Magic Hat portfolio: RB out, WIN in

It’s time to fiddle with my Magic Hat portfolio
(http://www.stockopedia.com/fantasy-funds/magic-hat-463/). The exit candidates are BSY, RB, SMWH. I chose to eject RB (Reckitt Benckiser) because it had a PE of 19.2 and an earnings yield of 5.98%. It’s also fairly stodgy.

There’s not going to be much analysis on my buy. I’m basically going to rank the Greenblatt stocks in descending earnings yield, weed out the bad ones, and first past the post wins.

Here’s some that were rejected:

INM has an EY of 83%. That seems to be distorted by exceptional income, though.

CTEK Chinese company. Instant rejection.

RMG Looks like another data anomaly due to exceptional income.

QPP gets a dishonourable mention. Paul Scott has written negatively about it for quite some time. The M-Score puts it as an earnings manipulator. The number of shares in issue has more than doubled over a short timeframe. Revenues were £14m for 2011, and are expected to rise to £1022m for 2014. Seems too good to be true. Receivables are 86% of revenues, which seems suspiciously high. There’s a very distinct whiff of fish about this stock. I see that Stockopedia has an article pointing out that Fidelity has doubled its stake, though. So what would I know?

I’ve decided to put WIN in the portfolio. WIN (Wincanton) is a logistics group. It’s a tricky decision, because Paul Scott has described it as univestable, on account of its balance sheet. However, it did negotiate a new and improved financing agreement on 19 June. It does have a Piotroski score of 8, and a stock rank of 99. It also makes it into the screen of screens. So. Man versus robot. Let’s see who will win.