MFI Turnover

I turned over my MFI portfolio today. I also turned back the clock a little, and picked new stocks based largely on insider purchases, but also influenced marginally by market caps, Piotroski F-Score, Rule #1 investing and insider ownership. I actually had some difficulty making a few decisions, and debt was often a deciding factor. Here are my new picks:

AMEN - A Texas-based power and land company. Seems that they've been moving their resources to power and their EBIT increased hugely y.o.y. last quarter. I like the idea that if the land and housing market were to turn, this company could become even more profitable.

CHKE - This is a company that owns several brands that are sold at stores like Target. It's done very well over the last year, but the stock price has dropped dramatically after a disappointing quarter. Apparently, both the CEO and the CFO think that the drop has been excessive, and I'll join them in buying shares. About an 8% yield.

HERO - They provide services to oil exploration and drilling companies. They've got very high corporate governance scores at Yahoo! Profiles.

NPLA - They make 'proprietary emerging technologies,' including digital pens for tablet PCs and feedback switches. No debt. Last quarter was huge, and they've been going up since then. Normally, that would make me cautious, but 'the tools' that Phil Town introduced me to are all a strong buy. After the bell today, they announced that the CEO/CFO was resigning. I'm afraid that this will put the brakes on the stock. On the other hand, the price was up 1% after hours.

ROK - Rockwell Automation provides power and control services for industrial automation. Total debt is about 2/3 of cash on hand and the stock is cheaper than the Rule #1 margin of safety. They closed an aqcuisition today, of ICS Triplex, a maker of control and safety equipment.

I struggled in considering a couple of other companies: RURL, KNL and SPLS. Staples (SPLS) of course is the well-known business supply store. Rural/Metro (RURL) operates ambulances in rural areas, and Knoll Inc. (KNL) makes office furniture. Both of the latter two had a huge amount of debt relative to total cash, and that was what eventually got me to decide against them. As for SPLS - I really have no good reason not to buy them based on the level of research that I did. Which, frankly, could've been more. Oh, well, we'll just have to see.

Welcome aboard!

A couple of additional notes. I decided to keep half my holdings of DECK. This was basically for one reason and one reason only: 'the tools' still call it a strong buy. As soon as those turn, I'll sell it and forget it. So my realized gain for this first portfolio is about 34%; the IRR after one year of MFI is 40.5% (only for my MFI stocks).

And this brings me to my second note. My special situations and 'One Up on Wall Street' portfolios are definitely slowing down the rest of my investments. I'm not ready to sell them off, but I am ready to start backing out of them. Over maybe the next six months or so, I'm going to try to make some tough decisions and pare these portfolios back by about 50%. I still believe in some of these companies, but I realize that I've held on to others for too long and there are still others that I shouldn't have bought in the first place.