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 most of my Magic Hat articles can be found on the web page http://www.markcarter.me.uk/money/greenblatt.htm This will allow you to see, at a glance, what shares have been bought and sold in the past, as well as what shares have been rejected from consideration and why.
Airline operator DTG (Dart Group) is up for renewal this month. It has been in the portfolio a long time, and I have decided to keep it in this month. DTG does not make it onto Stockopedia’s official Greenblatt Screen. However, it does have a Magic Formula score of 93%, and a rating of A+. It also has a Stock Rank of 95.
The chart on DTG is interesting. The share price reached a high of around 675p in April, and then went into steady decline, almost in a freakishly straight line. This continued until late October, when the share price was around 360p. Momentum then reversed, and the share price has bounced back on the back of positive news. I commented on their half-year report on in November (https://goo.gl/cS9g8f), arguing that a re-rating of its shares are in order.
On the basis of the foregoing, I am going to keep the company in the portfolio.