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 ...
Morgan Sindall (LON:MGNS) is due to be ejected from the portfolio by rotation this month. It has a Stockopedia StockRank of 99, so it stays in. It passes two screens: the Richard Beddard;s Nifty Thrifty Screen and the Value Momentum Screen. The former has annualised returns of 10%. The latter has annualised returns of 12%. That sounds pretty good to me; although I dare say others will find it pedestrian. It excludes dividends, so real results would be even better. It depends if you're trying to make all the money in the world, or want a good return with minimal effort.
In my own portfolio, I have stood pat this month, too. I find it helpful to have a list of sell rules. So I trawl through my holdings and see what can be usefully dumped. Having rules saves a lot of prevarication as to whether i should, or should not, sell a share. These are my rules for selling:
- held for at least 1 year and
- StockRank < 85 and
- not a Screen Of Screens or CANSLIM share, and
- the shares did not go up 10% on a trading update in the last 6 months
Points to note:
- I've noted that the CANSLIM…
