a real pain.  So I have created a table that approximates the dividends.  It may be off a bit from time to time, but should be pretty accurate in aggregate.

Finally, I have moved my small bank portfolio,  which yields about 2% from Misc to Dividend.  Basically I put holdings in Dividend portfolio if (1) they have a dividend and (2) I plan to hold long term.

Bank	Start	Current	Dividends	Change	Yield
ACBI	16.99	17.95	-	5.6%	0.0%
ASB	25.69	25.50	-	-0.7%	2.2%
FBIZ	23.69	22.64	-	-4.4%	2.3%
FULT	18.81	18.18	0.11	-2.8%	2.4%
FNB	14.47	13.98	-	-3.4%	3.4%
MSBI	32.96	32.90	-	-0.2%	2.5%
NRIM	37.47	33.65	0.21	-9.6%	2.7%
PACW	48.30	50.80	-	5.2%	4.0%
SONA	17.13	16.14	-	-5.8%	2.0%
WNEB	10.88	10.80	-	-0.7%	1.1%
Total				-1.7%	2.3%

Note that the -1.7% is overall for this basket of stocks... not since start if 2018.

Miscellaneous

It was a good week for my Misc holdings.  SELB, EXXI and AUPH were all up in excess of 10%.

Here is my basket of small miners:

Miner	Start	Current	Change
TORXF	9.90	8.30	-16.2%
SAND	4.48	5.24	17.0%
NSU	2.38	2.48	4.2%
KLDX	2.41	2.47	2.5%
KL	14.49	16.52	14.0%
GSS	0.87	0.84	-2.7%
FSM	4.24	5.09	20.0%
EXK	2.14	2.47	15.4%
BTG	2.61	2.98	14.2%
EGO	1.18	1.41	19.5%
Total			8.8%

Like the banks, this is a cumulative number.  I do have a fair number of biotechs in my Misc portfolio.  I have decided that over time as I sell them (either because they hit their catalyst or did not), that I will change and create a basket approach for biotechs.  I think that will be a less risky approach and still give me some of the excitement of biotechs.

Ok, that is officially the end of my ramble.  Thanks for reading.