Magic Formula Performance for 2009

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Happy New Year to everyone!!! 2009 is long gone and I see nothing but good things going ahead. It was a really great year to be a magic formula investor.

Magic Formula Fund returned 62.87% vs S&P 500 26.47%. As such, the magic formula outperformed by a cool 36.41%. It also continues to outperform for every other period.

Magic Formula Trades for December 2009

First and foremost, Happy Holidays and Happy New Year to everyone. This will most likely be the last time I post on this website for this decade. 2009 has been a roller coaster in the markets but nevertheless, the magic formula has outperformed.  While not official, it seems like my little fund will outperform the market by a cool 40%!!!!

November Magic Formula Trades

Trades were made in November but were not posted on this site as I totally forgot about it.

Buys

Sturm, Ruger & Company, Inc. (RGR)

Continucare Corporation (CNU)

Sells

Terra Industries Inc (TRA)

Sierra Wireless Inc. (SWIR)

December 2009 Magic Formula Trades

Buys-

Pervasive Software Inc (PVSW)

Net 1 Ueps Technologies Inc (UEPS)

Sells-

Graham Corporation (GHM)

NutriSystem, Inc. (NTRI)

There’s not much to say about these stocks other than they outperformed the S&P 500, especially in the past couple months. Overall, they basically doubled. If you have a couple of these in the portfolio, you will be well off.

Magic Formula Purchases For October 2009

More of the same, outperformance. The magic formula continues to trounce the S&P . In the previous months, the magic formula had been outperforming the S&P by about 17% on an annualized basis. In the past 30 days, this has increased to 19% annualized. Not exactly the 30% or so as laid out in the book, but considering the economic environment we are in, this is more than acceptable.
Buys:
Pre-Paid Legal Services, Inc (PPD)
Comfort Systems USA, Inc. (FIX)

Sells:
ValueClick, Inc. (VCLK) +77%
TheStreet.com, Inc. (TSCM)  (-27%)
VAALCO Energy, Inc. (EGY) (- 3.60%)

Magic Formula Purchases For Spetember 2009

Are these markets exciting or what? Who Cares!!! If you have been following the magic formula, your portfolio would be perfectly fine. It would have been a rough ride though. So many peaks and valleys, clunkers and superstars, I doubt many who have read The Little Book would have stuck with the magic formula. Nevertheless, I’m sticking with it and have a couple of tricks to go along with it.  Anyway, we are still outperforming for every period that marketocracy.com tracks. Don’t believe me? Take a look!!!!

The chart looks something like this………..

With a couple more months left in the year, its safe to say that the magic formula will outperform the market by a wide margin. The only index that even comes close is the tech heavy NASDAQ which is on a tear.

Magic Formula Purchases for September 2009

Buy:

• Amedisys, Inc. (AMED)
• j2 Global Communications, Inc. (JCOM)

SELL:

• Deluxe Corporation (DLX), returned 9.06%, outperforming the market by approximately 23%
• KHD Humboldt Wedag International Ltd. (KHD), lost 50% of its original value, underperforming the market by approximately 35%

Magic Formula Stocks For July and August 2009

I couldn’t get last months trades on the site due to being busy with personal issues. The market has had a great rally from its March lows and the magic formula continued to perform well given that its almost 100% on autopilot. I’m in the process of moving so I will keep things as short as possible and simply give the trades for this and last months trades.

Magic Formula Trades for July 2009

Bought:

• GNI
• PTIE

Sold

• EPAX
• TPC

Magic Formula Trades for August 2009

Bought:

• CBI
• INT

Sold:

• QXM
• BVF
• NVDA

Purchases For May 2009

Our magic formula has really kicked it into high gear as of late, as it continues to outperform the market by a significant amount. While the markets had a nice 30% from their trough, there are still some significant bargains layin around. Anyway, be on the lookout for a new magic formula investing website that shows the “retail” investor how to use the magic formula properly. Like I tell everyone, if your not outperforming by 10%+ in this market, your doing something wrong. Continue Reading >>

Magic Formula Stock Purchases For April 2009

I entered the trades yesterday April 13 but was a bit busy to write about them. Same story on my book, the magic formula continues to outperform. Despite the recent run up (bear market rally?), there are still some unbelievable bargains on the magic formula screen. At the same time, there are certain tweaks you can make to the magic formula that will allow anyone to outperform the market by a significant amount. In my opinion, if you are not beating the market by 5%+, your doing something wrong. Continue Reading >>

Magic Formula Stock Purchases For March 2009

You gotta love the magic formula. Its easy to understands, takes little effort and tax efficient. This simulated portfolio continues to outperm despite a tough environment. In my real life portfolio, the returns are even better. What do I do differently? not much, simple security analysis will do the trick. Anyway, here is the performance and the buys and sells for the portfolio. Continue Reading >>

Magic Formula Purchases for Feb. 2009

That time of the month again! While our politicians decide how much pork to include in the stimulus bill, the magic formula continues to outperform. Its amazing how little effort it takes to have a magic formula blog. I literally spend 5 minutes doing the buys and sells. On the other hands, we have individuals running large amount of money , spending a great deal of time , with unlimited and expensive resources, and getting paid millions of dollars to underperform the market. Continue Reading >>

Magic Formula Purchases for Jan. 2009

Almost forgot to insert this month’s trades. With the markets in turmoil, the magic formula continues to outperform. This time its time to sell our one year old holdings. The magic formula does state to wait for 1 year and 1 day for tax purposes but this is a simulated fund and taxes do not play a factor.Below are this month’s buys and sells with some commentary at the bottom.

Buys

Graham Corporation (GHM), designs, manufactures, and sells vacuum and heat transfer equipment worldwide. The company currently sports a P/E of 5 and has a ROIC greater than 100%. According to Yahoo Finance, it has an Enterprise Value/EBITDA of 2.371 or a yield of 42.17% (the magic formula site has pretax earnings yield of 41%)

NutriSystem, Inc.(NTRI)  provides weight management and fitness products and services in the United States and Canada. The company currently sports a P/E of 7 and has a ROIC greater than 100%. According to Yahoo Finance, it has an Enterprise Value/EBITDA of 3.684 or a yield of 27.144% (the magic formula site has pretax earnings yield of 24%)

Sells with returns

Accenture (ACN)- Returned 3.03%

Pacer International (PACR)- Had a negative return of  -22.07%

FreightCar America, Inc. (RAIL) Had a negative return of -33.69%

2 of the holdings (PACR and RAIL) rely havily on the economy and we all know how that has fared. Nevertheless, PACR outperformed the market while RAIL lagged by a couple of percentage points. If anything, right now would be the time to consider purchasing these two stocks as they will rebound with the economy (if that ever happens!). Finally, PACR continues to be on the magic formula top 25/50 million,

Disclosure: I Own PACR