Always exciting and always a bit frightening. The time has arrived for me to start a new MFI Select tranche. As a refresher, MFI Select is a real money portfolio using methods from Joel Greenblatt's "The Little Book That Beats The Markets". MFI Select consists of 4 tranches of 5 stocks. The MFI Select portfolio incepted in August 2012, so 6 year anniversary is just around the corner.
As the name "Select" suggests, I allow myself pretty much free form in how I pick the five stocks. I do pick the majority from the official screen, but I do pick the occasional stock from my own internal screens and readings.
I probably went a bit riskier on this tranche. May, for whatever reason, has always been my poorest performing tranche - although seasonality doesn't make sense as I hold for a year. I did also shovel quite a few extra dollars this quarter in per stock as that has been my intent (and action) all year for my MFI tranches. But the money added here was on the high side as May has been the worst performer and I am making a bit of an effort to get the $ per stock back into the ballbark of the other three MFI Select tranches. So hopefully it is money well invested.
As a reminder, here are the stocks I held:
| 5/6/2017 | Start | Current | Dividend | Pct Gain | R3K Gain |
| WSTC | $24.15 | $23.50 | $0.00 | -2.7% | 11.5% |
| TGNA | $25.75 | $19.83 | $0.28 | -21.9% | 11.5% |
| TIME | $15.05 | $18.50 | $0.08 | 23.5% | 11.5% |
| MSGN | $23.55 | $20.63 | $0.00 | -12.4% | 11.5% |
| QCOM | $54.93 | $50.32 | $2.28 | -4.2% | 11.5% |
| Totals | -3.6% | 11.5% |
It says May 6th, but I went back and checked and these were actually bought May 3rd. WSTC and TIME are gone as they were both bought. The other three were all losers, so I wanted to sell before May 3rd to harvest ST capital losses.
Then here is the new tranche:
| 5/2/2018 | Start | Current | Dividend | Pct Gain | R3K Gain |
| CAAP | $12.19 | $12.22 | $0.00 | 0.2% | 0.9% |
| TGNA | $10.51 | $10.53 | $0.00 | 0.2% | 0.9% |
| DISCA | $23.85 | $24.01 | $0.00 | 0.7% | 0.9% |
| FTSI | $19.39 | $19.50 | $0.00 | 0.6% | 0.9% |
| ICHR | $21.96 | $22.47 | $0.00 | 2.3% | 0.9% |
| Totals | 0.8% | 0.9% |
A few brief words on each one.
CAAP - this is an IPO of an Argentine company that provides services at various airports. They went public at $18 and have slid straight down, despite being super cheap. I went through their S-1 and came up with an earnings yield of 11% and ROIC of 506%. Those statistics would place them in top 25 of current MFI screens. And they are growing. Argentina does have issues - so there is certainly risk.
TGNA - you'll note the TGNA that I "bought" is less than the TGNA I "sold" (10.51 to 19.83). That is because the old TGNA also had the CARS spin-off, which I sold. TGNA is just so cheap. They own broadcast TV stations and I have to believe political advertising will be through the roof this fall.
DISCA - this is best known for Discovery network, but they own a lot of content and just bought Scripps as well. With the success of NFLX, I believe at some point there is a bidding war for content. In the meantime, DISCA is cheap and growing via the acquisition.
FTSI - this is a new, new stock to me. They are another recent IPO. They are involved in enhancing drilling (oil and gas), mostly in the Texas area. This is a real growth area and I think oil prices over next year are upwards biased. FTSI has a clean balance sheet and should be an effective competitor.
ICHR - finally, another relatively recent IPO (that makes three), they went public about 18 months ago and have sold off way too sharply (in my view) when TSM announced a shortfall. I now have this in two select tranches (the only stock in multiple select tranches).
Choosing the five names was tough. I almost went with AGX instead of FTSI. CAAP is a risky play for me and I almost went with AEIS. ALSN was also tempting.
I did look back at my May 2016 picks, they actually did pretty well the year after I sold them, up about 14% (due mostly to HSII up 77%). I also looked at the rejects back for May 2017. They were a mixed bag and ended up about 3.5% (another stock was also bought, WBMD). The best reject was VEC at 34% and the worst was MPAA at -36% (a stinker).
Here is the new fab five:
| 5/2/2018 | Start | Current | Dividend | Pct Gain | R3K Gain |
| CAAP | $12.19 | $12.22 | $0.00 | 0.2% | 0.9% |
| TGNA | $10.51 | $10.53 | $0.00 | 0.2% | 0.9% |
| DISCA | $23.85 | $24.01 | $0.00 | 0.7% | 0.9% |
| FTSI | $19.39 | $19.50 | $0.00 | 0.6% | 0.9% |
| ICHR | $21.96 | $22.47 | $0.00 | 2.3% | 0.9% |
| Totals | 0.8% | 0.9% |
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