Saturday, February 24, 2018

MFI Diary Weekend Update 2/24/18

MFI Diary Weekend Update 2/24/18

The markets kept up their general Jekyll and Hyde routine going this week.  "Go right! No, the other right!".  It felt like I went through the blender, but all-in-all with a strong Friday it was a decent week.

The theme for the year continues, my MFI (and all MFI approaches) portfolios continue to do very well, but my Misc approach is weighing down overall results.

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 - I continue to struggle to make this link work.  You can instead go to Blog archive on left margin of this blog and you will find a link in October 2017). 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.


Onwards.

Last Week

It does get frustrating when you see your speculative stocks get crushed all the time.  And it is also frustrating to either buy the wrong stock or sell the wrong stock.  I decided to sell WLL at start of week as I try to reduce my Misc portfolio, which has been a drag.  And then right after I sell, they have great earnings and pop 25%.  Did I mention that is frustrating?


Then the Misc stock I decided to hold, OMER, got crushed like a cigarette under the heel of a shoe.  They are primarily valued on a drug in development (OMS721). But their one commercial drug, Omidria is struggling.  So Omer is down 41% in past three weeks (29% drop this past week).  Did I mention that this is frustrating?

Here is a table summarizing the past week:



 Component   YTD   Week Change 
 Overall  -1.4% +0.7%
 MFI Select  +2.7% +0.7%
 MFI Formula  +6.1% +0.8%
 MFI Combined  +4.3% +0.7%
 Miscellaneous  -9.5% +0.2%
 Dividend  -2.1% +0.9%
 Dividend Index  -2.4% -0.1%
 R3K Index  +2.6% +0.6%
 Blended Index  +0.6% +0.3%
 MFI Index  +9.5% +0.9%
 GARIX  +2.4% +0.6%


So you can see that Misc was up 0.2% on the week despite the OMER crash and the mistake of selling WLL.  But still down 9.5% on the year.  However, my two real money MFI portfolios were up 0.7% on the week and now at 4.3% on the year (MFI Index is up 9.5% on the year).

MFI Select

Regular readers of the almost world famous MFI Diary will know that I have two real $ MFI
portfolios: Select and Formula.  I started Select in August 2012 after ending my MFI investing a year earlier (August 2011) from frustration (there is that word again).  MFI in total has struggled as too many stocks fall in the stinker category and drop 30% or more in a year (I have found that standard deviation amongst MFI stocks is much higher than the broader market).  So both my MFI approaches attempt to minimize how many stinkers I pick.  Select is as it sounds, I can Select whatever stocks I want, either from official screens or my own internal screens.  I try to find true MFI stocks, those that have earnings that can be replicated,,, as opposed to one time payments or ending stream of revenues.

Both my MFI portfolios consist of 4 tranches of 5 stocks apiece.  I buy and hold the stocks for a year. i have a great deal of conviction, last year I added about 30% more cash to each tranche at anniversary dates. And I am doing that again this year.  Here are the 4 open tranches:


5/6/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 WSTC  $24.15 $23.50 $0.00 -2.7% 15.5%
 TGNA  $25.75 $23.52 $0.21 -7.9% 15.5%
 TIME  $15.05 $18.50 $0.08 23.5% 15.5%
 MSGN  $23.55 $25.05 $0.00 6.4% 15.5%
 QCOM  $54.93 $63.32 $1.71 18.4% 15.5%
 Totals  7.5% 15.5%
8/15/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 GHC  $591.10 $601.45 $2.54 2.2% 12.5%
 ICHR  $19.80 $25.75 $0.00 30.1% 12.5%
 MD  $43.00 $57.35 $0.00 33.4% 12.5%
 SIMO  $43.05 $45.13 $0.60 6.2% 12.5%
 RHI  $44.15 $57.85 $0.76 32.8% 12.5%
 Totals  20.9% 12.5%
11/15/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 MSGN  $16.67 $25.05 $0.00 50.3% 7.2%
 CELG  $100.60 $95.61 $0.00 -5.0% 7.2%
 EVC  $5.78 $6.90 $0.05 20.2% 7.2%
 SIMO  $46.88 $45.13 $0.30 -3.1% 7.2%
 VIAB  $24.41 $33.74 $0.20 39.1% 7.2%
 Totals  20.3% 7.2%
2/1/2018  Start   Current   Dividend   Pct Gain   R3K Gain 
 AGX  $43.55 $39.25 $0.00 -9.9% -2.3%
 CASA  $18.81 $19.64 $0.00 4.4% -2.3%
 KLAC  $109.80 $110.47 $0.59 1.1% -2.3%
 THO  $136.33 $125.00 $0.00 -8.3% -2.3%
 WDC  $87.74 $89.14 $0.00 1.6% -2.3%
 Totals  -2.2% -2.3%

My only trailing tranche is May 2017, but other three look solid.  Here are my overall results for all tranches:


 Category/Tranche   August   November   February   May   Total 
 Initial Investment         25,000             25,000           25,000        25,000         100,000
 Current Tranche  20.9% 20.3% -2.2% 7.5% 10.6%
 Previous Tranche  -0.1% 42.6% 74.9% 19.1% 36.0%
 Tranche -2  2.8% 8.0% 10.7% -25.2% -0.9%
 Tranche -3  11.2% 69.4% -14.3% 18.3% 21.2%
 Tranche -4  41.4% 14.2% 8.5% 33.0% 24.3%
 Tranche -5  14.1% 43.7% 78.3% 0.0% 34.0%
 MFI Overall Gain  122.9% 415.7% 213.9% 50.6% 200.8%
 Current Balance         55,717           128,923           78,483        37,662         300,785
 R3K Current Tranche  12.5% 7.2% -2.3% 15.5% 8.2%
 R3K Overall Gain  115.4% 119.8% 97.1% 84.3% 104.2%
 R3K Balance         53,854             54,950           49,271        46,083         204,159
 Annualized IRR  15.6% 36.4% 25.3% 8.9% 21.6%

So on this table, I show every tranche (in summary) I have owned.  The first is under August, Tranche -5 and was up 14.1%.  Overall a hypothetical $100,000 will have grown to 300,785.  That is an annualized IRR of 21.6%.  Lot of information in this table for those who want to peruse.  I also show all my tranches in detail once a quarter when I retire a tranche.

Here is a table that shows quarter by quarter how $100,000 has grown versus $100,000 in Russell 3000 (R3K):


 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 96.63%        300,785            204,159
Finally,  here is a table showing my MFI stocks for the past week:


 Stock   Last Week   Current   Dividend   Change 
 MSGN              25.05         25.05                       -   0.0%
 SIMO              44.77         45.13                       -   0.8%
 VIAB              33.50         33.74                       -   0.7%
 CASA              19.27         19.64                       -   1.9%
 KLAC            107.52       110.47                       -   2.7%
 THO            124.83       125.00                       -   0.1%
 AGX              40.40         39.25                       -   -2.8%
 WDC              84.91         89.14                       -   5.0%
 EVC                6.80            6.90                       -   1.5%
 ICHR              25.17         25.75                       -   2.3%
 CELG              95.26         95.61                       -   0.4%
 RHI              56.20         57.85                  0.21 3.3%
 MD              56.61         57.35                       -   1.3%
 QCOM              64.85         63.32                       -   -2.4%
 GHC            599.85       601.45                       -   0.3%
 TGNA              23.54         23.52                       -   -0.1%

MFI Formula

Okay, same tables with less chatter.  MFI Formula was started in October 2014.  As opposed to Select, Formula picks are from a Formula and a random number generator.  While it has under-performed benchmark for quite a while, it has recently taken the lead.  


4/1/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 BKE  $18.45 $22.00 $2.75 34.1% 17.4%
 CSCO  $33.76 $44.00 $1.16 33.8% 17.4%
 GILD  $67.50 $80.91 $1.56 22.2% 17.4%
 OMC  $85.53 $77.31 $1.65 -7.7% 17.4%
 SYNT  $16.76 $26.98 $0.00 61.0% 17.4%
 Totals  28.7% 17.4%
7/1/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 CSCO  $30.98 $44.00 $0.58 43.9% 14.0%
 GME  $20.95 $15.97 $0.76 -20.1% 14.0%
 HPQ  $17.60 $22.13 $0.27 27.2% 14.0%
 RGR  $60.70 $49.90 $0.44 -17.1% 14.0%
 SYNT  $16.21 $26.98 $0.00 66.4% 14.0%
 Totals  20.1% 14.0%
10/1/2017  Start   Current   Dividend   Pct Gain   R3K Gain 
 DIN  $43.14 $68.99 $0.97 62.2% 9.2%
 GILD  $82.85 $80.91 $0.52 -1.7% 9.2%
 GME  $20.50 $15.97 $0.38 -20.2% 9.2%
 HPQ  $20.22 $22.13 $0.13 10.1% 9.2%
 OMC  $74.80 $77.31 $0.55 4.1% 9.2%
 Totals  10.9% 9.2%
1/2/2018  Start   Current   Dividend   Pct Gain   R3K Gain 
 AMGN  $177.11 $186.67 $1.32 6.1% 2.1%
 GME  $18.06 $15.97 $0.00 -11.5% 2.1%
 GILD  $71.64 $80.91 $0.00 12.9% 2.1%
 HRB  $26.34 $26.82 $0.00 1.8% 2.1%
 OMC  $72.81 $77.31 $0.00 6.2% 2.1%
 Totals  3.1% 2.1%
 Category/Tranche   October   January   April   July   Total 
 Initial Investment      249,820        249,939     250,180      249,728         999,667
 Current Tranche  10.9% 3.1% 28.7% 20.1% 14.4%
 Previous Tranche  7.0% 16.5% 25.2% 26.7% 19.5%
 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  25.7% 45.7% 60.7% 33.2% 41.3%
 Current Balance      314,123        364,196     401,941      332,554      1,412,814
 R3K Current Tranche  9.2% 2.1% 17.4% 14.0% 10.7%
 R3K Overall Gain  46.5% 37.7% 37.0% 32.8% 38.5%
 R3K Balance      365,908        344,185     342,799      331,572      1,384,464
 Annualized IRR  7.0% 12.7% 17.7% 11.4% 12.2%

No shame in 12.2% annualized IRR.  Current tranches at 14.4% versus benchmark 10.7%.


 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 2.84%        141,281            138,446

One can really see the acceleration since start of 2018.  Note this is based on hypothetical $100,000 at start with no additions.  In my real portfolio, I have steadily been adding money past two years.


 Stock   Last Week   Current   Dividend   Change 
 GILD              80.70         80.91                       -   0.3%
 OMC              78.72         77.31                       -   -1.8%
 GME              16.40         15.97                       -   -2.6%
 SYNT              26.87         26.98                       -   0.4%
 CSCO              44.33         44.00                       -   -0.7%
 HPQ              21.40         22.13                       -   3.4%
 AMGN            183.55       186.67                       -   1.7%
 HRB              28.04         26.82                       -   -4.4%
 BKE              21.95         22.00                       -   0.2%
 DIN              54.67         68.99                       -   26.2%
 RGR              50.30         49.90                       -   -0.8%

DIN was great this week.  HPQ also had strong earnings.

Dividend Portfolio

Those here for MFI can stop reading as now I will review my dividend portfolio (to create income for my retirement) and my Misc portfolio (apparently a way for me to offset MFI gains).  With dividend portfolio, I am more focused on income rather than capital gains.  I compare it against a portfolio of income holdings listed by Barron's in December.


 Dividend Stocks  Start  Current   Divvy   Overall Pct Gain   Weekly Pct Gain   12/30/17 Price   Yield 
 OIBAX      5.91         6.04      0.21 5.7% -0.7%           5.96 4.0%
 TK      7.43         7.99      0.08 8.5% 7.0%           9.32 2.8%
 KCLI    48.89       44.49      0.60 -7.8% 3.7%        45.25 2.4%
 KNOP    21.30       20.40      0.52 -1.8% -3.5%        20.75 10.2%
 GLOP-PB    25.36       25.05           -   -1.2% 0.1%        25.36 8.1%
 CPLP      3.53         3.22      0.16 -4.4% 2.2%           3.36 9.9%
 TGP    18.28       19.10      0.14 5.3% 1.6%        20.15 2.9%
 NS    37.37       23.61      1.83 -31.9% -2.2%        29.95 10.2%
 LADR    13.01       14.91      0.62 19.4% 0.9%        13.63 8.5%
 JQC      8.18         8.10      0.72 7.8% 0.2%           8.22 7.0%
 PSXP    47.39       50.42      1.71 10.0% 0.3%        52.35 5.4%
 FDEU    18.40       18.74      1.06 7.6% -0.7%        18.83 7.7%
 ISBC    13.25       13.85      0.24 6.4% -0.5%        13.88 2.6%
 EVG    14.46       13.65      0.48 -2.3% -0.6%        14.35 6.7%
 RILY    15.58       18.95      0.21 23.0% -1.0%        18.10 2.5%
 RLJ-PA    28.45       25.80      0.98 -5.9% 1.0%        27.01 7.6%
 NRZ    16.56       16.57      1.17 7.1% -1.9%        17.88 12.1%
 SBRA    22.28       17.32      0.63 -19.4% 1.9%        18.77 10.4%
 DSL    19.47       19.72      2.14 12.3% -0.6%        20.19 9.1%
 OCSI      8.68         7.70      0.38 -6.9% -1.4%           8.40 9.9%
 TGONF    11.04       12.96      1.79 33.6% -1.1%        13.30 5.4%
 AMID    13.25       11.85      0.41 -7.5% -2.1%        13.35 13.9%
 TOO      2.33         2.71      0.01 16.5% 10.6%           2.36 1.5%
 O    25.82       50.20    21.18 176.4% 0.5%        57.02 5.1%
 Totals  2.8% 1.0% 6.3%

While I don't show it here, this portfolio is down 2.1% on the year (shown in table at top of this blog). NS, TK, AMID and O are all down 10% or more this year.  TOO is big winner, up almost 15%.


Here is dividend index for comparison.  It is down 2.4% in 2018.


 Ticker  12/30/2017  Current   Dividend   YTD Change   Weekly Change   Yield 
 AMLP                10.79          10.37               0.21 -2.0% -2.3%         8.12%
 NML                  9.38             8.98               0.11 -3.1% -2.5% 7.35%
 EPD                26.51          25.73               0.42 -1.4% -2.6% 6.54%
 ETP                17.92          19.21               0.57 10.4% 3.6% 11.55%
 FDD                13.73          14.20                    -   3.4% 0.3% 2.69%
 VGK                59.15          59.93                    -   1.3% -0.4% 2.67%
 DDAIF                84.57          88.06                    -   4.1% -2.5% 3.94%
 NVS                83.96          85.33               2.75 4.9% -1.8% 3.19%
 NOBL                64.04          64.05                    -   0.0% -0.5% 1.74%
 VYM                85.63          86.12                    -   0.6% 0.0% 2.79%
 MRK                56.27          54.87                    -   -2.5% -2.5% 3.45%
 PEP              119.92        109.68               0.81 -7.9% -1.2% 2.88%
 VNQ                82.98          74.92                    -   -9.7% -0.5% 4.69%
 RQI                12.65          11.39               0.16 -8.7% 4.4% 3.43%
 TCO                65.43          60.82                    -   -7.0% 0.1% 4.10%
 SLG              100.93          97.62                    -   -3.3% 1.5% 3.22%
 T                38.88          36.72               0.49 -4.3% -1.1% 5.36%
 VZ                52.93          48.29               0.56 -7.7% -3.7% 4.84%
 CHL                50.54          47.89                    -   -5.2% 0.0% 3.82%
 DTEGY                17.66          16.50                    -   -6.6% 1.0% 4.12%
 DSU                11.70          11.46               0.14 -0.9% -0.3% 2.99%
 HIO                  5.07             4.90               0.06 -2.2% 0.2% 3.46%
 MUB              110.74        108.62               0.63 -1.3% 0.0% 2.29%
 PRHYX                  6.76             6.66               0.06 -0.6% -0.3% 5.40%
 NEA                13.75          13.06               0.12 -4.1% -1.5% 5.51%
 JNK                36.72          36.26               0.50 0.1% -0.2% 5.63%
 VWITX                14.13          13.89               0.09 -1.0% 0.0% 0.00%
 PHMIX                  9.09             8.97               0.10 -0.3% -0.1% 2.80%
 UTG                30.94          28.58               0.32 -6.6% -1.0% 4.20%
 XLU                52.65          50.35                    -   -4.4% 0.5% 3.48%
 DUK                84.11          77.22               0.89 -7.1% 0.7% 4.57%
 EIX                63.24          62.17                    -   -1.7% 1.8% 3.58%
 PFF                38.07          37.30               0.54 -0.6% 0.6% 5.70%
 JPC                10.34             9.73               0.13 -4.6% 0.5% 3.36%
 WFC-PL          1,309.99    1,275.00                    -   -2.7% 0.0% 5.80%
 TIP              114.08        111.90               0.63 -1.4% 0.1% 2.33%
 SHY                83.85          83.47               0.24 -0.2% 0.0% 1.03%
 TLT              126.86        118.13               0.77 -6.3% -0.5% 2.61%
 Totals                       -                    -                      -   -2.4% -0.3% 4.08%


Finally, I do hav a group of small banks in my dividend portfolio:


 Bank   Start   Current   Dividends   Change   Yield 
 ACBI          16.99          17.50                 -   3.0% 0.0%
 ASB          25.69          25.20                 -   -1.9% 2.4%
 FBIZ          23.69          24.58            0.14 4.4% 2.3%
 FULT          18.81          18.85            0.11 0.8% 2.3%
 FNB          14.47          14.52                 -   0.3% 3.3%
 MSBI          32.96          31.44            0.22 -3.9% 2.8%
 NRIM          37.47          33.85            0.21 -9.1% 2.6%
 PACW          48.30          53.78            0.50 12.4% 3.8%
 SONA          17.13          15.84            0.08 -7.0% 2.0%
 WNEB          10.88          10.10            0.04 -6.8% 1.6%
 Total  -0.8% 2.3%

Miscellaneous

Not much to say.  Struggling.  Easily the smallest of my three investing legs (MFI, Divvy and Misc), but still causing problems.  But will stay with what I have,  not wanting more WLL mistakes. I picked stocks for a reason and will stay with them until the reason no longer exists... not because I am nervous.

Here are the small mining stocks I hold as part of this portfolio:


 Miner   Start   Current   Change   2018 Change 
 TORXF            9.90             8.81 -11.0% -7.3%
 SAND            4.48             4.66 4.0% -6.6%
 NSU            2.38             2.21 -7.1% -9.4%
 KLDX            2.41             1.52 -36.9% -41.8%
 KL          14.49          15.60 7.7% 1.6%
 GSS            0.87             0.72 -16.9% -19.2%
 FSM            4.24             4.62 9.0% -11.5%
 EXK            2.14             2.26 5.6% -5.4%
 BTG            2.61             3.02 15.7% -2.6%
 EGO            1.18             1.08 -8.5% -24.5%
 Total  -3.9% -12.7%

At -12.7% they have not helped Misc cause either.

Later everyone!


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