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.
MCGN is ejected from the portfolio by rotation. It gained 185% during its two years there. That is, obviously, pleasing.
Real estate services company LSL.L (LSL Property Services) is added to the portfolio.
The portfolio has had a fantastic 6-month performance, being up 19%. Performance has slackened off since June, however. The portfolio climbed a steep hill during the first half of the year. It looks like it it making an equally sharp descent. We shall see, in the fullness of time, just how much of a retrace it makes.
That’s it for the Magic Hat portfolio this month. See you in a month’s time.