May Purchases for the Magic Formula Portfolio

    Decided to place the orders for Monday.  As of today (5-10-08) 3 stocks in the portfolio have increased over 20%. PACR leading the way with a 40% return since inception. CITP was up over 50% on better than expect earnings but investors took profits. CITP has appreciated a respectable 35% since inception. Next,RAIL ended this week on a high note (up 9% on friday) after an analyst from Jefferies upgraded the stock. RAIL’s earnings weren’t the best due to the economy but that information had been priced in.

The Garcia Magic Fund continues to outperform the S&P 500. As of today, it is outperforming by about 4% providing a 13% annualized return. More importantly, as I am adding cash to work, the fund is increasing in volatility as opposed to the beginning of the portfolio where the small positions (in relation to cash) rarely moved the needle.

Finally, this months’ purchases were a bit different. To stay consistent with the system, I still used the magic formula screen found on the main site. Next, I found a magic formula screen which would allow me to rank the stocks as opposed to randomly choosing stocks. The original screen I was using to rank stocks is awesome but comes with its flaws. First, the lowest screen is for companies with a market cap greater than 100 million, I am basing my portfolio on companies with a market cap greater than 50 million. Secondly, from what I have see the screen is updated about 2 times a month. When I come and update the blog, the screen results are a bit dated and I want to use the more recent information.

Finally, this month I decided go with 4 purchases. Why? I am in a good mood

Here are the 4 purchases with their Yahoo Finance profile.

• HOC- Holly Corporation and its subsidiaries operate as a petroleum refiner in the United States. It involves in the purchase and refining of crude oil; and wholesale and marketing of refined products, such as gasoline, diesel fuel, and jet fuel in Texas, New Mexico, Arizona, Utah, Wyoming, Montana, Idaho, Washington, and northern Mexico.
• PPD-Pre-Paid Legal Services, Inc., together with its subsidiaries, designs, underwrites, and markets legal expense plans in the United States and Canada.
• IAR-Idearc, Inc., through its subsidiaries, provides yellow and white page directories and related advertising products in the United States and the District of Columbia. The company’s products primarily include print yellow and white pages directories; Superpages.com, Switchboard.com, and LocalSearch.com online local search products; and Superpages Mobile, an information directory for wireless subscribers
• DEPO -Depomed, Inc., a specialty pharmaceutical company, develops and commercializes pharmaceutical products based on its proprietary oral drug delivery technologies in the United States.