Magic hat portfolio: MCGN in, XCH out

My Magic Hat fantasy fund, which is mostly mechanical, is on Stockopedia: http://www.stockopedia.com/fantasy-funds/magic-hat-463/ Its goal is too achieve above capital returns greater than the FTSE350 and Magic Formula screen using a portfolio of about 12 shares selected from Stockopedia’s Greenblatt Screen.

The Greenblatt screen is beating my human-intervening portfolio on a 2-year basis, but not on a 1-year basis. That doesn’t necessarily prove anything, as relative performance can often be sensitive to the period chosen. The portfolio is beating the FTSE 350 by 6.3% over 1 year. It’s the kind of outperformance that I would expect most competent investors to achieve over the long term. Investors with real skill should do a lot better. Although we do hear of people regularly whipping the indices, I do think that that kind level of skill is rare. Over a 3-year period, the Magic Hat portfolio has outperformed the FTSE 350 by about 2.2% pa. Yawn!

XCH (Xchanging) was kicked out of the portfolio on a rotational basis. It lost about 26% of its value during the holding period.

In its place is MCGN, which, according to Stockopedia:

is engaged in developing, implementing and supporting business-critical software. The Company is organized into two divisions, Microgen Aptitude Systems Division (MASD) and Microgen Financial Systems Division (FSD). MASD’s flagship products are Microgen Aptitude, a high-performance application platform used by medium and enterprises to automate complex business processes, and Microgen Accounting Hub (MAH), which provides a single point of control for financial and accounting data. Microgen’s Financial Systems Division delivers a portfolio of back office processing software to the banking, wealth management and energy sectors. For trust administrators through to fund and asset management organizations, the Company provides solutions for front and back office administration, performance measurement/analytics and fund and product design.

I chose it because it had a StockRank in the 90’s (its score is actually 90), and a nice dividend yield, 3.71%. Its PE ratio is a modest 11.1, with a PEG of 0.6. Its P/FCF is 8.58, and EV/EBITDA is 5.5. That looks a pretty good deal to me. I don’t have any insights into the industry or the company. The Fund as this is primarily mechanical.

May you all be well.

Advertisements

About mcturra2000

Computer programmer living in Scotland.
This entry was posted in Magic Formula Investing. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s