Magic Hat portfolio: QRT in, HNT out

My Magic Hat fantasy fund, which is mostly mechanical, is on Stockopedia: http://www.stockopedia.com/fantasy-funds/magic-hat-463/

It has had a lacklustre performance over the last 3 years, slightly underperforming the FTSE 350. It does beat it over the portfolio lifespan, though. It is slightly underperforming the Joel Greenblatt screen over 2 years. The Greenblatt screen was slaughtered during 2014, having made a massive run-up in 2013. Its latest 6-month performance has exceeded its benchmarch by a huge margin (19.3% return vs 4.1% for the FTSE 100). The moral is: it’s probably better to invest in a screen after a bout of underperformance than a bout of overperformance.

It is that time of month when I swap a share around in the portfolio. I’m ejecting HNT (Huntsworth), because it was bought a year ago. It has been a terrible performer, down 20.8% from its purchase price. It had a profit warning shortly after the shares were purchased, as required by Sod’s Law. The share no longer qualifies for the Magic Formula screen. It rates an “E+”. However, I think that figure is likely to be distorted by the recent set of accounts. I don’t think the situation is as bad as they seem. HNT is on a PE of 11.4, a PEG of 0.96, and a yield 4.06%. So it is entirely possible that this share could go on to perform well. I sure to wish I hadn’t ejected IMT (Imperial Tobacco) from the portfolio in order to make room for HNT. IMT is up nearly 23% over 1 year.

I have grown a little despondent with the Greenblatt screen, and was thinking of doing away with it. On reflection, though, I decided to stick with the Greenblatt screen, but add an extra criteria: select only those stock with a Stockopedia Stock Rank of at least 90.

There’s quite a few to choose from. I decided to restrict the selection to those having a dividend of at least 3%. Everyone likes a dividend, right? That still leaves a few to choose from, so I just chose one that looked good artitrarily; nothing much more scientific than that. I decided to opt for QRT (Quarto), which is a book publisher and distributor. It is on an EV/EBITDA of 2.71. How much cheaper do you want?

I recall that QRT had positive reviews from ExpectingValue (http://expectingvalue.com/) and theredcorner (http://quinzedix.blogspot.co.uk/) in the past.

May you all be happy.

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About mcturra2000

Computer programmer living in Scotland.
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