Proforma: The MHP (Magic Hat Portfolio) on Stockopedia (http://www.stockopedia.com/fantasy-funds/magic-hat-463/) is an experiment by me to see if a human can improve on a mechanical Greeblatt Magic Formula screen. I am trying to weed out "mistakes" that I feel the screening commits: unseasoned companies, scams, foreign companies (particularly Chinese), fishy accounting, and statistical quirks. Apart from that, I am agnostic as to the sector the company operates in, although I will try to avoid heavy concentration in any one sector. I will mostly apply "Strategic Ignorance", by which I mean that I wont try to be clever in my stockpicking. My picking will be mostly mechanical. A summary of transactions can be found at https://blippy.github.io/money... As of January 2020, I have adjusted my strategy a little. Instead of selecting stocks from the Greenblatt Screen, I will select them from Stockopedia's Screen Of Screens, and look for a StockRank (TM) in the 90's. I won't rule out selecting something from the Greenblatt Screen, though. You can view the portfolio by switching to the old version of the Stockopedia site. With the boilerplate now out the way, let's move on to the actual content ...
IG Group (LON:IGG) was due to be ejected from the portfolio by rotation this month, but stays in because it has a StockRank in the 90's and passes 9 screens. I do not trade "to keep things interesting" or garner views. The portfolio is just my attempt to do well out of the self-imposed guidelines.
CMC Markets (LON:CMCX) gave the portfolio a major kicking recently, as the market did not the Trading Update it issued on 2 September. Consensus on the bulletin boards that the update was all a bit iffy. On 29 July it issued a trading update stating:
the Board remains confident in achieving net operating income in excess of £330 million for FY 2022.
Now it reckons net operating income to be in the range £250-£280m. Hmm. This caused the shares to close down 27% on the day. Investors are beginning to question management's integrity; as well as wondering what other surprises the company has in store. It has been suggested that the company doesn't hedge all of its positions; a strategy that works great until it doesn't. The risk is that they could get wiped out. It seems a…
