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 ...
Tclarke (LON:CTO) gets kicked out of the portfolio by rotation, having returned 59% since its introduction into the portfolio in Jun 2018.
Royal Mail (LON:RMG) enters the portfolio on account of it passing the Screen Of Screens and having a Stock Rank in the 90's. I stagged these shares when they first floated, and did alright out of them. I decided to take a second bite of the cherry. Stockopedia reports a PE of 11. a divvie yield of 3.6%, a P/FCF of 7.3 and an EV/EBITDA of 5. So it looks like a cheap valuation.
In my personal portfolio, I sold $TW (held since May 2020, gain 14.2%) and Stock Spirits (LON:STCK) (held since June 2020, gain 10.4%). I bought Royal Mail (LON:RMG) and Air Partner (LON:AIR) this month. Let's see how it all turns out.
Currently I adopt a mechanical strategy based on data from Stockopedia. I deal once a month. It's quite a pragmatic strategy for me. I don't have to do much thinking, and the results…
