Magic Formula Fund Purchases In Q1 2010

• The Corporate Executive Board Company (EXBD)
• j2 Global Communications, Inc. (JCOM)
• ValueClick, Inc. (VCLK)
• Terra Nova Royalty Corp (TTT)
• Endo Pharmaceuticals Holdings Inc. (ENDP)

Going forward I will be talking a bit about why I choose the stocks that I do. I don’t use technical analysis and do not read or listen to a company’s conference call. Management can be misleading and give investors false hopes. I truly believe by sticking to the numbers one could find undervalued companies.  Going forward I will also write about earnings and other events that might occur during the quarter. This will help keep the blog updated on a consistent basis. Finally, I will also be talking about stocks that are moving in and out of the screen. For the most part, I have been sticking to a philosophical point of view and writing more about theory rather than practice.

Magic Formula Fund Performance

As you can see above, things aren’t looking too good. And they won’t as long as the market keeps rising, the large cash on hand will continue to act as an anchor.

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Last Updated: January 20, 2010

I’m a big fan of testing different strategies within a strategy. For almost 2 years now, I have  set up a website tracking the results of a simulated magic formula fund. It’s a nice way to see how it competes against other investors and to see what and why it works and whether certain stocks work better than others. This will not be the only magic formula fund I will be running but it will be the only magic formula fund I will talk about publicly. Why be so discrete? mainly because I know the magic formula works and the other funds are to test certain strategies out. As the other funds get older and the study becomes more apparent of whether they work or not, I will make them public.

Magic Formula Fund Strategy

Nothing spectacular here. I will screen the magic formula every 3 months and do minor security analysis and choose 5 stocks. The only downside about this is the large amount of cash the fund will be holding which might skew the results a bit but i’m more interested in the long term performance of the fund (10+ years). I will report on the performance and holdings of the fund like a typical mutual fund, every three months. I will also keep tabs on the stocks on this page, I will show a “Last Updated On” at the top of the page so everyone who comes to this specific page will have an idea of what’s going on when we mention the magic formula fund.

Finally, the fund will be simulated at Marketocracy.com and will compete against 80,000+ individual investors that believe they can outperform the market consistently. To visit the public page of the fund in any given day, click on this URL http://www.marketocracy.com/cgi-bin/WebObjects/Portfolio.woa/ps/FundPublicPage/source=GlBmAhBhElDmOcBaMaKiAbDd

Magic Formula Fund Inception Date: December 31,2009

Company|  Ticker| Purchase Date |Sold Out Date

• KHD Humboldt Wedag International Ltd |KHD |  1/04/2010
• The Corporate Executive Board                   |EXBD| 1/04/2010
• Endo Pharmaceuticals Holdings Inc          |ENDP| 1/04/2010
• ValueClick, Inc.                                                   |VCLK| 1/04/2010
• j2 Global Communications, Inc.                   |JCOM| 1/04/2010

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