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 due for ejection this month. It is no longer in the Greenblatt screen. However, its Stockopedia StockRank is 94, it is classified as a SuperStock, and it has at Greenblatt rating of A-, rather than A+. I’m going to be lazy, and keep it in.
Taking a look at the chart of the fund’s performance, I see that it has performed exceptionally well against the FTSE 350. I should note a couple of caveats, though:
- although the fund has outperformed the index fairly consistently, the really superior gain has been over the course of 2017. This somewhat lumpy gain could be just luck.
- the FTSE 350 is heavily weighted to the Footsie. The FTSE 250 has performed exceptionally well against the FTSE 100 over the course of the existence of the fund, so the fund’s performance would look far more modest if it was compared against the mid-caps.
So, that’s it for this month. Have a merry Christmas, and let’s hope we get lots of mild weather.
Stay safe out there.