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| Investing 2010 |
Since the "bible" of MFI, The tiny Book with the aim of Beats the Market, emphasizes together with small caps to exploit the strategy's returns, underneath is a graph with the aim of shows the next of kin performance of MFI's "top 50 stocks on 50 million marketplace cap" screen contrary to the S&P 500 ETF (SPY). The results underneath affect with the aim of all 50 MFI stocks were purchased on a engagement and held until 12/23, and compares the usual performance of all stocks in the screen to trade SPY on the same daylight hours. 52 samples were taken, on Wednesday of both week in 2010:
The chief gains from MFI came first in the time, particularly in February someplace the screen averaged almost 24% in place of both obtain, far out-performing the S&P's 14.8%. The most awful performance came through April and the basic part of May, someplace MFI trailed the S&P by 2.4% on usual. Clothed in all, though, the strategy's achievement is evident. The formula out-performed the S&P in 41 of 52 samples, and in place of the total time, the usual MFI portfolio appreciated 13.1% v. The S&P's 10.3%.
Also impressive was the "hit rate" of MFI. Clothed in immediately single of the 52 samples (the carry on single, 12/22) did the screen maintain under 50% of its stocks conclude with helpful gains. Clothed in 17 weeks, on 3/4 (75%) of stocks delivered helpful gains to the last part of the time. Put simply, near were very a small number of duds in MFI this time, a stark contrast to pardon? I've seen in the ancient.
MFI dug up selected great big winners in place of the time:
Magic Software (MGIC): MGIC's performance in 2010 was pretty magical. If you would maintain purchased the routine throughout its February run in the screen, you would maintain enjoyed virtually a four-bagger (300% appreciation). This Israeli cloud computing, "platform-as-a-service" bringer was the single superlative entertainer of MFI in 2010.
Questcor Pharmaceuticals (QCOR): Questcor had similarly strong results, delivering on a triple (200%) from January listings in MFI. A obtain as last-minute as mid-March would maintain doubled. Clothed in the periodical, I mentioned with the aim of this was a risky, but potentially lucrative, routine, certain its dominance of a niche marketplace. Competitive failures and another indications in place of its single drug Acthar has pressed the routine continually senior.
Synta Pharmaceuticals (SNTA) [Premium Content] : Synta is a classic instance of the unpredictable nature of development stage drug companies. Frankly, I panned the routine in my periodical, as it lost its highest candidate Elesclomol, had nothing barred of part 2 trials, and was burning a fate of cash. However, strong first results in place of STA-9090 maintain sent the routine sharply upwards. This is still a lottery ticket, but it is powerfully to argue with 130% gains from majestic.
CF Industries (CF): CF is up on 100% from May/June MFI purchases. The completion of the Terra Industries acquisition has certain the safe a dominant marketplace share in nitrate nourishment, which theater seamlessly into a in a jiffy 3-year long agricultural bull marketplace. Back in the spring, the marketplace was concerned with the aim of CF overpaid in place of Terra, but topical results maintain buried folks concerns in place of the schedule being.
The losers...:
SuperMedia (SPMD): This routine, both in current form and in its prior life as Idearc, has been kryptonite to MFI. It is down 80% from its manifestation in the screen through February and protest. This yellow pages publisher is the standard "bad Magic Formula stock".
Jackson Hewitt (JTX): Tax prep safe, down not far off from 50% since appearing carry on January. The loss of refund anticipation advance funding, franchisee problems, a poor balance sheet, and a move towards self-filing has decimated this once upon a time solid company.
Chinese reverse take-over stocks (CSKI, CJJD, NEP, CEU, et cetera.): Most of these maintain declined 20%, by the side of smallest amount, since viewing up. Successful small attacks, fraud allegations, and an overall distrust of management and auditors has been the theme in place of 2010. I believe selected may well maintain been explicitly distant from the representative screens due to fraud allegations. Statistically, it seems they ought to all be listed.
The Magic Formula Investing strategy continued its history of market-beating returns in 2010, and near is rebuff goal not to expect more of the same in 2011.